Final answer:
The main purpose of an insurance policy document is to serve as a contract between the insurance company and the policyholder, outlining the details of the coverage, and laying the foundation for financial protection against unexpected events.
Step-by-step explanation:
The purpose of an insurance policy document is to serve as a contract between the insurance company and the policyholder, establishing the terms of coverage. This includes the details of the coverage provided, the premiums to be paid by the policyholder, and the conditions under which the insurance company will disburse payments. An insurance policy aids in financial protection by pooling premiums from multiple households or firms and making payments to those who suffer a specified detrimental event, such as medical expenses, car accidents, theft, or the death of an insured individual, ensuring that no single event causes a significant financial burden for the policyholder.
Therefore, the correct answer is b. It is a contract between the company and the consumer, establishing coverage. When a claim is filed by the policyholder, the insurance policy document is referenced to determine eligibility and the amount of the payment. Insurances like health insurance, car insurance, house or renters' insurance, and life insurance all follow this model, protecting consumers from the financial jeopardy of unexpected losses.