Hawaii Insurance License Practice Exam

In insurance terms, what is an occurrence?

1. A pre-existing condition

2. A gradual loss over time

3. A sudden and unexpected accident or injury

4. An intentional act

The correct answer is: A sudden and unexpected accident or injury

In insurance terminology, an occurrence refers to a specific event that results in liability or a claim under an insurance policy, typically characterized by being sudden and unexpected. This definition aligns closely with the description of a sudden and unexpected accident or injury. Such events can lead to unforeseen damages or losses, which are critical in determining the insurer's responsibility to cover claims. Occurrences are significant because they help define the scope of insurance coverage. For instance, many policies, especially liability insurance, specifically cover occurrences as they arise. These can include accidents like slips and falls, unexpected damages to property caused by unforeseen incidents, or injuries resulting from accidents. On the other hand, a pre-existing condition generally relates to health insurance and refers to any health issues that existed before a policy was taken out, which doesn't fit the occurrence definition. A gradual loss over time, such as wear and tear, is not considered an occurrence since it suggests a slow process that doesn’t happen suddenly or unexpectedly. Intentional acts are also excluded from the definition of an occurrence in most insurance policies, as insurers typically do not cover claims arising from deliberate actions. Therefore, the identification of an occurrence specifically as a sudden and unexpected event is crucial for understanding liability and coverage in insurance.