Property & Casualty Insurance Exam (National Portion)Property and Casualty Insurance BasicsMedium
A commercial property owner has an insurance policy that requires them to maintain the insured property in a good state of repair and to report any significant changes in risk to the insurer. Failure to comply could result in a denial of a claim. Under which part of the insurance policy would this requirement typically be found?
- AExclusions
- BInsuring Agreement
- CDeclarations
- DConditions
Show answer & explanationAnswer & explanation
Correct answer: D. Conditions
The Conditions section of an insurance policy outlines the responsibilities and duties of both the insured and the insurer. Maintaining the property and reporting risk changes are typical conditions that must be met for coverage to apply.
Why the other options are wrong
- A. Exclusions list what is NOT covered by the policy, rather than what the insured must do.
- B. The Insuring Agreement defines the perils covered and the scope of coverage, not policyholder duties.
- C. Declarations identify who is insured, what is insured, and for how much, but do not list duties.
Conditions (Policy)
The section of an insurance policy that outlines the duties and responsibilities of both the insured and the insurer.
- Must be met for coverage to apply.
- Examples include prompt notice of loss, protecting property from further damage, and proof of loss.
- Failure to comply can lead to denial of a claim.
Memory trick: DECLARATIONS declare WHO, WHAT, WHEN; INSURING AGREEMENT agrees to PAY; CONDITIONS condition coverage; EXCLUSIONS exclude coverage.