An insurance policy is a contract between an insurer and an insured party, which clarifies the claims that the insurer is required to pay. The policy sets forth the risks covered, the duration of the coverage period, the coverage to be provided, the amount of any deductibles, and the premium payments to be made by the insured party to the insurer.
An insurance policy is typically comprised of a large amount of standard boilerplate text, which is used by an insurer with all of its customers. When a customer wants a customized adjustment to a policy, it is attached as a rider to the policy. This approach is more efficient for the insurer, since it does not have to write an entirely customized contract for each customer.