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RMIN 4000 Edmunds Test 3 Questions and Answers 2024
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RMIN 4000 Edmunds Test 3
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RMIN 4000 Edmunds Test 3Basic Parts of an Insurance Contract - answer1. Declarations
2. Definitions
3. Insuring agreement
4. Exclusions
5. Conditions
6. Miscellaneous provisions
Declarations - answer statements that provide information about the particular property
or activity to be insured
definitions - answer statements that provide information about the particular property or
activity to be insured
Insuring Agreement - answer Summary of the major promises of the insurer (what the
policy covers)
named perils - answer only those perils specifically named in the policy are covered
open perils - answerall perils are covered except for those that are specifically excluded
exclusions - answerperils or property that are not covered under the policy
ex. flood/earthquake, war, intentional loss, certain types of property
Why are exclusions necessary? - answer-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 - answerprovisions in the policy that qualify or place limitations on the
insurer's promise to perform
Miscellaneous Provisions - answer- States have mandatory provisions (added by
endorsements)
- Notice of Cancellation
- Notice of Nonrenewal
- Notice of Loss
- Mortgagee Clause
named insured - answerthe person or persons named in the declarations section of the
policy
First Named Insured - answerhas certain additional rights and responsibilities that do
not apply to other named insureds
other insureds - answerpersons or parties who are insured under the policy even though
they are not specifically named
additional insureds - answerperson or party added to the policy by an endorsement
Endorsements and Riders - answerprovisions that add to, delete from, or modify the
original/main policy
Deductible - answera provision by which a specified amount is subtracted from the total
loss payment that otherwise would be payable
Why have deductibles? - answer-eliminate small claims
-reduce premiums
-reduce moral and morale hazard
straight deductible - answerthe amount the insured is responsible for per loss before the
insurer pays anything
aggregate deductible - answerthe amount the insured is responsible for in total (over all
losses during the policy period) before the insurer pays anything
elimination (waiting) period - answera stated period of time at the beginning of a loss
during which no insurance benefits are paid
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