Idaho Property and Casualty Practice Exam 2025 - Free Practice Questions and Study Guide

Long-tail liabilities are characterized by claims that emerge long after the event that caused them has occurred. The correct answer highlights that long-tail liabilities are not typically resolved quickly. This contrasts with short-tail liabilities, where claims are settled in a relatively shorter timeframe.

The nature of long-tail liabilities means that they often surface years after the triggering incident, necessitating a prolonged period for claims to be filed and resolved. They also require long-term financial retention, as insurers must set aside reserves to cover potential future claims that may arise from these liabilities over time. Additionally, because the claims can stretch out over many years, this leads to a protracted claims-handling process where settlements may not happen until far later than the incident itself.

Thus, these distinctive features underscore the prolonged nature of long-tail liabilities, making the assertion that they are resolved quickly inaccurate.