4.) COMMERCIAL LINES QUIZ QUESTIONS Flashcards by Kay Acy

Which of the following coverage options does NOT waive the coinsurance requirement in a commercial property policy?

A. Monthly Limit of Indemnity
B. Replacement Cost
C. Maximum Period of Indemnity
D. Agreed Value

B. Replacement Cost

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When shelving falls on two of Phil’s customers at his store, his CGL covers their medical expenses under Medical Payments coverage. Which of the following will tell Phil the most his policy will pay to each injured party?

A. Per Occurrence Sub-Limits
B. General Aggregate
C. Conditions section
D. Products—Completed Operations Aggregate

A. Per Occurrence Sub-Limits

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ABC Homebuilders hires Frank’s Roofing to work on several units in its new subdivision. While roofing one of the homes, a worker drops a bag of nails onto a neighbor’s AC unit. Some nails fall inside, destroying the unit. ABC Homebuilders is ultimately responsible for the destruction of the air conditioning unit through:

A. personal liability.
B. vicarious liability.
C. homeowner’s liability.
D. subcontractor liability.

B. vicarious liability.

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Coverage B - Personal and Advertising Injury in a CGL policy will cover all of the following, EXCEPT:

A. A professional advertising firm knowingly publishes untrue statements about a company.
B. A shop owner accuses an innocent person of shoplifting.
C. A landlord uses improper means to repossess an apartment from a tenant.
D. A children’s clothing manufacturer uses the image of a popular cartoon character in its advertisements without permission.

A. A professional advertising firm knowingly publishes untrue statements about a company.

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The Commercial General Liability (CGL) could classify all of the following as an “occurrence” except:

A. A set of aftermarket brakes fail, leading to a serious automobile accident.
B. A baseball bat cracks in half and injures a Little League player.
C. A cell phone battery explodes, causing 3rd degree burns to the owner.
D. A customer returns a defective bicycle.

D. A customer returns a defective bicycle.

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While working on a customer’s industrial copier in the repair facility, an employee at RZJ Electronics Repair accidentally destroys the copier, causing $3,000 in damage. What commercial property coverage might apply?

A. Extra Expense coverage
B. Legal Liability coverage
C. Business Interruption coverage
D. Employees Personal Property coverage

B. Legal Liability coverage

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Stan owns ABC Mattress Supply. During a storm, lightning strikes a large tree, causing it to fall through the front of his building, resulting in $23,000 in damages. Which coverage in a BOP would pay for the extraction of the tree from Stan’s store?

A. Liability coverage
B. Business interruption coverage
C. Debris removal coverage
D. Extra expense coverage

C. Debris removal coverage

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In a commercial property policy, the Business Income Coverage Form provides indemnification to the policyholder for the loss of income during which of the following time frames?

A. From 72 hours after the initial damage until 72 hours before the business is up and running again
B. From the point of initial damage until the moment the business is up and running again
C. From the point of initial damage until 72 hours before the business is up and running again
D. From 72 hours after the initial damage until the business is up and running again

D. From 72 hours after the initial damage until the business is up and running again

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ABC Paving owns a warehouse where they store all their pavers. Lightning strikes the warehouse, which burns to the ground and destroys the entire fleet of pavers. In order to complete the projects they are currently working on, ABC Paving has to lease four pavers from another company. What commercial insurance coverage might pay for this expense?

A. Preservation of Property
B. Legal Liability
C. Extra Expense
D. Order of Civil Authority

C. Extra Expense

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Extended coverage under a commercial policy often provides coverage for damage to outdoor trees, plants, and shrubs. When covered, what is the maximum per-plant amount?

A. $250
B. $200
C. $100
D. $50

A. $250

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When Sally slips and falls at XYZ Furniture, she injures her back and incurs $145,000 in covered medical expenses. Assuming XYZ Furniture carries a CGL policy with a General Aggregate of $400,000, and a Per Occurrence limit of $100,000, what will the new limits be after paying this claim?

