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Unit 3 Nature of the Industry
Insuring Agreement
The insuring agreement identifies the commitment the insurance
carrier has made to the policyholder. It outlines perils the policy does or
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policy means the contract only covers losses resulting from the causes
listed in the insuring agreement. On the other hand, all-risk policies list
perils it will not cover. If a peril is not listed, then the policy covers it.
Conditions
The conditions section describes the responsibilities the policyholder
has when a loss occurs. Conditions may require the policyholder to
contact the insurance carrier within a certain period following a loss. This
section will also explain what happens when a claim is filed.
Exclusions
Exclusions are losses the insurance carrier will not cover. For
example, homeowner’s insurance may cover water damage caused by a
pipe that breaks. But, it may not cover damage from a flood caused by a
rainstorm. If this is the case, it will be stated as an exclusion on the policy.
Endorsements
Most policies are standard, but often the carrier needs to add
information not found on the standard policy. The endorsements section
details agreements that are not otherwise part of the policy. It may state,
for example, that the contract covers your personal computer. It could also
contain modifications to the contract that restrict coverage. For example, if
it is not addressed in the policy, an endorsement might state that the policy
does not apply for losses caused by an act of terrorism.
It is important to
understand the details
of an insurance policy’s
terms and conditions.
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