If a loss occurs outside the stated policy territory, what is its coverage status?

• A. It is covered worldwide
• B. It falls outside the policy territory and is not covered
• C. It is automatically expanded to the territory
• D. It becomes a separate policy issue

Answer: (B)

Coverage territory defines where the policy provides protection. If a loss occurs outside that geographic area, the policy terms generally do not cover it because the insured risk isn’t within the agreed territory. There isn’t automatic expansion to include the outside area—only a specific endorsement or a separate policy would change that. Without such coverage, the loss falls outside the policy territory and is not covered.