Insurance Policies and Coverage Flashcards

Under a claims-made liability policy, a 'retroactive date' of January 1, 2020 means:

Answer: Occurrences before January 1, 2020 are not covered even if the claim is made during the policy period

The retroactive date sets the earliest point in time from which occurrences can give rise to covered claims; incidents before that date are excluded regardless of when the claim is made.

Which provision in a property insurance policy requires the insured to carry insurance equal to a specified percentage of the property's value or face a penalty at the time of loss?

Answer: Coinsurance clause

The coinsurance clause (e.g., 80% coinsurance) penalizes insureds who underinsure their property by requiring them to share in the loss proportionally.

A homeowner's policy excludes flood damage. The insured suffers a loss from storm surge during a hurricane. The adjuster should:

Answer: Deny the flood portion and pay only wind damage if separable

When a covered peril (wind) and an excluded peril (flood) combine to cause damage, the adjuster must segregate the damages; only wind-caused losses are covered.

What does 'additional insured' status on a liability policy typically grant?

Answer: The additional insured is covered under the named insured's policy for specified liability arising from the named insured's operations

Additional insured status extends the named insured's liability coverage to a third party (e.g., a property owner) for claims arising out of the named insured's work or operations.

An 'umbrella' policy differs from an 'excess' liability policy primarily because an umbrella policy:

Answer: Can drop down to provide primary coverage for claims not covered by underlying policies

An umbrella policy can 'drop down' to cover gaps in the underlying policy or claims not covered by the primary policy, while a pure excess policy only sits above the primary limits.

Under a Business Owners Policy (BOP), which coverage is typically NOT included in the standard form?

Answer: Workers' compensation coverage

A BOP packages property, general liability, and business income coverage for small businesses, but workers' compensation is a separate statutory coverage not included in a BOP.

A 'per occurrence' limit in a CGL policy means the insurer will pay no more than that amount for:

Answer: All bodily injury and property damage arising from one single event or occurrence

The per occurrence limit caps the insurer's liability for all BI and PD damages resulting from any single occurrence, regardless of how many claimants are involved.