Which term describes the losses (perils) that are covered by an insurance policy?

• A. Exclusions
• B. Deductible
• C. Covered cause of loss
• D. Premium

Answer: (C)

The thing a policy will pay for are the causes of loss that are included in the contract. Policies list perils and designate which ones are covered; when a loss results from one of those included perils, the insurer provides coverage (subject to limits and any endorsements). That is why the term describing the losses the policy covers is the covered cause of loss. Exclusions are the perils not covered, a deductible is the out-of-pocket amount you pay before coverage, and a premium is the cost of the policy.