CIA Insurance Policies & Coverage Analysis 3

Question 1

An insured files a claim for water damage caused by a burst pipe. The adjuster discovers the pipe had been leaking slowly for months before bursting. Which policy exclusion is most likely to apply?

Accepted Answer

Wear and tear / gradual damage exclusion

Answer

Gradual or continuous leakage is typically excluded under most property policies because it represents maintenance neglect rather than a sudden, accidental loss.

Question 2

A liability policy with a '$1 million per occurrence / $2 million aggregate' limit means:

Accepted Answer

The insurer pays up to $1 million for any single event and $2 million total for all events in the policy period

Answer

The per-occurrence limit caps payment for a single incident, while the aggregate limit is the total the insurer will pay for all occurrences during the policy period.

Question 3

Which homeowner policy form (HO-3) provides open-peril coverage on the dwelling but named-peril coverage on personal property?

Accepted Answer

HO-3

Answer

The HO-3 Special Form covers the dwelling and other structures on an open-peril basis but covers personal property only for the named perils listed in the policy.

Question 4

A 'claims-made' liability policy covers claims:

Accepted Answer

That arise from incidents occurring after the retroactive date and reported during the policy period

Answer

Claims-made policies require that the triggering incident occur after the retroactive date AND that the claim be reported while the policy is in force.

Question 5

Under the principle of indemnity, an insured who suffers a $40,000 loss on property insured for $60,000 should receive:

Accepted Answer

$40,000

Answer

Indemnity means restoring the insured to their pre-loss financial position, so they receive the actual loss amount ($40,000), not the full policy limit.

(CIA) Certified Insurance Appraiser Practice Test

(CIA) Certified Insurance Appraiser Practice Test

CIA Insurance Policies & Coverage Analysis 3