Life License Qualification Program (LLQP) Practice Exam

How will an insurer typically handle a claim for injuries sustained during an illegal act?

1. Claim will be denied and policy terminated

2. Claim will be partially paid

3. Claim will be paid

4. Claim will be denied

The correct answer is: Claim will be denied

An insurer will typically deny a claim for injuries sustained during an illegal act because most insurance policies contain a provision that excludes coverage for any loss that arises from illegal activities. The rationale behind this exclusion is grounded in public policy, which dictates that insurance should not be available to indemnify individuals for engaging in unlawful behavior. Allowing claims for injuries incurred while committing a crime would encourage illegal activities and contradict the principles of responsible risk management. When evaluating claims, insurers look closely at the circumstances surrounding the incident. If the injuries are directly tied to conduct that is illegal, such as driving under the influence or engaging in a fight, the insurer will often determine that providing coverage would violate these basic policy principles. As a result, the claim would be denied, and the insured would not receive any compensation for the injuries sustained during the act.