A. General Aggregate: $300,000; Per Occurrence: $100,000
B. General Aggregate: $400,000; Per Occurrence: $100,000
C. General Aggregate: $255,000; Per Occurrence: $0
D. General Aggregate: $300,000; Per Occurrence: $0

A. General Aggregate: $300,000; Per Occurrence: $100,000

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Which of the following does NOT have a per occurrence sub-limit under the General Aggregate limit of a CGL policy?

A. Medical Payments
B. Damages to Premises Rented by You
C. Product and Completed Operations
D. Personal and Advertising Injury

C. Product and Completed Operations

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After a heavy hailstorm cut the power to Julia’s bakery, she had to rent generators to keep her business going for a few days. Which of the following coverages in her commercial property policy would protect Julia the MOST in this situation?

A. Business Income
B. Contingent Business Interruption
C. ACV valuation
D. Extra Expense coverage

D. Extra Expense coverage

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An overhead projector is taken to a conference room at a local hotel for a week. Sometime during the week, the projector falls off its stand and is destroyed. Assuming it is a covered loss, what commercial property coverage might cover the projector?

A. Extra Expense
B. Preservation of Property
C. Property Off-Premises
D. Valuable Papers and Records

C. Property Off-Premises

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In a commercial property policy, the Building and Personal Property Form contains three coverages. Which of the following coverages is NOT a part of this form?

A. Coverage C - Personal Property of Others
B. Coverage B - Business Personal Property
C. Coverage D - Loss of Use
D. Coverage A - Buildings and Structures

C. Coverage D - Loss of Use

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Which of the following is NOT covered by Coverage A of a Commercial General Liability policy without an endorsement?

A. Bodily injury to a third party on the insured premises
B. Contractual liability for insured contracts
C. Damage to property of others caused by employees working outside the insured premises
D. Damage caused by pollutants

D. Damage caused by pollutants

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When a fire burns through The Chronicle newspaper company, it takes out two permanently installed printing presses, three employees’ personal laptops, five rolls of newspaper stock, and in a twist of irony, two fire extinguishers. Which of these would be covered by the Building & Personal Property Form under Coverage B -Business Personal Property?

A. The printing presses and newspaper stock
B. The printing presses and fire extinguishers
C. The employees’ personal laptops
D. The rolls of newspaper stock

D. The rolls of newspaper stock

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ABC Acoustics builds replica Neumann microphones using tube technology. When a fire takes out the only factory that manufactures these vintage tubes, ABC Acoustics must halt production until their supplier’s factory comes back online. Which commercial property insurance coverage option could indemnify ABC Acoustics from lost income due to halted production?

A. Extra Expense
B. Contingent Business Interruption
C. Vintage Replacement
D. Electronic Data

B. Contingent Business Interruption

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Jim has several trailers in the supply yard of his business which belong to his respective buyers. Jim’s business loads the trailers and then contracts with another company to ship the goods to their final destination. One day while loading up a trailer, Jim accidentally pierced the side of a covered trailer with his forklift. The damage to the trailer would be covered by the _____________ coverage extension.

A. Newly-Acquired Property
B. Outdoor Property
C. Non-Owned Detached Trailers
D. Property of Others

C. Non-Owned Detached Trailers

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Bill has experienced a loss covered under the Business Income and Extra Expense coverage in his Equipment Breakdown Protection Coverage Form. When does the period of restoration begin?

A. Five days after repair or replacement of covered equipment
B. 72 hours after the breakdown occurred
C. After a length of time in which Bill should have reasonably been able to repair or replace the damaged equipment
D. At the time of the breakdown or 24 hours before Bill was notified of the breakdown, whichever is later

D. At the time of the breakdown or 24 hours before Bill was notified of the breakdown, whichever is later

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Which type of CGL coverage would indemnify an insured party for damages resulting from a libel claim?

A. Supplementary coverage
B. Extra Expense coverage
C. Personal and Advertising Injury coverage
D. Medical Payments coverage

C. Personal and Advertising Injury coverage

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ABC Homebuilders hires Frank’s Roofing to work on several units in its new subdivision. While roofing one of the homes, a worker drops a bag of nails onto a neighbor’s AC unit. Some nails fall inside, destroying the unit. Who is ultimately responsible for the damage done to the air conditioning unit?

