West Virginia Property and Casualty Licensing Practice Exam

What is the purpose of the severability of insurance clause?

1. To limit coverage to one party

2. To ensure both parties are equally protected

3. To define liability limits

4. To share costs of legal representation

The correct answer is: To ensure both parties are equally protected

The purpose of the severability of insurance clause is to ensure that the insurance policy provides coverage to each insured party separately, meaning that the actions of one insured do not affect the coverage available to another insured under the same policy. This clause is vital in situations where multiple parties are covered by the same policy, such as in a commercial general liability policy that covers several individuals or entities. In practice, severability offers a level of protection by allowing each party to benefit from the policy as if they were the only insured. For example, if one insured party commits an act that might otherwise void coverage for all parties, the severability clause would ensure that the other insured parties are not penalized and can still rely on the coverage they need. This promotes fairness and equity in the application of the policy’s provisions among all insured parties. The other options relate to aspects of insurance but do not accurately reflect the primary function of severability. The limitation of coverage to one party would contradict the intent of providing equal protection under the policy. Defining liability limits pertains to the overall scope of what the policy will cover, not the separation of insureds. Lastly, sharing costs of legal representation is typically related to how legal expenses are handled but does not directly involve the