CCP Insurance Policy Interpretation & Coverage Analysis 2 — Questions and Answers
Question 1: Under the doctrine of reasonable expectations, courts will interpret an insurance policy in favor of:
- The insurer's stated intent
- The objectively reasonable expectations of the insured (Correct answer)
- The plain meaning of the policy language only
- The industry standard definitions
Correct answer: The objectively reasonable expectations of the insured
The doctrine of reasonable expectations holds that courts will honor the objectively reasonable expectations of the insured even if a close reading of policy language would negate them.
Question 2: A 'claims-made' policy differs from an 'occurrence' policy in that it covers claims:
- Based on when the loss occurred
- Based on when the claim is first made during the policy period (Correct answer)
- Based on when damages are paid
- Based on when the insured first discovers the loss
Correct answer: Based on when the claim is first made during the policy period
A claims-made policy provides coverage when the claim is first made against the insured during the active policy period, regardless of when the underlying event occurred.
Question 3: The 'anti-concurrent causation' clause in a property policy is designed to:
- Provide coverage when multiple perils combine to cause a loss
- Exclude loss when an excluded peril contributes to the loss, even if covered perils are also involved (Correct answer)
- Prioritize the covered peril over the excluded peril
- Require the insured to prove causation by a single peril
Correct answer: Exclude loss when an excluded peril contributes to the loss, even if covered perils are also involved
An anti-concurrent causation clause excludes loss if an excluded peril contributes to the damage in any sequence, even if a covered peril is also present.
Question 4: When a policy contains both a broad named-insured endorsement and a standard additional insured endorsement, a coverage dispute arises. How should the adjuster proceed?
- Apply the broader of the two endorsements
- Apply the most recently attached endorsement
- Analyze the specific language of each endorsement to determine scope of coverage (Correct answer)
- Deny the claim pending legal resolution
Correct answer: Analyze the specific language of each endorsement to determine scope of coverage
The adjuster must carefully analyze the specific language, scope, and intent of each endorsement to determine which applies and the extent of coverage provided.
Question 5: Which rule of policy construction provides that specific policy language controls over general policy language when the two conflict?
- Contra proferentem
- Ejusdem generis
- Expressio unius
- Specific over general (Correct answer)
Correct answer: Specific over general
The principle that specific language controls over general language resolves conflicts between broad and narrow policy provisions in favor of the more specific clause.
Question 6: An 'earth movement' exclusion in a homeowners policy would most likely exclude coverage for which of the following?
- Roof collapse due to accumulated snow weight
- Foundation cracking caused by soil expansion from drought
- Sinkhole damage caused by dissolution of limestone
- Both B and C (Correct answer)
Correct answer: Both B and C
Earth movement exclusions typically apply to soil expansion/contraction and sinkhole collapse, both of which involve ground movement, though some policies carve out sinkholes separately.
Question 7: What is the purpose of a 'severability of interests' clause in a liability policy?
- To sever the insured's obligations after a claim
- To apply the policy as if each insured were covered by a separate policy, preventing one insured's conduct from excluding another (Correct answer)
- To limit coverage to the named insured only
- To divide the policy limit equally among all insureds
Correct answer: To apply the policy as if each insured were covered by a separate policy, preventing one insured's conduct from excluding another
A severability of interests clause treats each insured separately so that an exclusion triggered by one insured's conduct does not automatically bar coverage for other innocent insureds.
CCP Insurance Policy Interpretation & Coverage Analysis 2
Under the doctrine of reasonable expectations, courts will interpret an insurance policy in favor of: