Property and Casualty Insurance Practice Exam

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What requires a business to maintain records of suspension events in case of a claim?

Legal Action Against Us Condition
Control of Property Condition
Extra Expense Coverage
Mortgage Holder Condition

The correct answer is: Extra Expense Coverage

The requirement for a business to maintain records of suspension events in case of a claim aligns with the characteristics of Extra Expense Coverage. This type of coverage is designed to reimburse a business for additional costs incurred due to a situation that interrupts normal operations, such as a fire or natural disaster. In order to substantiate a claim under Extra Expense Coverage, a business must be able to provide detailed records of the events leading to additional expenses. Keeping thorough documentation of all suspension events is essential for validating those claims and demonstrating the impact on operations. The other options have different focuses: Legal Action Against Us Condition pertains to the responsibilities and behaviors in the event of a legal dispute; Control of Property Condition relates to a policyholder’s obligation regarding the protection and maintenance of covered property; and Mortgage Holder Condition deals with the rights and responsibilities of mortgage lenders in terms of property insurance. None of these conditions specifically require the maintenance of records concerning suspension events as a prerequisite for making claims related to losses or extra expenses incurred from such suspensions.