Policy Structure: Declarations, Insuring Agreement, Conditions, Exclusions

The standard DICE structure

Most ISO property and casualty policies are assembled the same way, and the exam expects you to identify each part by its function. A common mnemonic is DICE:

• D — Declarations: the front page personalized to the insured. Names the insured, policy period, covered property/location, limits of insurance, deductibles, premium, and the forms/endorsements attached. On a Homeowners form it appears on the ISO HO 00 03 declarations; on auto it sits on the PP 00 01 (Personal Auto Policy) dec page.
• I — Insuring agreement: the insurer's core promise — what perils or risks are covered and the basic scope. Named-peril forms cover only listed perils; open-peril ("all-risk") forms cover everything not excluded — a key burden-of-proof difference.
• C — Conditions: the rules of the relationship — duties after loss, cancellation, how losses are valued and paid.
• E — Exclusions: what is removed from coverage.

Definitions and the burden of proof

A fifth component, definitions, controls how key words ("insured," "occurrence," "bodily injury") are read — always check the defined terms before deciding coverage.

Burden of proof trap: under a named-peril form the insured must prove the loss came from a covered peril. Under an open-peril form the insurer must prove an exclusion applies to deny the claim. This shifts the litigation advantage and shows up repeatedly on the national portion. Homeowners HO 00 03 is open-peril on the dwelling (Coverage A/B) but named-peril on personal property (Coverage C); HO 00 05 is open-peril on both.

Limits, deductibles, and split limits

Limits cap the insurer's payout. Property limits are usually a single dollar amount per coverage; liability limits are often expressed as split limits.

Auto split limit 100/300/50 = $100,000 bodily injury per person / $300,000 bodily injury per accident / $50,000 property damage per accident.

Worked example. A 100/300/50 policyholder causes a crash injuring three people — claims of $120,000, $90,000, and $40,000, plus $60,000 in property damage. BI per person caps the $120,000 claim at $100,000; the $90,000 and $40,000 pay in full; the three BI payments total $230,000, within the $300,000 per-accident cap. Property damage is capped at $50,000 of the $60,000. The insurer pays $100,000 + $90,000 + $40,000 + $50,000 = $280,000; the insured personally owes the $20,000 BI excess and the $10,000 PD excess.

Common conditions and exclusions

Frequently tested conditions:

• Duties after loss (prompt notice, protect property, file proof of loss, cooperate).
• Appraisal provision — resolves disputes over the amount of loss (each side hires an appraiser; a neutral umpire breaks ties).
• Other-insurance and subrogation clauses.
• Cancellation/nonrenewal mechanics.

Nearly universal exclusions across P&C forms: intentional/expected loss, war, nuclear hazard, government action, wear and tear, and (in property forms) flood and earth movement — which require separate coverage such as NFIP flood or a difference-in-conditions policy. The standard ISO CP 00 10 and HO 00 03 both list these so the insurer avoids catastrophic, uninsurable, or non-fortuitous exposures.

Deductibles, sublimits, and how limits restore

A deductible is the retained first layer of each loss — it reduces premium and discourages small claims. Property deductibles are usually a flat dollar amount; catastrophe perils may carry a percentage deductible (e.g., 2% of the dwelling limit for windstorm). A sublimit caps a specific category below the overall limit; Homeowners forms, for example, sublimit theft of jewelry, firearms, and silverware unless scheduled.

Limits can be written per occurrence with a separate aggregate ceiling. On a CGL the per-occurrence limit applies to any single event, while the aggregate caps total payments for the policy year. Once the aggregate is exhausted, coverage stops until renewal — a reason businesses buy umbrella coverage. Some property limits are non-reducing, restoring after each loss; liability aggregates do not restore mid-term.

Endorsements, riders, and ordering rules

Endorsements (called riders in some lines) are attachments that add, delete, or modify coverage — increasing a limit, adding a covered location, or scheduling valuable items. When endorsement language conflicts with the base form, the endorsement controls because it is the more specific and more recent expression of the parties' intent.

When multiple provisions seem to conflict, courts apply ordering rules: specific language overrides general language, handwritten or typed entries override printed forms, and an exclusion is read narrowly against the insurer. Knowing this hierarchy lets you predict how a question's fact pattern resolves: if a scheduled-jewelry endorsement raises the theft limit, the base-form sublimit no longer governs that scheduled item. Always read the declarations, then the base form, then every attached endorsement before deciding coverage.

Occurrence vs. claims-made, and the policy period

Liability forms use one of two coverage triggers, and the difference is heavily tested. An occurrence form covers injury or damage that happens during the policy period, no matter when the claim is reported — even years later. A claims-made form covers claims first made during the policy period, provided the loss occurred after the retroactive date. When a claims-made policy ends, an extended reporting period (tail) preserves coverage for claims reported after expiration.

The policy period on the declarations defines the window, and most P&C policies run on the standard rule that coverage begins at 12:01 a.m. at the insured's mailing address. Coverage territory limits where losses are covered — a Personal Auto Policy, for instance, covers the U.S., its territories, Puerto Rico, and Canada, but not Mexico. Matching the right trigger and territory to a fact pattern is a recurring national-portion skill.