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RMIN 4000 Edmunds Test 3|115 Questions and Answers |Distinction Graded
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RMIN 4000 Edmunds Test 3|115 Questions and Answers |Distinction Graded
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RMIN 4000 Edmunds Test 3|115Questions and Answers |Distinction
Graded
Basic Parts of an Insurance Contract - -1. Declarations
2. Definitions
3. Insuring agreement
4. Exclusions
5. Conditions
6. Miscellaneous provisions
- Declarations - -statements that provide information about the particular
property or activity to be insured
- definitions - -statements that provide information about the particular
property or activity to be insured
- Insuring Agreement - -Summary of the major promises of the insurer
(what the policy covers)
- named perils - -only those perils specifically named in the policy are
covered
- open perils - -all perils are covered except for those that are specifically
excluded
- exclusions - -perils or property that are not covered under the policy
ex. flood/earthquake, war, intentional loss, certain types of property
- Why are exclusions necessary? - --Some perils are not commercially
insurable
e.g., catastrophic losses due to war
-Extraordinary hazards are present
e.g., using the automobile for a taxi
-Coverage is provided by other contracts
e.g., use of auto excluded on homeowners policy
-Moral hazard problems
e.g., coverage of money limited to $200 in homeowners policy
-Attitudinal hazard problems
, e.g., individuals are forced to bear losses that result from their own
carelessness
-Coverage not needed by typical insureds
e.g., homeowners policy does not cover aircraft
- conditions - -provisions in the policy that qualify or place limitations on the
insurer's promise to perform
- Miscellaneous Provisions - -- States have mandatory provisions (added by
endorsements)
- Notice of Cancellation
- Notice of Nonrenewal
- Notice of Loss
- Mortgagee Clause
- named insured - -the person or persons named in the declarations section
of the policy
- First Named Insured - -has certain additional rights and responsibilities
that do not apply to other named insureds
- other insureds - -persons or parties who are insured under the policy even
though they are not specifically named
- additional insureds - -person or party added to the policy by an
endorsement
- Endorsements and Riders - -provisions that add to, delete from, or modify
the original/main policy
- Deductible - -a provision by which a specified amount is subtracted from
the total loss payment that otherwise would be payable
- Why have deductibles? - --eliminate small claims
-reduce premiums
-reduce moral and morale hazard
- straight deductible - -the amount the insured is responsible for per loss
before the insurer pays anything
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