Chapter 1F: Policy Structure

Policy Structure

The standard components that make up a property or casualty insurance policy

Declarations

The section of the policy containing basic underwriting information such as the insured’s name, address, coverage amounts, premiums, and insured locations

Definitions

The section of the policy that explains the meaning of key terms used in the contract

Insuring Agreement

The section that states the insurer’s promise to provide coverage, describing who is insured, what is covered, the perils insured against, and policy dates

Additional or Supplementary Coverage

A provision in an insurance policy that provides an additional amount of coverage for specific loss expense at no additional premium

Conditions

The section that outlines the rules, duties, and procedures that both the insurer and insured must follow for coverage to apply

Endorsement

A written addendum attached to a policy that modifies coverage, terms, or conditions

Exclusions

The section of the policy that specifies perils, persons, or property that are not covered, limiting the scope of the insuring agreement

Types of exclusions

Earth movement and water damage

Policy Limits

The maximum amount the insurer will pay for a covered loss under the policy

Liberalization Clause

A condition stating that if the insurer broadens coverage without charge, the insured automatically receives the benefit during the policy term

Return of Premium

The method used to calculate the return premium when the policy is cancelled before the expiration date

Earth Movement Exclusion

An exclusion that removes coverage for losses caused by earthquake, mudflow, or volcanic eruption

Water Damage Exclusion

An exclusion that removes coverage for flood, sewer or drain backup, sump pump overflow, and subsurface water