Common Policy Provisions

Question 1

Type of insured:

The person dedicated on the declarations page

(has broadest coverage)

Answer 1

Named insured

Question 2

Type of insured:

Receives notifications from insurer, can cancel the policy, and is responsible for paying the premium

Answer 2

First named insured

Question 3

Type of insured:

A person who’s not ordinarily protected by a policy, but is granted status through the addition of an endorsement

Answer 3

Additional insured

Question 4

A provision used to encourage the insured to purchase insurance in order to establish a basis of payment

Answer 4

Coinsurance

Question 5

Coinsurance:

What formula is used when a penalty is applied to partial losses?

Answer 5

Did/Should x Loss = Amount Paid

Question 6

Coinsurance example:

Building’s replacement value is $100K

Building insured for $40K

Policy has 80% coinsurance clause

Building sustains $10K loss

Answer 6

40,000/80,000 x 10,000 = $5,000