What is an insuring agreement?

Often, insuring agreements outline a broad scope of coverage, which is then narrowed by exclusions and definitions. An insuring agreement is that portion of the insurance policy in which the insurer promises to make payment to or on behalf of the insured.

What is the purpose of an insurance agreement?

The purpose of an insurance agreement is to create a legally binding contract between the insurance company and the insured. Within this agreement, the insured agrees to pay small periodic payments in exchange for a payout from the insurance company if the covered event specified in the agreement occurs.

What is the difference between an insurance contract and a definition?

The insuring agreement states which of the subsequent items and circumstances the insurance company will cover in exchange for a premium. Definitions specify exactly what is covered in the contract. For example, the definitions section may define “insured property” as a car, house or business property depending on the type of insurance contract.