Los Angeles Claims Adjuster Property and Causality Practice Exam

What is a key characteristic of the separation of insureds provision in CGL coverage?

1. All claims are pooled under one limit

2. Each insured receives individual handling of claims

3. Claims against multiple insureds are combined

4. There is a waiting period before claims can be filed

The correct answer is: Each insured receives individual handling of claims

The separation of insureds provision is crucial in Commercial General Liability (CGL) coverage as it indicates that each insured under the policy is treated as a separate entity. This means that when a claim is made, it is handled individually for each insured, rather than pooling all insureds together. This provision ensures that one insured's liability does not affect the coverage available to another insured, providing clarity and a fair approach to handling claims. For example, if one insured is facing a claim while another is not, the second insured's policy limits remain unaffected. This provision is particularly important in situations where multiple parties are covered under a single policy but may be involved in different claims or incidents. By separating the handling of claims, it affirms the insurer's responsibility to treat each insured equitably based on their specific circumstances.