General and specific policy conditions
The two documents that make up an insurance contract: the general conditions, common to all insureds of a product, and the specific conditions, particular to each insured, which prevail in case of conflict.
An insurance contract consists of two sets of documents whose interplay determines cover. The general conditions set out the rules common to all insureds of a product: definitions, covers offered, general exclusions, the parties' obligations, claims notification and settlement procedures, termination, time bar. They are often identical for thousands of insureds. The specific conditions tailor the contract to each policyholder: identity, insured property or activities, covers chosen from those in the general conditions, sums insured, deductibles, premium, specific clauses. When they conflict, the specific conditions prevail, because they express the parties' own intent. The French Insurance Code requires certain clauses, notably exclusions, nullities and forfeitures, to be printed in very conspicuous characters, and case law requires exclusions to be formal and limited. In large-risk markets the same distinction takes other forms: policy wording and schedule in the market reform contract. For insured and underwriter alike, reading the specific conditions without the general conditions is the most common and most costly mistake.
Textbook case: the general conditions of a multiperil policy exclude damage from groundwater; an insured's specific conditions include an extension covering seepage into its basement. After flooding from rising groundwater, the extension prevails, because the specific conditions override the general ones.
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