Policy is an act of will. Policy is an intentionally structured system of rules to guide activities and achieve reasonable results. A policy is an unambiguous statement of purpose, which is normally implemented as a set procedure or rule. Policies are usually adopted by an organizational governance body within an organization. The most common types of policies are those that address the policies and procedures of particular departments, organizations, and the like. These may also cover aspects such as general policies for the organization or values and principles.
General policies cover areas such as risk management, occupational health and safety, information systems, pollution and waste management, and information security. Specific policies may address such aspects as investment risk, life and health insurance, property and casualty insurance, credit risk, and insurance compliance. Specific policies may also cover legal protection covers such as warranties, guarantees, and disclaimers.
Policy language is critical to the overall expressiveness of a policy. This means that a policy must be unambiguously expressed in plain English. For example, if an insurer is offering a life insurance policy that includes a waiver that states in the event of the death of the insured, his family is not entitled to any additional benefits, he must state in the waiver where the term of the policy expires. This is the insurance company’s policy wordings. Plain English insurance policy wordings protect the insurer’s interests as well as the insured’s interests.
Policy language is also closely related to the policy’s risk characteristics. Risk characteristics refers to the legal risks that an insurer faces in offering its products and services. For example, an insurance company should not include the risk of a customer being sued for personal injuries in its policy wordings because it has the risk of a customer suing them for damages even when the customer was not at fault. If the company does not explicitly state these risk characteristics in their policies, the policies will have a broad conception of negligence that is not legally accurate.
An insurance company cannot be sued for damages that are based on gross mischaracterization of facts. This pertains to an issue of negligence that causes the insured to be financially disadvantaged when he or she sue an insurer. For example, a car insurance company must not state in its policies that their insured can be sued for damages caused by another party’s recklessness when the customer was driving the vehicle recklessly. An insurance company cannot be sued for damages for acts of another party that cause the insured party to be financially disadvantaged, even if the insured did not know of the acts of the other party.
An insurance company cannot be sued for punitive damages in most states and will not be subjected to deductibles in the majority of states. A tort law expert in California has previously stated, “There is nothing in tort law that allows the insurance company to be sued for punitive damages.” However, every insurance company will be liable for the costs of disputing or correcting any discrepancies provided in the policy. In addition, every insurance company will be held liable for the costs related to the preparation, review and approval of the policy. The insured may be held liable for the cost of advertising and the cost of the distribution of the policy.