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 Chapter 1 - Charts B & C
Insurance Principles & Concepts
B: The Parts of an Insurance Contract
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All insurance policies may be divided into five sections. They are as follows:
- Declarations Page- This part of the policy identifies the named insured, it names the insurance company, effective date of the insurance policy, the expiration date of the policy, the amount of premium to be paid, and any endorsements that apply. It's the first page of an insurance policy.
- Insuring Agreement- The insuring agreement describes the covered perils, or risks assumed, or nature of coverage, or makes some reference to the contractual agreement between the insurer and insured.
- Conditions- Policy conditions set provisions, rules of conduct, duties, and obligations for the parties. A number of common insurance conditions describe such things as the insured's obligation to provide proof of loss, how settlements are handled when other insurance is involved, and the right of each party to cancel the policy.
- Exclusions and Limitations- Exclusions may describe property, perils, hazards, or losses arising from specific causes that are not covered by the policy - i.e., things that the insurance company will not pay.
- Definitions- Definitions define important terms used in the policy language. Some policies list definitions in a distinct section having that title. Some policies include definitions in the "Conditions" section, while others spread definitions throughout policy sections.
- Endorsements- Some policies also contain endorsements that are used to add, delete, or change any of the policy parts. Endorsements may alter the content of the declarations and insuring agreement, and they may contain conditions, exclusions, and definitions.
C: Standardized Policies
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- Standardized policies refer to forms that have been filed by Insurance Services Office, Inc. (ISO) to the individual insurance departments for approval.
- Insurance Department approves/disapproves insurance company rates & forms.
- Many insurance companies use the approved ISO forms rather than filing their own forms in each individual state.
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