Los Angeles Claims Adjuster Property and Causality Practice Exam

Which of the following is defined as "in addition to" the liability limits of the policy in some liability policies?

1. Loss settlement

2. Supplementary payments

3. Excess liability coverage

4. Underlying coverage

The correct answer is: Supplementary payments

Supplementary payments are defined as "in addition to" the liability limits of the policy in many liability insurance policies, which is why this choice is accurate. These payments cover certain expenses that the insurer agrees to pay without reducing the liability limits. Common examples of supplementary payments include costs incurred for legal defense, expenses related to bail bonds, and other necessary expenditures that arise during the claims process. Understanding this aspect is critical for claims adjusters, as it directly impacts how claims are processed and the overall financial exposure for an insurer. This distinction allows claimants to receive compensation for certain additional costs that are separate from the payout of the liability amount itself. The other options refer to different aspects of insurance coverage but do not fit the definition of payments made in addition to the primary limits of liability. Loss settlement pertains to how claims are resolved and settled under a policy. Excess liability coverage refers to additional coverage that kicks in once the primary policy limits are exhausted, rather than being "in addition to" the limits. Underlying coverage involves the basic liability coverage that forms the foundation for any excess policies but does not represent extra payments outside of the covered limits.