Policy Structure

Question 1

Statements in an insurance policy are referred to as:

Answer 1

Policy Provisions or Clauses

Question 2

The front page of the policy. Contains information unique to that particular policy. Included are items such as the name and address of the insured or the business, the type of business organization (for example, partnership or corporation), the policy period, policy limits, deductible(s), and the premium.

Answer 2

Declarations of information page.

Question 3

Simply the person or organization whose name appears first in the policy declarations. May be the only one who is authorized to cancel the policy or request policy changes.

Answer 3

First Named Insured.

Question 4

Those who are entitled to coverage under the policy. commonly added by attaching a separate endorsement that identifies these parties and the extent of that party’s rights.

Answer 4

Additional Insured

Question 5

Sets forth the insurer’s basic promises under the policy. ie: in a personal auto policy states, in effect, that “we (the insurer) will pay for direct and accidental loss to your (the named insured’s) covered auto.” Very broad.

Answer 5

Insuring Agreement

Question 6

Many insurance policies contain secondary coverages along with the main coverage in an insuring agreement.

Answer 6

Additional Coverages, Extensions of Coverage, Supplementary Coverages, Optional Coverages

Question 7

Limit the broad coverage granted in property and liability insuring agreements

Answer 7

Exclusions

Question 8

Most exclusions serve at least one of the following purposes.

Answer 8

• Eliminate or reduce overlapping coverage
• Remove coverage not needed by a typical insured
• Reduce incentive to create losses/ provide inventive to prevent losses
• Remove coverage for uninsurable risks.

Question 9

Without some exclusions, more than one policy might respond to the same loss. For example, a homeowners insurance policy excludes liability coverage for most motor vehicle accidents because that coverage is covered by an auto insurance policy.

Answer 9

Eliminate of reduce overlapping coverage.

Question 10

Sometimes an insurer is willing to provide a coverage that most insureds do not need because they have no exposure

Answer 10

Remove coverage not needed by a typical insured

Question 11

A business liability policy excludes coverage for property damage to the insured’s own work—to avoid encouraging poor quality workmanship that the insurer might otherwise be required to cover.

Answer 11

Reduce the incentive to create losses and provide an incentive to prevent losses

Question 12

Some risks, such as speculative risks. Cannot get coverage for failed product.

Answer 12

Remove cvg for uninsurable risks.

Question 13

Coverage for the extra expenses, over and above the cost of replacing damaged property, that might be necessary to comply with current building code.

Answer 13

Building Ordinance or Law Exclusion

Question 14

Open perils property insurance policies typically contain a group of exclusions sometimes referred to as maintenance or wear-and-tear exclusions.

Answer 14

Exclusions for Expected Losses

Question 15

Common Exclusions:

Answer 15

• Bldg ordinance or Law exclusion
• Earth movement/ quake
• Nuclear Hazard
• Flood
• Exclusions for Expected Losses

Question 16

9 Typical causes of loss that are under Exclusions for Expected Losses.

Answer 16

• Wear and tear
• Deterioration
• Rust
• Smoke from industrial operations
• Dmg by birds, vermin, rodents, insects or animals owned by the insured.
• Leakage or Seepage
• Artificially Generated Electrical Current
• Explosion of Steam Boilers
• Mechanical breakdown

Question 17

May clarify the terms of the policy by adding new definitions. It might also expand coverage by eliminating exclusion. Takes precedence over the wording in the policy to which it is attached.

Answer 17

Endorsements