CA Insurance Policies & Regulations 5

Question 1

Under a California claims-made liability policy, which date determines whether a claim is covered?

Accepted Answer

The date the claim is first made against the insured during the policy period

Answer

Claims-made policies are triggered when a claim is first made against the insured during the policy period, regardless of when the underlying act occurred.

Question 2

What is the primary purpose of a 'tail' (extended reporting period) endorsement on a California claims-made policy?

Accepted Answer

To allow claims arising from acts during the policy period to be reported after the policy expires

Answer

A tail endorsement extends the time to report claims for acts that occurred during the original policy period, protecting the insured after the policy expires.

Question 3

California Insurance Code Section 790.03(h) prohibits which of the following claims handling practices?

Accepted Answer

Compelling an insured to litigate by offering substantially less than amounts ultimately recovered

Answer

Section 790.03(h)(6) specifically prohibits compelling insureds to litigate by offering settlements unreasonably low relative to what is ultimately recovered.

Question 4

An insured under a California homeowner's policy fails to disclose a prior mold remediation at the time of application. The insurer later discovers this before a new mold claim. What remedy is available to the insurer?

Accepted Answer

Rescind the policy for material misrepresentation if within the applicable discovery period

Answer

California Insurance Code Section 331 allows an insurer to rescind a policy for material misrepresentation or concealment that would have affected underwriting, subject to applicable time limits.

Question 5

Under California's Insurance Code, what distinguishes a 'named peril' policy from an 'open peril' (all-risk) policy?

Accepted Answer

Open peril policies cover all losses unless specifically excluded; named peril policies only cover specifically listed causes

Answer

Open peril (all-risk) policies cover any cause of loss not specifically excluded, while named peril policies only cover the causes of loss explicitly listed in the policy.

(CA) Certified Adjuster Designation Practice Test

(CA) Certified Adjuster Designation Practice Test

CA Insurance Policies & Regulations 5