Property & Casualty Insurance Exam (National Portion)Property and Casualty Insurance BasicsEasy
A client has a property insurance policy that covers direct physical loss to their building. However, the policy explicitly states that damage caused by war, nuclear hazard, or intentional acts by the insured is not covered. These specific limitations are examples of which policy provision?
- AExclusions
- BSubrogation
- CEndorsements
- DAppraisal
Show answer & explanationAnswer & explanation
Correct answer: A. Exclusions
Exclusions are provisions in an insurance policy that specifically state what is not covered. War, nuclear hazard, and intentional acts are common examples of perils that are excluded from standard property insurance policies.
Why the other options are wrong
- B. Subrogation is the insurer's right to pursue a third party responsible for a loss.
- C. Endorsements are additions or changes to the basic policy.
- D. Appraisal is a method to resolve disputes about the amount of a loss.
Exclusions (Policy)
Provisions in an insurance policy that specifically list perils, property, or situations that are not covered.
- Limit the scope of coverage
- Common exclusions include war, nuclear hazard, flood, earthquake
- Help manage risk and keep premiums affordable
Memory trick: Understand what's IN and OUT of policy's reach.