Arizona Adjuster Practice Exam

How will the Special Causes of Loss Form respond to Hart Food Supply's claim for spoiled inventory due to loss of electrical service?

1. It will pay in full for the spoiled inventory

2. It will approve partial payment

3. It will deny the claim under the Off-Premises Utility Interruption exclusion

4. It will refer to another coverage area for review

The correct answer is: It will deny the claim under the Off-Premises Utility Interruption exclusion

The correct response to Hart Food Supply's claim for spoiled inventory due to loss of electrical service is based on the Off-Premises Utility Interruption exclusion found within the Special Causes of Loss Form. This exclusion generally limits coverage for losses that result from disruptions in utility services that are not directly tied to a covered peril. Since the loss of electrical service is typically categorized as an off-premises issue, the claim would likely be denied because it does not stem from a covered cause of loss as specified in the policy. Understanding the implications of this exclusion is essential for claims handling in situations involving utility failures. It highlights the importance of reviewing the specific terms of the insurance coverage, as they determine the limits and scopes of what is covered in different scenarios related to property and operational losses.