South Carolina Personal Lines Practice Exam

What is a certificate of insurance?

1. A legal document for claims

2. A summary of policy exclusions

3. A written document showing a policy has been issued

4. A confirmation of premium payment

The correct answer is: A written document showing a policy has been issued

A certificate of insurance serves as a written document that confirms a specific insurance policy has been issued. It provides key details about the coverage, such as the type of insurance, policy limits, effective dates, and the insured party's information. This document acts as proof that an individual or organization holds an active insurance policy, which is often required by clients, vendors, or regulatory authorities to verify that coverage exists before entering into contracts or agreements. While other elements related to insurance may seem relevant, they do not accurately define what a certificate of insurance is. For instance, it is not a legal document for claims, nor is it primarily a summary of policy exclusions, nor does it function as a confirmation of premium payment. Each of those options addresses different aspects of the insurance process but does not encapsulate the purpose and significance of a certificate of insurance itself.