Insurance Contracts & Policy Interpretation Flashcards
7 cards from real Insurance practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Insurance Contracts & Policy Interpretation flashcards as text
What is an 'exclusion' in an insurance policy?
Answer: A specific condition, peril, or circumstance not covered by the policy
Exclusions are specific risks, perils, persons, or circumstances that the policy explicitly does not cover.
What information is typically found on the 'declarations page' of an insurance policy?
Answer: Named insured, policy period, coverage limits, and premium amount
The declarations page ('dec page') is a summary identifying the insured, coverage dates, limits, deductibles, and premium.
In property insurance, a coinsurance clause requires the policyholder to:
Answer: Insure the property for at least a specified percentage of its value to receive full reimbursement
Coinsurance clauses (typically requiring 80% of property value) require the insured to carry adequate coverage or face a penalty at claim time for being underinsured.
Which statement best describes a policy 'deductible'?
Answer: The amount the insured must pay out of pocket before the insurer pays a claim
A deductible is the portion of a covered loss the insured must pay first before insurance benefits apply.
What is the key difference between a 'claims-made' policy and an 'occurrence' policy?
Answer: Claims-made policies require the claim to be reported while the policy is active; occurrence policies cover incidents that happen during the policy period regardless of when reported
Claims-made policies require both the incident and the claim report to occur during the active policy period, while occurrence policies only require the incident to happen during coverage.
A 'named perils' property insurance policy:
Answer: Only covers losses caused by perils explicitly listed in the policy
Named perils policies provide coverage only for the specific causes of loss listed in the policy, and the insured bears the burden of proving the loss falls under a listed peril.
'Actual Cash Value' (ACV) in property insurance is calculated as:
Answer: Replacement cost minus accumulated depreciation
ACV equals the cost to replace the damaged property with a similar item, minus accumulated depreciation, reflecting the item's real-world value at the time of loss.