Policy Structure

Question 1

What are the components of a policy structure?

Answer 1

1. Declarations
2. Definitions
3. Insuring agreement
4. Additional Coverage
5. Conditions
6. Endorsements
7. Exclusions and policy limits

Question 2

Declarations

Answer 2

1. Contains basic underwriting information such as the insured’s name, address, amount of coverage and premiums/deductible.
2. First page of the policy

Question 3

Definitions

Answer 3

Clarifies terms used in the policy

Question 4

Insuring Agreement or Clause

Answer 4

Establishes the obligation of the insurance company to provide the insurance coverages as stated in the policy.
*Lists the perils

Question 5

Additional or Supplementary coverage

Answer 5

A provision in an insurance policy that provides an additional amount of coverage for specific loss expense at no additional premium.

Question 6

Conditions

Answer 6

Indicates general rules and provisions
Examples:
- Inspections may be made as needed…
-Changes to the policy must be in writing
-Liberalization clause ensures that if…
-Return of premium indicates the method….

Question 7

Endorsements

Answer 7

Printed addendums (a thing added) 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.

Question 8

Exclusions and Limitations

Answer 8

Details the perils that are not insured against and what persons are not insured
-Earth Movement and Water Damage are examples of exclusions

Question 9

Earth movement and water damage

Answer 9

Earth Movement is excluded if caused by earthquake, mudflow, or a volcanic eruption
Water is excluded if it’s flood and subsurface water, water that backs up through sewers and drains or overflows from a sump pump, or water below ground that seeps through basement walls.

Question 10

Policy Limits

Answer 10

The maximum amount an insured may collect