Texas Property and Casualty License Practice Exam

What does the Insuring Agreement in an insurance policy represent?

1. List of covered perils under the policy

2. Insurers promise to pay

3. Details of the premium payment schedule

4. Conditions under which claims are denied

The correct answer is: Insurers promise to pay

The Insuring Agreement in an insurance policy serves as the core part of the contract, outlining the insurer's commitment to provide coverage in exchange for the premium paid by the insured. It explicitly states the insurer’s promise to pay for covered losses, making it a fundamental component of the policy. This agreement typically includes the scope of coverage, which can either encompass specific risks or provide broader protection depending on the type of policy. While the other choices mention important aspects of an insurance policy, they do not capture the essence of the Insuring Agreement. For instance, a list of covered perils is certainly important but is more granular than the overarching promise made by the insurer. Likewise, details about premium schedules and claim denial conditions are relevant but pertain to different sections of the insurance documentation, not the Insuring Agreement itself.