Question

On January 27, 2008, Ryan was using an exercise bike purchased from NusquamCycle when the chain broke, causing him to fall and severely bruise his knee. It seemed to heal just fine, but three years later, on January 25, 2011, Ryan's knee gave out while jogging. His doctor told him that he'll need surgery and that this deterioration most likely resulted from the earlier accident with the exercise bike. Which of the following CGL policies would cover Ryan's claim filed January 25, 2011?

Option 1: Occurrence Policy

Option 2: Claims-Made Policy

Option 3: Umbrella Liability Policy

Option 4: Professional Liability Policy

Answer 1

The Occurrence Policy would cover Ryan's claim for surgery in 2011 because it covers incidents that happen during the policy period, regardless of when the claim is actually filed.

Step-by-step explanation:

The question pertains to Commercial General Liability (CGL) insurance and which policy would cover Ryan's claim for his knee surgery that is connected to an incident that occurred three years prior. The options presented are different types of insurance policies that have specific conditions on when they would apply.

Option 1, the Occurrence Policy, would be the correct choice. This type of insurance policy provides coverage for injuries or damages that occur during the policy period, irrespective of when a claim is filed. Since Ryan's original injury occurred while he was using the exercise bike in 2008, and assuming the Occurrence Policy was in effect at that time, it would cover incidents relating to that injury, including the surgery needed in 2011.

Option 2, the Claims-Made Policy requires the claim to be made during the policy period. Since the claim was filed in 2011, a Claims-Made Policy would not cover Ryan unless it was purchased retroactively to cover the date of the first incident. An Umbrella Liability Policy may provide extra coverage above the limits of a standard policy but typically follows the form of underlying policies. A Professional Liability Policy covers businesses against liability incurred as a result of errors and omissions in performing professional services, which is not applicable in this scenario.