A. ABC Homebuilders
B. ABC Homebuilders & Frank’s Roofing are each 50% responsible
C. The owner of the AC unit
D. Frank’s Roofing

A. ABC Homebuilders

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In the CGL coverage for Damage to Premises Rented by You, how is the coverage for fire damage different than for other perils?

A. In the case of fire, only the rented premises are covered, not personal property.
B. Fire damage is excluded.
C. Fire damage is only covered if the policyholder has met the coinsurance requirement.
D. In the case of fire, coverage is only provided on an ACV basis. All other perils are covered on an RC basis.

A. In the case of fire, only the rented premises are covered, not personal property.

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Which of the following is NOT a universal commercial property policy exclusion?

A. Warfare
B. Floods
C. Earthquakes and land movements
D. Lightning

D. Lightning

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In a commercial property policy, Extra Expense Coverage provides indemnification to the policyholder for additional expenses incurred during which of the following time frames? A. From 72 hours after the initial damage until the business is up and running again B. From 72 hours after the initial damage until 72 hours before the business is up and running again C. From the point of initial damage until the moment the business is up and running again D. From the point of initial damage until 72 hours before the business is up and running again

C. From the point of initial damage until the moment the business is up and running again

XYZ Computer's production building for circuit boards is struck by lightning, which results in a fire that burns down the entire facility. XYZ Computer cannot continue the production of computers until the facility is rebuilt. Which insurance coverage might indemnify XYZ Computer for lost revenue until a new facility is built? A. Business Interruption B. Extra Expense C. Builders Risk D. Leasehold Interest

A. Business Interruption

After a fire burns through XYZ Condominiums, they have to replace most of the interior. Which of the following will NOT be covered under the Condominium Coverage Form of the condo association's commercial property policy? A. Computers used by the condo B. The common areas of the condo building C. Piping, ductwork, or wire units D. Upgrades within individual condos

D. Upgrades within individual condos

A(n) _____ allows an insurer to specifically exclude insurance coverage from a claims-made CGL policy for a product with a spotty safety record. A. Basic Extended Reporting Period B. Laser Beam endorsement C. Insured Contract D. Contractual liability

B. Laser Beam endorsement

Helen’s business is growing rapidly, so she decided to add an annex onto her office and hire another worker. A storm blows down most of the annex structure while it is under construction, forcing Helen to restart from scratch. Assuming she maintains the 80% coinsurance requirement on her commercial policy, which coverage extension could help Helen rebuild? A. Outdoor Property B. Reasonable Repairs C. Property Off-Premise D. Newly Acquired Property

D. Newly Acquired Property

Which of the following is NOT considered “covered equipment” under an Equipment Breakdown Protection Coverage Form? A. Equipment that operates under internal pressure or vacuum B. Equipment that is buried in the ground C. Computer equipment D. Mechanical equipment that generates energy

B. Equipment that is buried in the ground

A storm travels through town, partially destroying Wilma’s business, which is covered by a commercial property policy. Wilma maintains Business Income Coverage with a $100,000 limit, and the Maximum Period of Indemnity coverage option. Wilma's business incurred the following losses: ``` Monthly Losses Month Amount Month 1 $19,000 Month 2 $16,000 Month 3 $14,000 Month 4 $11,000 Month 5 $6,000 How much would her policy pay for lost income? ``` A. $100,000 B. $60,000 C. $120,000 D. $66,000

B. $60,000

Which commercial property Causes of Loss form offers open-peril (also called “all-risks”) coverage? A. Basic form B. Broad Form C. All commercial insurance coverage is open peril D. Special form

D. Special form

Charles made a big mistake by using copyrighted material for an advertising campaign. He now has three separate lawsuits pending from using trademarked logos and characters in his advertisements. Where in Charles’ CGL will he find the limits of his coverage for Advertising Injury? A. General Aggregate B. Conditions section C. Products—Completed Operations Aggregate D. Per Occurrence Sub-Limits

D. Per Occurrence Sub-Limits

In the Business and Personal Property Form of a commercial property policy, Coverage B - Business Personal Property coverage applies to all of the following EXCEPT: A. Leased office equipment B. Office furniture C. Commercial flooring D. Business stock/inventory

