Texas Life Agent Practice Exam

Which statement is true about the Insuring Clause?

1. It states the coverage exclusions

2. It contains the insurer's enforceable promise to pay covered claims

3. It defines the policy premium structure

4. It outlines the responsibilities of the insured

The correct answer is: It contains the insurer's enforceable promise to pay covered claims

The Insuring Clause is a fundamental component of an insurance policy, as it specifically includes the insurer's enforceable promise to pay covered claims. This clause essentially serves as the foundation of the contract between the insurer and the insured, clearly articulating what the insurer is obliged to do in the event of a claim. By establishing the promise to pay for losses or claims under specified conditions, the Insuring Clause provides assurance to the policyholder about the coverage they have purchased. In contrast, other options describe elements that are not functions of the Insuring Clause. Coverage exclusions pertain to conditions or situations that are not covered by the policy, which is detailed in a different section known as the exclusions or limitations. The policy premium structure is typically outlined in the premium section or schedule of the policy, providing detailed information about how premiums are calculated and due. Responsibilities of the insured are usually delineated in a separate section, often referred to as "Duties After a Loss" or "Insured’s Responsibilities," which outlines what the insured must do to maintain coverage and report claims effectively.