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
A flood damages an insured home. The homeowners policy excludes flood, but the insured has a separate NFIP policy. Which statement is correct?
Answer: Only the NFIP policy responds to the flood damage
Because the homeowners policy specifically excludes flood, only the separate NFIP flood policy provides coverage for flood-related damage.
Under a commercial property policy, 'business income' coverage is designed to pay:
Answer: Lost net income and continuing expenses during a period of restoration
Business income (BI) coverage replaces lost net income and pays continuing normal operating expenses during the time needed to restore operations after a covered loss.
Which coverage part responds when an insured's product causes bodily injury after it leaves the insured's premises and control?
Answer: Products-completed operations liability
Products-completed operations coverage under a CGL policy applies to injuries or damage caused by the insured's products or completed work after they leave the insured's control.
The 'expected or intended injury' exclusion in a CGL policy is designed to exclude coverage for:
Answer: Harm the insured deliberately caused
This exclusion bars coverage for bodily injury or property damage that the insured intended or expected, preserving CGL as a policy for accidental events.
An insured's dwelling is insured for $200,000 under a replacement cost policy. The coinsurance requirement is 80%. The home's replacement cost is $300,000. A covered loss results in $60,000 in damages. How much does the insurer pay (before deductible)?
Answer: $50,000
Required insurance = 80% × $300,000 = $240,000; carried = $200,000; penalty ratio = $200,000/$240,000 = 5/6; payment = $60,000 × 5/6 = $50,000.
A personal auto policy's 'medical payments' coverage differs from bodily injury liability in that medical payments coverage:
Answer: Pays regardless of fault for occupants of the insured vehicle
Medical payments (MedPay) is a no-fault coverage that pays reasonable medical expenses for occupants of the insured vehicle regardless of who caused the accident.
Under a standard workers' compensation policy, Part Two (Employers' Liability) covers:
Answer: Lawsuits by employees alleging employer negligence outside statutory WC benefits
Employers' Liability (Part Two) responds to common-law suits brought by injured workers in situations not fully covered by the exclusive remedy of workers' compensation statutes.