Property & Casualty Insurance Exam (National Portion)Property and Casualty Insurance BasicsMedium
A policyholder intentionally causes damage to their insured property to collect insurance money. Which common policy provision would most likely prevent the policyholder from receiving any payment?
- ASubrogation Clause
- BLiberalization Clause
- CAppraisal Clause
- DConcealment or Fraud Clause
Show answer & explanationAnswer & explanation
Correct answer: D. Concealment or Fraud Clause
Insurance policies contain clauses that void coverage if the insured commits fraud or intentionally conceals material facts. Intentionally damaging property to collect money is a clear act of fraud, which would trigger this clause and deny the claim.
Why the other options are wrong
- A. Subrogation allows the insurer to pursue a third party, not the insured.
- B. The Liberalization clause broadens coverage without additional premium; it's unrelated to fraudulent acts.
- C. Appraisal resolves disputes over the value of a loss, not the cause or intent.
Concealment or Fraud Clause
A policy condition that voids coverage if the insured intentionally misrepresents a material fact or commits a fraudulent act related to the policy or a claim.
- Protects insurers from dishonest policyholders.
- Applies to intentional acts, not mistakes.
- Can lead to denial of claim and policy cancellation.
Memory trick: Conditions: The 'Conditions' you 'Conform' to for coverage.