Insurance Policies and Coverage Flashcards
7 cards from real CCA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Insurance Policies and Coverage flashcards as text
A homeowner's policy includes a 'replacement cost' endorsement. The insured's 10-year-old roof is destroyed. How should the adjuster calculate the payment?
Answer: Pay full cost to replace the roof with new materials, no depreciation deduction
A replacement cost endorsement eliminates the depreciation deduction, so the insurer pays the full cost to replace the damaged property with new materials of like kind and quality.
Which clause in a liability policy requires the insurer to defend the insured against covered claims even if the allegations are groundless?
Answer: Duty to defend clause
The duty to defend clause obligates the insurer to provide a legal defense for the insured for any claim that falls within the policy's coverage territory, even if the suit is ultimately found to be groundless.
Under an occurrence-based liability policy, coverage is triggered when:
Answer: The bodily injury or property damage occurs during the policy period
An occurrence-based policy is triggered by the date the injury or damage actually happens, regardless of when the claim is reported or lawsuit is filed.
A business auto policy's Symbol 1 (Any Auto) designation means coverage applies to:
Answer: All autos owned, hired, borrowed, or used in the business
Symbol 1 is the broadest designation, extending coverage to any auto used in connection with the business, including owned, non-owned, and hired vehicles.
What is the primary purpose of a 'subrogation waiver' endorsement requested by a tenant?
Answer: To prevent the landlord's insurer from suing the tenant after paying a covered loss
A waiver of subrogation endorsement on the landlord's property policy prevents the insurer from exercising its subrogation rights against the tenant after paying a covered claim caused by the tenant.
A commercial general liability (CGL) policy's 'products-completed operations' coverage protects the insured against claims arising from:
Answer: Bodily injury or property damage occurring after a product is sold or work is completed
Products-completed operations coverage applies to BI/PD claims arising after the insured's product leaves their custody or after contracted work has been completed.
An insured has a $1,000 straight deductible and suffers a $750 loss. What does the insurer pay?
Answer: $0
With a straight deductible, the insurer pays nothing if the loss amount is less than or equal to the deductible; the insured absorbs the entire $750 loss.