FL Adjuster Claim Professional Exam Study Guide

Policy Structure

Property and casualty insurance policies follow a standardized structure, shaped by state regulations and industry practices. Understanding this structure is key to mastering the FL Adjuster Claim Professional Exam.

Key Acronym: DICED

Declarations
Insuring Agreement
Conditions
Exclusions
Definitions

Common Policy Provisions

Insurance policies contain provisions that outline what is covered and what is not. These provisions include:

Provision	Description
Declarations	Contains policy-specific details: insured’s name, address, policy period, limits, deductibles, premium, and endorsement form numbers.
Insuring Agreement	The insurer’s core promise, e.g., "We will pay for direct and accidental loss to your covered auto."
Conditions	Rules for qualifying for coverage (covered in a separate lesson).
Exclusions	Limits broad coverage, e.g., excludes floods or intentional losses.
Definitions	Clarifies terms like “we” (insurer) and “you” (named insured), often marked in bold or quotes.

Policies with multiple coverages (e.g., property and liability) may have separate insuring agreements, exclusions, and definitions for each, plus master provisions applying to all coverages.

Key Definitions

Named Insured: The person or organization listed in the declarations. In personal policies, the spouse is also a named insured.
Additional Insured: Added via endorsement, with specific coverage rights.
Relative: A person living with the policyholder, related by blood, marriage, or adoption.
Automatic Insureds: Covered but not named, e.g., employees or household family members.

Example: In a policy, “we” refers to the insurer, and “you” refers to the named insured in the declarations.

Insuring Agreement

The insuring agreement is the insurer’s promise, often broad, with limits set by exclusions. It may include:

Coverage Extensions: Additional coverages like debris removal in property policies.
Supplementary Payments: In liability policies, covers costs like lost earnings for assisting in a claim.
Optional Coverages: Included in the policy but only active if listed in the declarations.

Example: A property policy may cover debris removal costs after a covered loss, like clearing damaged materials before rebuilding.

Exclusions

Exclusions limit coverage to manage premiums and risks. Common exclusions include:

Building Ordinance or Law: Excludes extra costs to comply with updated building codes.
Earth Movement/Earthquake: Excludes earthquake damage; coverage available via endorsement.
Nuclear Hazard: Excludes losses from nuclear incidents.
Flood: Excludes water damage from floods; covered by the National Flood Insurance Program (NFIP).
Wear and Tear: Excludes expected losses like deterioration or rust.
Leakage/Seepage: Excludes gradual water damage from leaks.
Artificially Generated Electrical Current: Excludes damage from power surges or short circuits.
Mechanical Breakdown: Excludes equipment failure; covered by equipment breakdown insurance.
Steam Boiler Explosion: Excludes boiler explosions; covered by specialty insurance.

Exclusions prevent overlapping coverage, reduce morale hazards, and exclude uninsurable risks, keeping premiums affordable.

Endorsements

Endorsements modify policies by adding, clarifying, or restricting coverage. They take precedence over the base policy wording.

Example: An endorsement may add earthquake coverage or name an additional insured.

Test Your Knowledge!

Question: What is the difference between an exclusion and an endorsement?

An exclusion limits or removes coverage for specific perils, property, or losses, while an endorsement modifies the policy by adding, clarifying, or restricting coverage.

Question: Common policy exclusions listed in the exclusions section of a property or casualty insurance policy cannot be covered under any circumstances. True or False?

False. Many exclusions can be covered through endorsements, such as earthquake or flood coverage.

For Your Review

Standard provisions: Declarations, Definitions, Insuring Agreement, Exclusions, Conditions.
Exclusions limit coverage to manage premiums and risks.
Endorsements customize policies to meet specific needs.
Understand key terms like named insured, additional insured, and relative.