Washington State Insurance Practice Exam

What is the purpose of an "insurance policy"?

1. A document outlining privacy practices

2. A contract outlining coverage specifics

3. A form for filing complaints

4. A guideline for claim processes

The correct answer is: A contract outlining coverage specifics

An insurance policy serves as a contract between the insurer and the insured, detailing the specific terms and conditions of coverage provided. It outlines what risks are covered, the responsibilities of both parties, the exclusions, and the procedures for making claims. This document is essential for both parties to understand their rights and obligations, ensuring that the insured knows what is protected and what might not be included in the coverage. The other options presented, while related to the broader realm of insurance, do not accurately capture the primary function of an insurance policy. A document outlining privacy practices focuses on how personal data is handled, rather than on coverage specifics. A form for filing complaints is related to the resolution of disputes rather than the contract of coverage itself. Similarly, a guideline for claim processes provides procedural information but does not encompass the contractual nature or the detailed coverage outlines that an insurance policy offers.