Florida Insurance Claims Adjuster License Practice Exam

What does the Known Loss rule prevent?

1. Coverage for losses known after purchasing the insurance

2. Coverage if the insured knew the loss was probable at the time of the contract

3. Any payment from the insurer

4. Third-party claims

The correct answer is: Coverage if the insured knew the loss was probable at the time of the contract

The Known Loss rule prevents coverage for losses known to the insured at the time of purchasing the insurance. This means that option A and B are incorrect, as they refer to the known loss rule itself. Option C is incorrect because insurers are expected to provide some form of payment for covered losses. Option D is incorrect because the Known Loss rule specifically deals with losses known to the insured, not third-party claims.