C. Commercial flooring

Frank’s computer store lies in the direct path of a rapidly approaching wildfire. In an attempt to diminish possible damages, Frank loads his most valuable computers into a truck and drives them to a remote storage facility. However, as he is unloading the computers, someone hijacks his truck and steals all of the merchandise still inside. What commercial property coverage would indemnify Frank for the theft of the computers? A. Electronic Data B. Preservation of Property C. None D. Extra Expense

B. Preservation of Property

Which of the following is NOT true of the Replacement Cost endorsement to the Buildings & Structures Form of a commercial property policy? A. The policy still pays ACV up front, and then the remainder of the actual cost to repair or replace after the repair/replacement has been completed. B. It changes the loss settlement terms of the policy from ACV to RCV. C. It always requires the policyholder to meet at least an 80% level of coinsurance. D. It applies to both the insured property and any property of others on the insured premises.

D. It applies to both the insured property and any property of others on the insured premises.

All of the following are typically excluded from liability coverage in a BOP, except: A. Damage to premises rented by the insured B. Property damage to the insured’s products C. Contractual liability D. Employee injuries

A. Damage to premises rented by the insured

For occurrences transpiring during the supplemental extended reporting period, what is the time limit in which a claim must be made in order to be covered by a claims-made CGL policy? A. 7 years B. 5 years C. None D. 2 years

C. None

Jay’s Chip Factory makes potato chips, and it gets chip bags from Bags, Inc. One day, the bag-making machine at Bags, Inc. broke down, and thus, Jay’s Chip Factory couldn’t get the bags it needed to bag its potato chips. Jay’s Chip Factory had to shut down production temporarily while waiting on Bags, Inc. to fix their machine. Jay’s lost business income may be covered under what coverage in its Equipment Breakdown Protection Coverage Form? A. Contingent Business Income and Extra Expense B. None C. Business Income and Extra Expense D. Brands and Labels

A. Contingent Business Income and Extra Expense

Which characteristic would prohibit a convenience store/gas station from purchasing a BOP? A. The use of microwave ovens. B. The operation of a car wash C. Gasoline accounts for over 50% of sales D. Over 4,000 square feet of retail space

B. The operation of a car wash

In a Business Auto policy, which symbol applies to private passenger autos owned by the insured, excluding trucks, buses, and specialty vehicles? A. Symbol 3 B. Symbol 9 C. Symbol 1 D. Symbol 7

A. Symbol 3

XYZ Carpet Manufacturing's main factory burns down during the night due to faulty electrical wiring. No longer able to manufacture carpeting, XYZ Carpet faces a serious cash flow dilemma. Which insurance coverage might help pay XYZ Carpet’s bills while the factory is repaired? A. Business Income coverage B. Control of Property coverage C. Preservation of Property coverage D. Builders Risk coverage

A. Business Income coverage

Acme Insurance is trying to attract new commercial clients, so they decide to broaden coverage for business personal property items without increasing the premium. Which condition would allow the current clients of Acme Insurance to benefit from the newly expanded coverage? A. Policy Period B. Changes in Policy C. Liberalization D. Control of Property

C. Liberalization

Each insurance coverage in a commercial property insurance policy will contain a Causes of Loss form. Which of the following is NOT an example of a Causes of Loss form? A. General Form B. Basic Form C. Special Form D. Broad Form

A. General Form

Which of these claims would NOT be covered by Personal and Advertising Injury coverage in a Commercial General Liability policy? A. False arrest B. Wrongful eviction C. Libel D. Physical impairment

D. Physical impairment

Craig purchased some additional machinery for his business so that he can keep up with customer demand. The problem is that Craig does not have enough space for the newly purchased machinery. He rents a storage unit to house the machinery until he can bring it to the company, but when the storage unit burns down, Craig’s equipment goes with it. Which coverage extension might indemnify Craig for his loss? A. Property Off-Premise B. Preservation of Property C. Outdoor Property D. Newly Acquired Property

