Los Angeles Claims Adjuster Property and Causality Practice Exam

What happens if claims are reported within the Basic Extended Reporting Period?

1. They are subject to the regular policy aggregate limit

2. They exceed the coverage limits indefinitely

3. They are automatically denied

4. They have a reduced premium rate

The correct answer is: They are subject to the regular policy aggregate limit

When claims are reported within the Basic Extended Reporting Period, they are subject to the regular policy aggregate limit. This means that although policyholders have an extended time frame to notify the insurer of claims that occurred during the policy period, the financial responsibility of the insurer is still constrained by the limits established in the original policy. The basic extended reporting period (often referred to as "tail coverage") allows for claims to be reported after the policy has expired, but it does not alter the fundamental terms of coverage, including the aggregate limit. Therefore, if a claim is reported during this period, the total amount the insurer is obligated to pay will still be limited to the amount specified in the policy, ensuring that the insurer's risk is managed while allowing policyholders to still seek coverage for claims they may have missed during the active policy period. This understanding is crucial for claims adjusters and policyholders alike, as it determines how claims will be handled and what limits are in place for any claims reported during this transitional time.