Policy Structure Flashcards
Declarations
Declarations is the section of an insurance policy containing the basic underwriting information, such as the insured’s name, address, amount of coverage and premiums, and a description of insured locations. It also contains any supplemental representations by the insured. This is usually the first page of the policy.
Definitions
The definitions component of an insurance policy clarifies terms used in the policy. Typically, words that are printed in bold, italics, or quotations have a definition as to their meaning in that contract.
Insuring agreements or Clause
An Insuring Agreement (sometimes labeled Agreement) is the section of an insurance policy that establishes the obligation of the insurance company to provide the insurance coverages as stated in the policy. Among other things, the insuring agreement lists the parties to the contract, effective and renewal dates, the description of coverage provided, and perils. It is usually found after policy Declarations, but may be placed after Definitions.
Additional or Supplementary Coverage
Additional (or supplementary) coverage is a provision in an insurance policy that provides an additional amount of coverage for specific loss expense, at no additional premium. Examples: claim-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, and defense expense.
Conditions
Conditions is the section of an insurance policy that indicates the general rules or procedures that the insurer and insured agree to follow under the terms of the policy.
Exclusions
The exclusions section of an insurance policy details the perils that are not insured against and what persons are not insured. Exclusions restrict some of the broad terms used in the insuring agreement. This section can exclude people (except a spouse), property, and perils.
Endorsements
Endorsements are printed addendums to a contract that are used to change the policy’s original terms, conditions, or coverages. Endorsements may be included at the time the policy is issued or added during the policy term. Endorsements must be in writing, attached to the policy and signed by an executive officer of the insurer to have any effect on the contract. Endorsement may be used to add or delete coverage, or may be used to correct items such as the insured name, address, etc.
Concurrent insurance
Concurrent insurance is two or more policies covering the same risk and providing the same coverages. They may have different policy periods or amounts of insurance. Claims are paid on a pro-rata basis to the total insurance in force.
Aggregate
Aggregate limit is the maximum limit of coverage available under a liability policy during a policy year, regardless of the number of claims made or the number of accidents that occur.
Coinsurance
The coinsurance clause states that, in consideration of a reduced rate, the insured agrees to maintain a certain minimum amount of insurance on the insured property. This encourages the insured to insure the property closer to its full value. In case of a partial loss, the insurer will pay the partial loss in full if the insured has maintained the required percentage of insurance with relation to the value of the property.
No Benefit to the Bailee
The no benefit to the bailee provision excludes any assignment or granting of any policy provision to any person or organization holding, storing, repairing, or moving insured property for a fee. A business that has temporary possession of property of another and will do something with that property for the mutual benefit of both parties is a bailee.
