Coverage Analysis & Interpretation Flashcards

A contractor's CGL policy has a 'your work' exclusion. Which scenario would this exclusion most likely bar from coverage?

Answer: Damage to the building the contractor was hired to renovate

The 'your work' exclusion eliminates coverage for property damage to the work the contractor performed, as this is considered a business risk rather than an insurable event.

Which term describes a policy condition requiring the insured to take reasonable steps to protect property from further damage after a covered loss?

Answer: Preservation of property

The preservation of property condition obligates insureds to mitigate further loss after an insured event occurs or risk having part of the claim denied.

A property policy is written on a 'replacement cost' basis. The insured's 10-year-old roof is destroyed by a covered peril. How is the claim typically settled?

Answer: Cost of a new roof of like kind and quality

Replacement cost coverage pays the cost to replace damaged property with new property of like kind and quality, without a deduction for depreciation.

Under ISO's standard commercial property form, the 'building' definition generally includes:

Answer: Permanently installed fixtures and machinery

ISO commercial property forms define 'building' to include permanently installed fixtures, machinery, and equipment as part of the covered structure.

A claims adjuster discovers that two insurers each have a policy covering the same loss. Under the 'other insurance' clause, which approach divides payment equally up to each policy's limit?

Answer: Contribution by equal shares

Contribution by equal shares splits the loss equally between insurers until one policy's limit is exhausted, after which the remaining insurer pays the rest.

Which of the following is NOT typically considered an 'insured location' under a personal homeowners policy?

Answer: A rental property with 5 residential units

Standard homeowners policies limit insured locations to smaller rental properties (usually 1-4 units); a 5-unit building requires a commercial policy.

An adjuster reviewing a 'claims-made' liability policy must verify that:

Answer: The claim is first made during the policy period or extended reporting period

Claims-made policies require that the claim be first made and reported within the policy period or any applicable extended reporting period for coverage to apply.