Which term refers to losses covered by an insurance policy?

• A. The costs of acquiring coverage
• B. The maximum amount an insurer will pay per claim
• C. Covered cause of loss
• D. The method of calculating premiums

Answer: (C)

In insurance, whether a loss is payable depends on the cause of the loss and whether that cause is covered by the policy. The term you’re looking for refers to the perils or causes of loss the policy will pay for. When a loss stems from one of those covered causes of loss, the insurer will respond up to the policy’s limits, subject to any exclusions or endorsements. That’s why the best answer is the phrase that denotes the losses tied to the covered perils.

The other ideas describe things like how you obtain coverage, the maximum amount payable for a claim (the limit of liability), or how premiums are calculated. Those relate to cost, pricing, or coverage ceilings, not to which losses the policy will pay for.