South Carolina Personal Lines Practice Exam

What part of the insurance policy contains the insurer's promise to pay a claim?

1. Declarations

2. Endorsements

3. Insuring agreement

4. Exclusions

The correct answer is: Insuring agreement

The insuring agreement is the section of an insurance policy that clearly outlines the insurer's promise to pay for covered claims. It typically specifies the types of risks that are insured and the circumstances under which the insurer will provide compensation. This is a fundamental component of the policy as it establishes the scope of coverage and the obligations of the insurer, thereby providing policyholders with a clear understanding of the protections afforded to them under the policy. In contrast, other sections of the policy serve different purposes. The declarations section contains essential information such as the insured's name, policy period, and coverage limits, and while it sets the context for the policy, it does not outline the insurer's commitments. Endorsements are modifications or additions to the base policy designed to modify coverage or enhance options and may adjust the terms but aren't the primary source of the insurer's promise. Exclusions detail what is not covered under the policy, providing clarity on limitations but do not encompass the insurer's commitments. Therefore, the insuring agreement is the key part of the policy that conveys the insurer's promise.