Which term refers to a contract between a policyowner and an insurance company that pays the insured or beneficiary for losses caused by specific events?

• A. Insurance policy
• B. Insurance contract
• C. Limits of coverage
• D. Lifetime limit

Answer: (B)

The main idea here is that the document governing how coverage works is called an insurance policy. An insurance policy is a written contract between the policyowner and the insurance company. It spells out who is covered, what events or perils are covered, how much the insurer will pay, and under what conditions. When a loss occurs that is covered by the policy, the insurer is obligated to pay the insured or the beneficiary up to the limits stated in the policy, subject to any deductibles, exclusions, or requirements described there. So the policy serves as the binding agreement that defines the coverage and the payments for specified events.