PSI Ohio Insurance Practice Exam

Which part of an insurance contract contains the promise to pay losses covered by the policy?

1. Declarations

2. Insuring clause

3. Conditions

4. Exclusions

The correct answer is: Insuring clause

The insuring clause is a critical component of an insurance contract, as it specifies the insurer’s promise to pay for covered losses. It outlines the scope of coverage, defining what risks are insured and under what circumstances the insurer is obligated to make payments. This clause creates the foundation of the insurance agreement by establishing the insurer's liability. The declarations provide information about the insured party and the specific coverage terms but do not contain the commitment to pay claims. Conditions outline the duties and responsibilities of both the insurer and the insured during the policy term, while exclusions specify what is not covered by the policy, limiting the insurer's liability. Understanding the role of the insuring clause is essential for comprehending the obligations inherent in an insurance policy.