California Life-Only & Accident and Health AgentCalifornia Law - Life and Accident & HealthEasy
A client in California is purchasing a new Accident and Health policy. The agent explains that the policy includes a provision stating that if the insured suffers a loss while engaging in an illegal occupation, the insurer may reduce or deny benefits. What is this provision commonly known as?
- AHazardous Activity Clause
- BUnlawful Occupation Provision
- CIllegal Occupation or Act Provision
- DIllegal Activity Exclusion
Show answer & explanationAnswer & explanation
Correct answer: C. Illegal Occupation or Act Provision
The 'Illegal Occupation or Act' provision in an Accident and Health policy allows the insurer to deny or reduce benefits if the insured's loss is sustained while committing an illegal act or engaging in an illegal occupation.
Why the other options are wrong
- A. This is incorrect. Hazardous activity clauses typically relate to dangerous but legal activities, not illegal ones.
- B. This is partially correct but not the full and precise name of the standard provision.
- D. While conceptually similar, this is not the standard terminology for this specific provision.
Illegal Occupation or Act Provision (A&H)
A standard provision in Accident and Health insurance policies that allows the insurer to deny or reduce benefits if the loss occurs while the insured is committing an illegal act or engaged in an illegal occupation.
- Protects insurers from losses arising from unlawful behavior.
- Applies to both illegal occupations and illegal acts.
- Benefits may be denied or reduced, not necessarily voided.
Memory trick: In A&H, if you act outside the law, your benefits might just withdraw.