P&C Policy Provisions and Options 2

Question 1

The 'declarations page' (dec page) of an insurance policy contains:

Accepted Answer

Specific information about the insured, covered property, policy period, limits, and premium

Answer

The declarations page is the personalized section of the policy that identifies the named insured, coverage effective dates, limits of insurance, deductibles, premium, and covered locations or vehicles.

Question 2

An 'endorsement' to an insurance policy:

Accepted Answer

Modifies the terms of the original policy by adding, deleting, or changing coverage

Answer

An endorsement (also called a rider) is a written amendment that modifies the base policy — it can broaden coverage, restrict coverage, add covered parties, or make other changes.

Question 3

What is the purpose of a 'deductible' in an insurance policy?

Accepted Answer

To share the risk of loss between the insured and the insurer, reducing the premium and discouraging small claims

Answer

A deductible is the amount the insured pays out-of-pocket before the insurer's payment obligation begins; higher deductibles reduce the premium and provide the insured with an incentive to prevent small losses.

Question 4

Which policy provision requires the insured to notify the insurer of a loss within a reasonable time?

Accepted Answer

Prompt notice condition

Answer

The prompt notice condition requires the insured to notify the insurer of a covered loss as soon as practicable; late notice can give the insurer grounds to deny coverage if the delay prejudiced its ability to investigate the claim.

Question 5

The 'appraisal clause' in a property insurance policy is triggered when:

Accepted Answer

There is a dispute about the amount of loss (not coverage) between the insurer and the insured

Answer

The appraisal provision provides an alternative dispute resolution mechanism specifically for disagreements about the dollar value of a covered loss — each party selects an appraiser, and they select a neutral umpire to resolve differences.

Property & Casualty Insurance License Test Practice Test

Property & Casualty Insurance License Test Practice Test

P&C Policy Provisions and Options 2