Insurance Products & Coverage Types Flashcards

The 'other insurance' provision in most liability policies addresses situations where:

Answer: Multiple policies cover the same loss, defining how each insurer shares the payment

Other insurance clauses coordinate between overlapping policies using methods such as pro-rata, primary/excess, or contribution by equal shares.

A 'valued' policy differs from an 'indemnity' policy in that a valued policy:

Answer: Pays a pre-agreed stated amount upon a total loss without proof of actual value at the time

A valued policy pays the stated face amount on a total loss, agreed upon at policy inception, without requiring proof of market value at loss time.

Which disability income benefit feature ensures that benefit payments increase with inflation during a long-term disability?

Answer: Cost-of-living adjustment (COLA) rider

A COLA rider automatically increases monthly disability benefits, typically tied to CPI, to help maintain the insured's purchasing power over time.

Under the 'insuring agreement' section of a CGL policy, Coverage B — Personal and Advertising Injury covers claims arising from:

Answer: Offenses such as libel, slander, copyright infringement, or false arrest

Coverage B responds to enumerated offenses that harm a person's reputation or privacy, such as defamation, malicious prosecution, and advertising injury.

A 'retroactive date' in a claims-made liability policy means:

Answer: Claims arising from incidents before that date are excluded, even if reported during the policy period

The retroactive date sets the earliest point from which incidents are covered; injuries or damage occurring before that date are not covered under the claims-made form.

In commercial property insurance, 'business income' (business interruption) coverage is triggered when:

Answer: A covered cause of loss damages property and forces a suspension or slowdown of operations

Business income coverage replaces lost net income and continuing expenses while the insured's operations are impaired by a covered property loss.

Which provision requires an insurer that pays a property claim to 'step into the shoes' of the insured to pursue recovery against a negligent third party?

Answer: Subrogation clause

Subrogation transfers the insured's right of recovery to the insurer after a claim is paid, preventing the insured from collecting twice for the same loss.