A. Property Off-Premise

Greg owns a construction business and has been really swamped lately. His friend Chuck is looking to become a claims adjuster, but doesn’t have very much construction experience, so Chuck offers to help Greg on the weekends for free. This way Chuck gains his experience, while Greg catches up on work without the additional cost of hiring someone. According to the definitions in Greg's CGL policy, which of the following best describes Chuck? A. Leased Worker B. Part-time Worker C. Volunteer Worker D. Temporary Worker

C. Volunteer Worker

Ark Inc. purchases a CGL policy to protect the company against lawsuits for which they might be found legally liable. Which would NOT be covered by their CGL? A. An employee of Ark Inc. damages a retailer's property during a routine delivery. B. A popular product produced by Ark Inc. causes a child to choke. C. An employee drives a forklift into a wall of Ark Inc.'s owned factory, causing it to collapse. D. A woman slips on the floor at Ark Inc. headquarters and breaks both of her arms.

C. An employee drives a forklift into a wall of Ark Inc.'s owned factory, causing it to collapse.

When a fire destroys a car parts manufacturer in China, USA Motors finds itself without the necessary parts to build its vehicles. Which commercial property insurance coverage option could indemnify USA Motors from lost business due to the damages sustained by its Chinese supplier? A. Inflation Guard B. Order of Civil Authority C. Extra Expense Coverage D. Contingent Business Interruption

D. Contingent Business Interruption

Grace purchased a recliner from XYZ Furniture. After getting it home, she decided to try out the new chair. While leaning back, the chair broke and Grace injured her neck. She sued XYZ Furniture and was awarded $300,000. Under which limit in XYZ Furniture's CGL policy would these damages be paid? A. General Liability Limit B. Products-Completed Operations Limit C. General Aggregate Limit D. Negligence Limit

B. Products-Completed Operations Limit

Jim owns a small boutique. Jim forgot to turn off the automatic lawn sprinklers during the frigid winter weather, and when they came on last night, they created a thick layer of ice on his sidewalk. Before he could put salt on the ice, a customer came to the shop, slipped on the ice, and broke her hip. Which type of commercial general liability coverage would provide coverage in this situation? A. Completed Operations Liability B. Product Liability C. Premises Liability D. Mobile Equipment Liability

C. Premises Liability

While attending a free-sample tasting of Craig’s Famous Rock Candy, Claire bites into a sample containing an actual rock and breaks a tooth. Which coverage section of Craig’s CGL would cover Claire’s tooth? A. Coverage B B. Coverage D C. None—there is no provision for Dental Coverage D. Coverage C

D. Coverage C

In a commercial property policy, Business Income Coverage would pay for which of the following expenses? A. Materials B. Cost of goods sold C. Rent D. Physical property damage

C. Rent

The XYZ Company has an attached balcony on the top floor of their headquarters. During a summer storm, a lightning bolt strikes the metal railing of the balcony, splitting the balcony into two. XYZ Company would like to repair the balcony, but new building codes require more expensive construction materials. What commercial property coverage pays for this extra expense? A. Increased Construction Costs B. Extra Expense C. Newly Acquired Properties D. Preservation of Property

A. Increased Construction Costs

Wilma works for a professional cleaning service. While cleaning a ceiling fan at a customer's home, she leans too far forward, upsets the step stool, and falls. In an effort to prevent her fall, Wilma grabs the ceiling fan, but just ends up pulling the fan down and leaving a gaping hole in the ceiling. The damage Wilma caused would fall under what coverage in her company's Commercial General Liability policy? A. Premises Liability B. Product Liability C. Operations Liability D. Completed Operations Liability

C. Operations Liability

In a garagekeepers policy, PIP coverage is: A. available with an endorsement. B. included unless the insured declines it in writing. C. not available. D. mandatory.

