State Farm Insurance License Practice Exam

What does a claims-made form in CGL coverage provide?

1. Coverage for all future claims regardless of when they are made.

2. It pays losses for claims made against the insured during the policy period.

3. It exclusively covers property damage caused by natural disasters.

4. Coverage for all bodily injury claims regardless of filing date.

The correct answer is: It pays losses for claims made against the insured during the policy period.

A claims-made form in Commercial General Liability (CGL) coverage is designed to provide insurance protection for claims that are made against the insured during the specific policy period, regardless of when the actual incident that triggered the claim occurred. This means that if a claim is filed during the active policy period, the insurer will provide coverage for that claim, even if the incident happened before the policy was in effect. This type of policy is particularly important in certain professions where claims may arise long after the services were rendered, making it crucial for individuals or businesses to have coverage that responds to the claims made within the defined period of the policy. The policy itself does not cover incidents that occur after it has expired, emphasizing the importance of maintaining continuous coverage. In contrast, other options describe coverage scenarios that either extend beyond the parameters of the claims-made form or inaccurately define the nature of the coverage provided. For instance, the claims-made form does not provide coverage for all future claims or specifically cover property damage from natural disasters, nor does it extend to bodily injury claims regardless of the filing date. Thus, the accurate depiction of a claims-made form’s function is that it specifically pays losses for claims made against the insured during the term of the policy.