Question

Which is true as it applies to Occurrence Basis Property damage?

a) Covers damage happening gradually over a period of time.
b) Pollution is covered only if sudden and accidental.
c) It insures the unexpected result of a deliberate act.
d) It covers acts done by the insured with the intent to cause damage.

Answer 1

The statement true for Occurrence Basis Property damage is b) Pollution is covered only if sudden and accidental. This type of coverage is intended for unforeseen incidents, not for gradual or intentional harm. Insurance operates under the concept of imperfect information, estimating risks for unforeseen events.

Step-by-step explanation:

The correct answer to the question 'Which is true as it applies to Occurrence Basis Property damage?' is b) Pollution is covered only if sudden and accidental. This type of insurance coverage deals with claims arising from damage or injury occurring during the policy period, irrespective of when the claim is made. Option a is incorrect because occurrence-based policies typically do not cover damage that happens gradually over a period of time, as that may be considered part of wear and tear or ongoing maintenance issues. Option c is incorrect because while the result may be unexpected, the policy does not cover deliberate acts intended to cause damage. Option d is also incorrect because insurance policies generally do not cover acts done by the insured with the intent to cause damage; these are excluded as they involve intentional harm.

Pollution can cause immense costs on society and damage to water, air, or land. In the context of insurance, only sudden and accidental releases of pollutants are typically covered under the occurrence basis property damage policy, which is intended to protect against unforeseen and unintended incidents. Such coverage aligns with the principle that insurance is designed to provide financial protection for unexpected losses due to incidents beyond the insured's control, not for predictable or intentional harm.

How Insurance Works: All insurance operates on the premise of protecting against imperfect information and unforeseen events. Insurers cannot predict every specific event or accident, so they use models and statistics to estimate risks. Insurance policies, including occurrence-based property damage, are structured based on these estimations and are therefore designed to cover accidents that are sudden and accidental, rather than gradual or intentional damages.

Answer 2

Occurrence Basis Property damage insurance covers pollution only if it is sudden and accidental, not damage that occurs gradually or as a result of intentional acts by the insured.

Step-by-step explanation:

When discussing Occurrence Basis Property damage, it's important to understand which types of damages are covered by this form of insurance. The options provided relate to different scenarios, and the correct answer to which is true as it applies to Occurrence Basis Property damage insurance is b) Pollution is covered only if sudden and accidental. This means that gradual damage, expected outcomes of deliberate acts, or acts done with the intent to cause damage are generally not covered under such a policy. Instead, it typically insures against the unexpected result of an accidental act, which can include a sudden and unforeseen pollution event. Occurrence Basis Property damage insurance covers pollution only if it is sudden and accidental, not damage that occurs gradually or as a result of intentional acts by the insured.