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RMIN 4000 EDMUNDS EXAM 3
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RMIN 4000 EDMUNDS EXAM 3
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RMIN 4000 EDMUNDS EXAM 3Basic parts of an insurance contract - Answers- declarations, definitions, insuring
agreement, exclusions, conditions, and miscellaneous provisions
Declarations - Answers- statements that provide information about the particular
property or activity to be insured
What does the declarations page usually contain - Answers- name and address, policy
dates, amount of insurance, premium and deductible, and other relevant info
Definitions - Answers- key words or phrases are defined so that coverage under the
policy can be determined more easily (insurer-"we,us,out" vs. Insured-"you,your")
Insuring agreement - Answers- summary of the major promises of the insurer (what is
covered)
Named perils - Answers- only perils specifically named in the policy are covered
Open perils (All Risk, Special Coverage) - Answers- all perils are covered except for
those that are specifically excluded
Exclusions - Answers- perils or property that are not covered under the policy
Why are exclusions necessary - Answers- certain perils are considered uninsurable like
war and wear and tear
What are some reasons to have insurance contract exclusions - Answers- presence of
extraordinary hazards, coverage provided by other contracts, moral or morale hazard,
or coverage not needed by typical insureds
Conditions - Answers- provisions in the policy that qualify or place limitations on the
insurer's promise to perform (prompt notification of loss, no concealment or fraud, etc.)
What are some miscellaneous provisions - Answers- state mandatory provisions, notice
of cancellation, loss, nonrenewal, and mortgagee clause (mortgagee has right to be
protected and must prove loss to get paid back)
Named insured - Answers- person or party named on the declarations page of policy
First named insured - Answers- has additional rights and responsibilities that do not
apply to other named insureds
Other insureds - Answers- persons or parties who are insured under policy even though
they are not specifically named
, Additional insureds - Answers- person or party added to the policy by an endorsement
(lenders and mortgagors)
Endorsements and Riders - Answers- provisions that add to, delete from, or modify the
original policy terms (negotiated contract enhancements, state law provisions, etc.)
Deductible - Answers- a provision by which a specified amount is subtracted from the
total loss payment that would otherwise be payable
What purpose do deductibles have for insurers - Answers- eliminate small claims,
reduce premiums, and reduce moral and morale hazard
Straight deductible - Answers- the amount the insured is responsible for per loss before
the insurer pays anything
Aggregate deductible - Answers- The amount the insured is responsible for in total
(over all losses during policy period) before the insured pays anything
Elimination (waiting) period - Answers- stated period of time at the beginning of a loss
during which no benefits are paid (common in disability insurance and business
interruption claim coverage)
Coinsurance in property insurance - Answers- Encourages the insured to insure the
property to a stated percentage of its insurable value. If the coinsurance requirement is
not met at the time of loss, the insured must share in the loss as a coinsurer
What is the formula for amount of recovery - Answers- (amount carried/amount
required) x loss = amount of recovery
Coinsurance in health - Answers- provision that requires the insured to pay a specified
percentage of covered medical expenses after the deductible is met (reduce premiums
and prevent overusing policy benefits)
Pro rata liability - Answers- each insurer's share of the loss is based on the proportion
that its insurance bears to the total amount of insurance on the property
Contribution by equal shares - Answers- each insurer shares equally in the loss until
the share paid by each insurer equals the lowest limit of liability under any policy, or until
the full amount of the loss is paid
Primary and excess insurance - Answers- the primary insurer pays first, and the excess
insurer pays only after the policy limits under the primary policy are exhausted
("umbrella" liability)
Bryan Tedford - Answers- disruptive insurance delivery technology; to infinity and
beyond! Sustainability insurance and ESG
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