Insurance Policies & Coverage Analysis Flashcards

Under an HO-3, a dwelling's replacement cost is $300,000 and it is insured for $210,000. A $30,000 roof loss has an ACV of $20,000. Before the deductible, what is the loss settlement?

Answer: $26,250

The insured carries less than 80% ($240,000), so the insurer pays the greater of ACV ($20,000) or $210,000/$240,000 × $30,000 = $26,250.

Under the ISO CGL, how does Coverage B (personal and advertising injury) differ from Coverage A in what triggers coverage?

Answer: It is triggered by listed offenses such as libel or false arrest

Coverage B applies to injury caused by an offense listed in the definition, not to an accidental occurrence.

A claims-made CGL policy has a retroactive date of January 1, 2023. Which claim is most likely covered under the 2026 policy period?

Answer: Injury in 2024, claim first made in 2026

Coverage needs the injury to occur on or after the retroactive date and the claim to be first made during the policy period.

Under the ISO CGL claims-made form, which statement about the Supplemental Extended Reporting Period is accurate?

Answer: It is available by endorsement for an extra premium and runs for an unlimited duration

The supplemental ERP must be purchased by endorsement, is unlimited in duration, and costs up to 200% of the annual premium.

Under an ISO commercial property policy, a building has been vacant for more than 60 consecutive days when a windstorm damages it. How is the covered windstorm loss handled?

Answer: Payment is reduced by 15%

Losses from perils not specifically excluded for vacancy are reduced by 15% once the building has been vacant more than 60 days.

An insured and an insurer agree a fire loss is covered but disagree on the dollar amount. Which policy provision resolves this?

Answer: Appraisal

Appraisal resolves disputes over the amount of loss: each party picks an appraiser, an umpire breaks ties, and agreement by any two is binding.

Under the ISO HO-3, how are Coverage A (dwelling) and Coverage C (personal property) written?

Answer: Coverage A open perils; Coverage C named perils

The HO-3 covers the dwelling and other structures on an open perils basis and personal property on a named perils basis.