ACE Policy Analysis & Evaluation 3

Question 1

Which component of a policy is considered the primary document that outlines the insurer's basic promises and the insured's duties?

Accepted Answer

Insuring agreement

Answer

The insuring agreement sets forth what the insurer promises to pay or do and the broad scope of coverage granted.

Question 2

Under ACORD standards, what is the primary purpose of the ACORD 140 form?

Accepted Answer

To submit a property section of a commercial insurance application

Answer

The ACORD 140 is the Commercial Property Section application form used to collect property coverage information.

Question 3

A claims-made policy is triggered when:

Accepted Answer

A claim is first made against the insured during the policy period

Answer

Claims-made policies are triggered by when the claim is first made against the insured, not when the underlying act occurred.

Question 4

What is the primary function of a retroactive date on a claims-made policy?

Accepted Answer

It establishes the earliest date that a covered act can have occurred

Answer

The retroactive date limits claims-made coverage to acts that occurred on or after that date, preventing coverage for pre-existing incidents.

Question 5

An insured requests an Extended Reporting Period (ERP) endorsement. What does this provision primarily allow?

Accepted Answer

Reporting claims after policy expiration for acts that occurred before expiration

Answer

An ERP (or 'tail') allows the insured to report claims after the policy expires as long as the underlying acts occurred before expiration.

(ACE) ACORD Certified Expert Practice Test