A. available with an endorsement.

Which of the following is NOT a feature of a typical Business Owners Policy? A. Built-in inflation protection B. Usually Actual Cost Valuation C. Extra Expense coverage D. Liability protection for lawsuits from accidents or products

B. Usually Actual Cost Valuation

Ben owns a souvenir shop in a small town. During the winter time, the population consists of about 2,000 locals, but once the summer season hits, it’s a mad-house. The island can see over a million travelers during the summer season, and Ben must be ready with enough inventory to handle the demand. Which endorsement to his commercial property policy could temporarily increase Ben’s coverage limits during this high-volume time? A. Legal Liability B. Peak Season C. Protective Safeguard D. Tourism Endorsement

B. Peak Season

Kelly Supply purchases a claims-made CGL policy with a policy period of March 15, 2005 to March 15, 2006. The retroactive date is established as January 1, 2001. Which of the following events would trigger Kelly Supply's policy to respond? A. The policy would respond to any injury suffered during the policy period. B. A claim filed on May 10, 2005, for an injury suffered on March 1, 2004 C. A claim filed on May 10, 2005, for an injury suffered on November 15, 2000 D. An occurrence on November 2, 2005, regardless of when the claim is filed

B. A claim filed on May 10, 2005, for an injury suffered on March 1, 2004

Jerome was shopping at ABC Imports when a light fixture fell from the ceiling and hit him on the head. Jerome's injuries resulted in an extended hospital stay, so he sued ABC Imports and was awarded $400,000. Assuming ABC Imports carries a CGL with a General Aggregate of $750,000 and a Per Occurrence limit of $250,000, how much will ABC Imports have to pay out-of-pocket? A. $150,000 B. $400,000 C. $250,000 D. $0

A. $150,000

Argo Sciences Inc. wants to build a new testing laboratory for their line of chemicals. They want insurance coverage to protect their insurable interest in the building and materials while under construction. What commercial property coverage might Argo Sciences Inc. purchase to protect their new facility while it’s under construction? A. Preservation of Property B. Builder’s Risk coverage C. Extra Expense coverage D. Business Income coverage

B. Builder’s Risk coverage

Jane, an interior designer, is helping her client Grace choose new curtains and furniture. While at Jane’s office, Grace trips on some material and falls, breaking her arm. Which CGL coverage would help pay for Grace’s resulting expenses? A. Product Liability B. Medical Payments C. Operations Liability D. Grace’s homeowners insurance

B. Medical Payments

Kyle operates a collision repair garage and has many vehicles in his care, some for extended periods of time. Which type of coverage protects Kyle from any liability claims which may arise if one of the cars is further damaged or destroyed while in his possession? A. Non-Owned Vehicle Coverage B. Bailee Coverage C. Bailment D. Subrogation

B. Bailee Coverage

James is expecting a very important client to arrive in an hour so he decides to sweep and wash the floor. James finishes the job in time and goes to look over his bid for the contract one more time. James comes back out to the lobby to find his potential client laid out on the floor, having slipped and fallen. Which type of commercial general liability coverage would indemnify James' client for his injuries? A. Insured Contacts Liability B. Operations Liability C. Premises Liability D. Product Liability

C. Premises Liability

While going over his CGL policy, Bill pauses on the Declarations page. He finds the usual items: named insured, address, policy period, premiums, and the limits of insurance. But he also finds a retroactive date listed. This tells Bill his policy: A. is a policy from the 1970s. B. is an occurrence policy. C. is a claims-made policy. D. will only pay claims retroactively, meaning the policy must have expired before claims will be paid.

C. is a claims-made policy.

Diana owns a manufacturing company. One evening, a windstorm blows a tree through the side of her building, leaving a hole in the wall and damaging one of her production machines. Diana temporarily fixes the hole with some plywood, but will have to rent a new production machine until hers is repaired. Which coverage in her commercial property policy could indemnify Diana for the cost of the machine rental? A. Profit & Loss Form B. Rental Equipment Coverage C. Extra Expense Coverage D. Operating Expense Coverage

C. Extra Expense Coverage

Coverage C - Medical Payments in a CGL policy will ONLY cover claims IF: A. the named insured caused the injuries through negligence. B. the expenses are reported within one year of the occurrence. C. the injured party has been hospitalized for more than 24 hours. D. the expenses are reported within one year of the policy’s expiration.

