Principles of Risk Management and Insurance, 13th Edition

Summary

• Insurance contracts generally can be divided into the following parts:

  • – Declarations

  • – Definitions

  • – Insuring agreement

  • – Exclusions

  • – Conditions

  • – Miscellaneous provisions

• Declarations are statements concerning the property or activity to be insured.

• The definitions page or section defines the key words or phrases so that coverage under the policy can be determined more easily.

• The insuring agreement summarizes the promises of the insurer. There are two basic types of insuring agreements:

  • – Named-perils coverage

  • – Open-perils coverage

• All policies contain one or more exclusions. There are three major types of exclusions:

  • – Excluded perils

  • – Excluded losses

  • – Excluded property

• Exclusions are necessary for several reasons. Certain perils ...