General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
An insurer wrongfully refuses to pay a covered disability benefit that the policy clearly promises. If the insured sues for breach of contract, the measure of damages is generally:
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A wrongful refusal to pay a covered benefit is a breach of the insurance contract, and contract damages are designed to put the insured in the position the policy promised — typically the unpaid benefits plus any additional recoverable damages such as interest. Because the policy is a contract, the claim is a civil contract dispute; it is not a criminal matter, and an insured is never barred from challenging a denial.
Why the other options are wrong
- B) A claim denial is a civil breach-of-contract dispute, not a crime; fines are imposed in criminal proceedings, not contract suits.
- C) The agent's commission is a compensation matter between the insurer and the agent and is not the measure of damages for the insured.
- D) Insureds have the right to sue for the benefits promised; claim denials are routinely challenged through lawsuits and appeals.
Memory hook
Breach = broken promise; damages = the benefits you were promised. The policy is the measuring stick.