Policy Provisions, Options, and Exclusions
Structure and Conditions
Policies contain declarations, insuring agreements, conditions, and exclusions. Candidates must know the duties after loss: prompt notice, proof of loss, cooperation, and mitigation. Understand appraisal, salvage, subrogation, and the loss payment conditions. The mortgage clause protects the lender's interest.
Options and Endorsements
Review replacement cost, extended replacement cost, and agreed value options. Endorsements can add coverage, such as water backup or scheduled personal property, or restrict it. The coinsurance clause penalizes underinsurance.
Exclusions
Common exclusions include ordinance or law, earth movement, water damage, neglect, intentional loss, and faulty workmanship. Know the difference between concurrent causation and anti-concurrent causation language.
Traps
Questions often test whether an insured may recover without submitting a proof of loss, or whether an exclusion applies when a covered peril also contributed. Another trap is confusing the mortgage clause with the insured's duties.
Rule of Thumb
Read exclusions as narrowly as the language allows, but apply anti-concurrent causation clauses literally when present.
Worked Example
A policy excludes earth movement and includes anti-concurrent causation language. If an earthquake and a covered fire occur together, the earth movement exclusion bars coverage for the earthquake-caused damage even if fire also contributed.