Los Angeles Claims Adjuster Property and Causality Practice Exam

What type of liability falls under "insurable contracts" according to CGL?

1. Liabilities of independent contractors

2. Liabilities from public injuries

3. Liabilities assumed in written contracts

4. Liabilities arising from product defects

The correct answer is: Liabilities assumed in written contracts

The term "insurable contracts" refers to liabilities that an insured party agrees to assume or take on through a written contract. In the context of Commercial General Liability (CGL) insurance, these liabilities are typically associated with indemnification or hold harmless agreements, where one party agrees to cover the losses or damages of another. By defining such liabilities as those assumed in written contracts, the CGL policy provides coverage for specific obligations that are explicitly outlined and agreed upon by both parties. This aspect of insurable contracts is important because it helps ensure that businesses can manage their risks associated with contractual agreements, allowing for greater financial security and predictability. While other options may represent types of liabilities, they typically do not fall under the category of "insurable contracts" in the same way. For instance, liabilities of independent contractors and public injuries are typically addressed under different liability frameworks, and product defects relate more to product liability rather than contractual liability specifically. Understanding the nuances of these definitions is crucial for claims adjusters in determining coverage applicability under CGL policies.