Texas All Lines Adjuster Practice Test

Who is considered an insured in an insurance policy?

1. A person or entity who pays premiums

2. A third-party beneficiary

3. A person or entity covered by the policy

4. An insurance agent representing the insurer

The correct answer is: A person or entity covered by the policy

In an insurance policy, an insured refers to a person or entity that is covered by the insurance. This means that the insured is protected under the terms and conditions defined in the policy. The coverage usually applies to specific risks or events, which can include damage to property, liability for injuries, or other scenarios relevant to the type of insurance offered. For instance, in a homeowner's insurance policy, the insured would typically be the homeowner and any other individuals specified in the policy who are covered in the event of a loss. Consequently, the insured is the primary beneficiary of the insurance contract, receiving financial protection as delineated in the policy provisions. Other choices reflect different roles or concepts that do not define who is insured. For example, a person who pays premiums is not necessarily an insured if they are not covered by the policy, while third-party beneficiaries typically refer to individuals who might benefit from the policy but are not the primary insured. Similarly, an insurance agent represents the insurer and facilitates the insurance transaction, but they are not a party covered by the policy. Thus, the concept of being "covered by the policy" is essential in identifying who the insured is.