Policy Provisions & Contract Law

Question 1

Cancellation

Answer 1

termination of a policy prior to the expiration date

Question 2

Nonrenewal

Answer 2

termination of a policy at its expiration date

Question 3

Policy limits
(limitations)

Answer 3

the maximum amount an insured may collect

Question 4

Policy territory

Answer 4

location where coverage is provided

Question 5

Provisions

Answer 5

rights and obligations within the contract

Question 6

Policy Structure
-Declarations

Answer 6

(basic info about the policy: names, addresses, and amounts of
coverage)

Question 7

Policy Structure
-Definitions

Answer 7

(policy terms explained)

Question 8

Policy Structure
-Insuring agreement

Answer 8

(parties to the contract, dates of coverage, description of
coverage)

Question 9

Policy Structure
-Conditions

Answer 9

(general rules and procedures the insurer and the insured agree
to follow under the policy terms)

Question 10

Policy Structure
-Exclusions

Answer 10

(perils not insured against)

Question 11

Policy Structure
-Endorsements

Answer 11

(addendums that modify the policy’s original terms or
coverages)

Question 12

Provisions
Additional (supplementary) payments

Answer 12

provides additional coverage for specific loss expense at no additional cost

Question 13

Provisions
Appraisal

Answer 13

in property insurance: claim settlement method through an independent appraiser when there is a dispute between the insurer and the insured

Question 14

Provisions
Arbitration

Answer 14

in casualty insurance: claim settlement method through an independent arbitrator when there is a dispute between the insurer and the insured

Question 15

Provisions
Assignment

Answer 15

transfer of a legal right or interest in a policy

Question 16

Provisions
Cancellation and nonrenewal

Answer 16

terms and conditions for policy termination

Question 17

Provisions
Duties of the insured after loss

Answer 17

specific duties to cooperate with the insurer in the investigation, settlement, or defense of a claim

Question 18

Provisions
Liberalization

Answer 18

adopting a policy revision that broadens coverage without additional cost to the insured

Question 19

Provisions
Notice of claim

Answer 19

insured’s duty to provide a notice to the insurer in the event of a loss

Question 20

Provisions
Other insurance

Answer 20

insurers pay proportionate amount for any claim

Question 21

Provisions
Proof of loss

Answer 21

insured’s written and sworn statement regarding a loss

Question 22

Provisions
Subrogation

Answer 22

the insurer’s right to seek damages from third parties after reimbursing the insured for the loss