Which term describes an automatic improvement in insured policy terms on new policies?

Which term describes an automatic improvement in insured policy terms on new policies?

• A. Liberalization
• B. Subrogation
• C. Arbitration
• D. Coinsurance

Answer: (A)

Liberalization is the term for automatically improving policy terms when the insurer broadens coverage. When an insurer expands what a policy covers, those enhancements typically apply without extra cost on new policies (and may also extend to existing policies under a liberalization clause). This automatic improvement contrasts with subrogation (the insurer recovering costs from a third party), arbitration (a method to resolve disputes), and coinsurance (the insured sharing a portion of the risk by carrying a minimum amount of insurance).

Liberalization is the term for automatically improving policy terms when the insurer broadens coverage. When an insurer expands what a policy covers, those enhancements typically apply without extra cost on new policies (and may also extend to existing policies under a liberalization clause). This automatic improvement contrasts with subrogation (the insurer recovering costs from a third party), arbitration (a method to resolve disputes), and coinsurance (the insured sharing a portion of the risk by carrying a minimum amount of insurance).