Coverage Analysis & Interpretation Flashcards
7 cards from real CALA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Coverage Analysis & Interpretation flashcards as text
Under a standard homeowners policy, which of the following losses would most likely be excluded under the 'earth movement' exclusion?
Answer: Foundation cracking caused by soil subsidence
Soil subsidence is a form of earth movement, which is excluded under standard homeowners policies regardless of the cause.
An insured's commercial auto policy has a $500,000 combined single limit. After a covered accident, bodily injury damages total $450,000 and property damage totals $100,000. What is the insurer's maximum payment?
Answer: $500,000
A combined single limit applies to the total of all damages combined, so the insurer pays a maximum of $500,000 regardless of how damages are split.
Which doctrine holds that an ambiguous insurance policy term must be interpreted in favor of the insured?
Answer: Contra proferentem
Contra proferentem is the legal rule requiring that ambiguous contract language be construed against the drafter, which is typically the insurer.
A business owner's policy (BOP) typically covers which of the following under its liability section?
Answer: Bodily injury to third parties on the premises
A BOP's liability coverage protects the business against third-party bodily injury and property damage claims, not employee or professional liability.
An insured files a claim for stolen jewelry worth $8,000. The homeowners policy has a $1,500 sublimit for jewelry theft. How much will the insurer pay (ignoring deductibles)?
Answer: $1,500
Sublimits cap payment for specific categories regardless of the item's actual value or the policy's overall limit.
Which of the following best describes 'occurrence' coverage under a CGL policy?
Answer: Coverage applies when the injury or damage occurs during the policy period
Occurrence-based CGL policies trigger coverage based on when the bodily injury or property damage actually happened, not when the claim is made.
Under a personal auto policy, 'underinsured motorist coverage' applies when:
Answer: The at-fault driver's limits are lower than the insured's damages
Underinsured motorist (UIM) coverage fills the gap when the at-fault driver's liability limits are insufficient to cover the insured's actual damages.