RMI 3011 - Chapter 7 RMI 3011 Florida State University -Question and answers rated A+

RMI 3011 - Chapter 7 Question and
answers rated A+
Basic Parts of a Contract - correct answer ✔-Declarations
-Definitions
-Insuring Agreement
-Exclusions
-Conditions
-Miscellaneous Provisions


Declarations: - correct answer ✔Statements that provide information about
the particular property or activity to be insured.


-Can usually be found within the first few pages of the policy


Contains information specific to the insured:
-Insured Name
-Address
-Policy Term
-Amount of Insurance
-Deductible


Definitions: - correct answer ✔Insurance contracts typically contain a page or
section of definitions.


-Words that are defined within the policy are usually noted with quotation
marks

, Insuring Agreement: - correct answer ✔summarizes the major promises of
the insurer




The two basic forms of an insuring agreement in property insurance are:
-Named perils coverage, where only those perils specifically named in the
policy are covered
-Basic
-Broad
-Open-perils, or special coverage, where all losses are covered except those
losses specifically excluded
-Special


Exclusions: - correct answer ✔Insurance contracts contain three major types
of exclusions:
-Excluded perils, e.g., flood, intentional act
-Excluded losses, e.g., a professional liability loss is excluded in the
homeowners policy
-Excluded property, e.g., pets are not covered as personal property in the
homeowners policy


Why are exclusions necessary? - correct answer ✔- Some perils are not
commercially insurable (Ex. catastrophic losses due to war)
-Extraordinary hazards are present (Ex. using your automobile for a taxi)
-Coverage is provided by other contracts (Ex. use of auto excluded on
homeowners policy)
-Moral hazard problems (Ex. coverage of money limited to $200 in
homeowners policy)