Flashcards in Policy Structure Deck (17)
Statements in an insurance policy are referred to as:
Policy Provisions or Clauses
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.
Declarations of information page.
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.
First Named Insured.
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.
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.
Many insurance policies contain secondary coverages along with the main coverage in an insuring agreement.
Additional Coverages, Extensions of Coverage, Supplementary Coverages, Optional Coverages
Limit the broad coverage granted in property and liability insuring agreements
Most exclusions serve at least one of the following purposes.
- 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.
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.
Eliminate of reduce overlapping coverage.
Sometimes an insurer is willing to provide a coverage that most insureds do not need because they have no exposure
Remove coverage not needed by a typical insured
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.
Reduce the incentive to create losses and provide an incentive to prevent losses
Some risks, such as speculative risks. Cannot get coverage for failed product.
Remove cvg for uninsurable risks.
Coverage for the extra expenses, over and above the cost of replacing damaged property, that might be necessary to comply with current building code.
Building Ordinance or Law Exclusion
Open perils property insurance policies typically contain a group of exclusions sometimes referred to as maintenance or wear-and-tear exclusions.
Exclusions for Expected Losses
- Bldg ordinance or Law exclusion
- Earth movement/ quake
- Nuclear Hazard
- Exclusions for Expected Losses
9 Typical causes of loss that are under Exclusions for Expected Losses.
- Wear and tear
- 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