Los Angeles Claims Adjuster Property and Causality Practice Exam

What does the exclusion related to impaired property state?

1. Coverage for impaired property is always denied

2. Coverage is denied unless there is physical injury

3. Coverage is only provided if damage was intentional

4. Coverage applies if work is defective

The correct answer is: Coverage is denied unless there is physical injury

The exclusion related to impaired property indicates that coverage is denied unless there is a physical injury to the property. This means that if an item or property is damaged in some way that does not involve physical harm, such as a defect that affects its value or usability but does not cause direct physical injury, the insurer will not provide coverage for that loss. This concept is important in property and casualty insurance as it establishes the conditions under which coverage may apply. For example, if a contractor performs work that is substandard but does not physically damage the property itself, the insurance company may refuse to cover the claim based on this exclusion. The policy is specifically designed to focus on instances where there is actual physical damage rather than claims arising from economic loss or other non-physical incidents. Understanding this requirement is crucial for claims adjusters as it helps delineate the boundaries of coverage and ensures that claims are evaluated correctly according to the terms of the policy.