West Virginia Property and Casualty Licensing Practice Exam

What would cause an insurer to suspend coverage under the 1943 New York Standard Fire Policy?

1. Natural disasters

2. Increase in hazard

3. Negligence of the occupier

4. Loss of a lease agreement

The correct answer is: Increase in hazard

The reason for an insurer to suspend coverage under the 1943 New York Standard Fire Policy is primarily related to an increase in hazard. An increase in hazard typically refers to a change in conditions that elevates the risk associated with insuring the property. This could be due to various factors, such as renovations that make the property more susceptible to fire, or the introduction of flammable materials that were not previously present. Insurers assess risk closely, and if the level of risk changes significantly during the policy term, they may take action to mitigate their exposure, which can include suspending coverage. The underlying principle is to ensure that the risk remains within acceptable limits based on the terms of the policy. The other options, such as natural disasters or loss of a lease agreement, while they may affect the property or the risk, do not typically trigger a direct suspension of coverage. Similarly, negligence of the occupier may impact claims but does not directly lead to a suspension of coverage by the insurer under this policy.