Covered causes of loss on the Texas All-Lines exam

High-yield rules

Practice questions

Written the way the examination builds items. Answer before opening the explanation.

1. Question 1

   Property is damaged and investigation cannot establish what caused the damage. The policy is an open perils form and no exclusion is shown to apply. What is the most defensible coverage conclusion?

   1. ADeny, because the insured cannot prove a covered cause
   2. BCoverage generally applies, because the insurer has not established an applicable exclusion
   3. CDeny, because undetermined causes are excluded by definition
   4. DCoverage applies only if the insured signs a sworn statement identifying a cause
   Show answer and reasoning

   Correct answer: B — Coverage generally applies, because the insurer has not established an applicable exclusion

   Under an open perils form, coverage applies to risks of direct physical loss unless an exclusion removes them, which places the burden on the insurer. Because no exclusion has been established, the undetermined cause does not defeat coverage. Requiring the insured to prove a covered cause is the named perils burden, and there is no general exclusion for undetermined causes.

2. Question 2

   The same undetermined-cause loss occurs under a named perils form listing specific covered causes. What changes?

   1. ANothing changes, because the loss is physical damage either way
   2. BCoverage is not triggered, because the insured has not established that a listed peril caused the loss
   3. CThe insurer must now prove an exclusion applies
   4. DThe claim converts to an open perils analysis automatically
   Show answer and reasoning

   Correct answer: B — Coverage is not triggered, because the insured has not established that a listed peril caused the loss

   A named perils form only responds to causes it lists, and the insured carries the burden of establishing that a listed cause produced the loss. An undetermined cause fails that burden, so the grant is not reached. The exclusion burden belongs to the open perils structure, and forms do not convert based on the difficulty of proof.

3. Question 3

   A standard fire policy question asks for the first analytical step. What is it?

   1. AIdentify the form’s grant and the fire-related facts
   2. BPay replacement cost
   3. CAssume all smoke is excluded
   4. DApply the deductible
   Show answer and reasoning

   Correct answer: A — Identify the form’s grant and the fire-related facts

   Coverage analysis begins with the policy and the facts, not arithmetic. This original, source-mapped item is provided for concept practice and is not recalled exam content.

Frequently asked

Is open perils the same as all risk?

The older all risk terminology described the same structure, but open perils or risks of direct physical loss is the more accurate phrasing because exclusions always apply. The exam favours the precise framing.

Which form is broader?

Open perils is broader because it covers causes that are not excluded rather than only causes that are listed. Broader does not mean unlimited, since exclusions still operate.

Does the burden of proof really change the answer?

Yes, and that is precisely why the exam constructs undetermined-cause questions. The identical factual scenario produces opposite conclusions depending on which party carries the burden.

Key terms on this topic

• Named perilsNamed perils coverage insures only the causes of loss specifically listed in the policy, placing the burden on the insured to show the loss came from a listed peril.
• Open perilsOpen perils coverage insures direct physical loss from any cause except those the policy excludes, shifting the analytical focus from the list of covered causes to the list of exclusions.
• PerilA peril is the cause of a loss, such as fire, windstorm, hail, theft, or collision.
• ExclusionAn exclusion is policy language that removes a cause of loss, type of property, or category of liability from coverage that the insuring agreement would otherwise have granted.
• Insuring agreementThe insuring agreement is the part of the policy where the insurer states what it promises to pay for, creating the grant of coverage that every later exclusion and condition narrows.
• Concurrent causationConcurrent causation describes a loss produced by more than one cause, where at least one cause is covered and at least one is excluded, requiring the policy’s sequencing language to resolve the outcome.

Distinctions worth drilling

• Named Perils vs. Open PerilsNamed perils and open perils describe two opposite drafting strategies for defining what a property policy covers. The practical consequence is who has to prove what, which makes this one of the highest-yield distinctions on the property portion of the exam.
• Exclusion vs. ConditionExclusions and conditions both narrow what an insurer ultimately pays, but they do it through different mechanisms. Distinguishing them cleanly is one of the fastest ways to improve accuracy on policy-structure questions.

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