CALA Coverage Analysis & Interpretation 2

Question 1

Under a standard homeowners policy, which of the following losses would most likely be excluded under the 'earth movement' exclusion?

Accepted Answer

Foundation cracking caused by soil subsidence

Answer

Soil subsidence is a form of earth movement, which is excluded under standard homeowners policies regardless of the cause.

Question 2

An insured's commercial auto policy has a $500,000 combined single limit. After a covered accident, bodily injury damages total $450,000 and property damage totals $100,000. What is the insurer's maximum payment?

Accepted Answer

$500,000

Answer

A combined single limit applies to the total of all damages combined, so the insurer pays a maximum of $500,000 regardless of how damages are split.

Question 3

Which doctrine holds that an ambiguous insurance policy term must be interpreted in favor of the insured?

Accepted Answer

Contra proferentem

Answer

Contra proferentem is the legal rule requiring that ambiguous contract language be construed against the drafter, which is typically the insurer.

Question 4

A business owner's policy (BOP) typically covers which of the following under its liability section?

Accepted Answer

Bodily injury to third parties on the premises

Answer

A BOP's liability coverage protects the business against third-party bodily injury and property damage claims, not employee or professional liability.

Question 5

An insured files a claim for stolen jewelry worth $8,000. The homeowners policy has a $1,500 sublimit for jewelry theft. How much will the insurer pay (ignoring deductibles)?

Accepted Answer

$1,500

Answer

Sublimits cap payment for specific categories regardless of the item's actual value or the policy's overall limit.

(CALA) Certified All-Lines Adjuster Practice Test

(CALA) Certified All-Lines Adjuster Practice Test

CALA Coverage Analysis & Interpretation 2