Insurance Insurance Contracts & Policy Interpretation 2

Question 1

What is an 'exclusion' in an insurance policy?

Accepted Answer

A specific condition, peril, or circumstance not covered by the policy

Answer

Exclusions are specific risks, perils, persons, or circumstances that the policy explicitly does not cover.

Question 2

What information is typically found on the 'declarations page' of an insurance policy?

Accepted Answer

Named insured, policy period, coverage limits, and premium amount

Answer

The declarations page ('dec page') is a summary identifying the insured, coverage dates, limits, deductibles, and premium.

Question 3

In property insurance, a coinsurance clause requires the policyholder to:

Accepted Answer

Insure the property for at least a specified percentage of its value to receive full reimbursement

Answer

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.

Question 4

Which statement best describes a policy 'deductible'?

Accepted Answer

The amount the insured must pay out of pocket before the insurer pays a claim

Answer

A deductible is the portion of a covered loss the insured must pay first before insurance benefits apply.

Question 5

What is the key difference between a 'claims-made' policy and an 'occurrence' policy?

Accepted 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

Answer

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.

Insurance Practice Test

Insurance Practice Test

Insurance Insurance Contracts & Policy Interpretation 2