Casualty Actuarial Society (CAS) Practice Exam

What is the only circumstance under which specified causes of loss coverage covers a loss?

1. When the cause of loss is broadly defined

2. If it's listed in the policy

3. When multiple causes are at play

4. Only during a given timeframe

The correct answer is: If it's listed in the policy

Specified causes of loss coverage is a type of insurance that provides protection only for certain explicitly listed perils or events. This means that for a loss to be covered under such a policy, the specific cause of that loss must be included in the list of covered perils outlined in the policy documents. When a policy states that it covers specified causes of loss, it is essentially saying that coverage is limited strictly to those causes that have been expressly mentioned. If the cause of the loss is not on that list, no coverage will apply, regardless of the circumstances surrounding the incident or the nature of the loss itself. While other considerations, such as the breadth of definitions or the presence of multiple causes, may come into play in various insurance policies, they do not alter the fundamental requirement for specified causes of loss coverage. The timeframe of an event similarly does not influence the list of covered causes; it remains tied directly to what is expressly included in the policy. Hence, the correct understanding rests squarely on the necessity for the cause of loss to be stated within the policy to secure coverage.