Insurance Policies and Contracts Flashcards

Which contract law doctrine prevents an insurer from denying coverage based on a policy provision it previously waived through its own conduct?

Answer: Estoppel

Estoppel prevents an insurer from asserting a right or defense that it has previously abandoned through words or conduct that the insured reasonably relied upon.

Under a claims-made liability policy, the 'retroactive date' determines:

Answer: The earliest date an occurrence can trigger coverage

The retroactive date is the earliest point from which an occurrence or wrongful act can originate and still be covered under a claims-made policy.

An 'occurrence' trigger in a liability policy means coverage applies when:

Answer: The injury or damage happens during the policy period

An occurrence-based policy covers bodily injury or property damage that takes place during the policy period, regardless of when the claim is made.

Which clause in a property insurance policy requires the insured to maintain coverage equal to a specified percentage of the property's value to receive full loss reimbursement?

Answer: Coinsurance clause

The coinsurance clause penalizes an insured who underinsures property by requiring them to share in any loss proportionally.

What is the primary purpose of a 'separation of insureds' clause in a commercial general liability policy?

Answer: To allow each insured to be treated separately for coverage purposes

A separation of insureds clause means the policy applies separately to each insured, so one insured's wrongdoing does not automatically exclude coverage for another insured.

A 'blanket' property insurance policy differs from a 'scheduled' policy in that it:

Answer: Covers multiple locations or items under a single combined limit

A blanket policy provides a single limit of insurance that applies across multiple locations or classes of property, offering more flexible coverage.

Which of the following best describes the 'liberalization clause' found in many insurance policies?

Answer: It automatically extends broadened coverage to existing policies if the insurer files a broader form

A liberalization clause provides that if the insurer broadens coverage in a newer policy form without additional premium, existing policyholders automatically receive the same improvement.