B. the expenses are reported within one year of the occurrence.

ABC Motors produces luxury cars, but lately some of their automobiles have been shipped out with faulty accelerators that stick. One such car was sold to an elderly man who was pulling into a parking space when his car engine suddenly revved to 4,000 RPMs, crashing into a parked car. The resulting damage would fall under what coverage in ABC Motors' Commercial General Liability policy? A. Completed Operations Liability B. Operations Liability C. Premises Liability D. Product Liability

D. Product Liability

A fire in the break room kitchen of Helen’s small business spreads into the utility room, damaging the computer server. Her server is physically destroyed, along with a lot of vital information: client information, pending shipments, etc. Which coverage can help Helen with the costs associated with losing this information? A. Business Income B. Reasonable Repairs C. Records Recovery D. Electronic Data

D. Electronic Data

All of the following would fall under the definition of a “personal injury” in a Commercial General Liability policy, EXCEPT: A. A prominent businessman sues his competitor for slandering him in a TV commercial. B. A woman sues a company, claiming that they sued her for no reason. C. A man is justly fired and files for unemployment benefits from his previous employer. D. A woman sues her landlord for wrongful entry after being evicted from her apartment.

C. A man is justly fired and files for unemployment benefits from his previous employer.

Rise & Shine Light Bulb Co. has a claims-made & reported policy that is about to expire, but a customer just filed a liability claim against the company. If Rise & Shine wants to have insurance pay for the damages, it must do which of the following? A. Rise & Shine must report the claim as soon as possible, even if that means it makes the report after the policy expires. B. Rise & Shine must report the claim before its policy expires. C. Rise & Shine is ineligible for coverage unless it has already requested a renewal of its policy in writing. D. Rise & Shine may report the claim at any point for two years after the policy’s expiration date.

B. Rise & Shine must report the claim before its policy expires.

Tom needs some extra hands to help him lay a concrete foundation. He contacts XYZ Labor to hire some experienced concrete workers who can help him complete the job. Tom will pay XYZ Labor directly and let them handle payroll, taxes, etc. Once they finish with the foundation, Tom won’t need their services any longer and XYZ will move on to the next client. Under Tom's CGL policy, which of the following best describes the type of worker Tom is looking for? A. Employees B. Temporary Workers C. Leased Workers D. Volunteer Workers

C. Leased Workers

Veronica is in the process of building an extra structure for the sole purpose of kiln firing her pottery. After 40 days of waiting for it to be completed, she decides to go ahead and begin using it, since the kiln is already set up, even though the interior drywall isn’t completely finished. Her Builder’s Risk Coverage Form is then terminated because: A. interior drywall isn’t covered under a Builder's Risk Coverage Form. B. Veronica has now put the building to its intended use. C. Builder’s Risk policies are only good for 30 days. D. the risk of fire voided the policy.

B. Veronica has now put the building to its intended use.

John purchased some business property a few years ago. In the past two years, the property value has grown 4% each year. John maintains the 80% coinsurance requirement on his business policy, but wants a more automated coverage so he doesn’t have to constantly check the appraised value of his property. Which optional coverage can John purchase to help ensure that he always has the right amount of coverage? A. Value Reporting B. Agreed Value C. Inflation Guard D. Appraisal Condition

C. Inflation Guard

Acme Construction is in charge of building a new subdivision in the city, and hires Jim’s Masonry to lay the foundations. As part of the deal, Jim’s Masonry is required to purchase Owners & Contractors Protective Liability to protect Acme Construction in the event Jim makes a mistake that results in a liability claim. Who retains ultimate control over the policy? A. Jim’s Masonry B. The city C. The insurance agent D. Acme Construction

D. Acme Construction

When Bill’s business is interrupted because of a fire, he must provide a profit and loss statement to his insurer so they can determine an accurate amount of indemnification. Which three core elements from the profit and loss statement are used to calculate the net income? A. Operating expenses, inflation, cost of goods sold B. Total revenue, cost of goods sold, operating expenses C. Inflation, depreciation, cost of goods sold D. Total revenue, inflation, operating expenses

B. Total revenue, cost of goods sold, operating expenses

Acme Kitchen loses a lawsuit brought by a claimant who suffered injuries resulting from a design flaw in a kitchen knife she purchased. When Acme Kitchen’s CGL insurer pays out on the claim, the amount they pay will be subtracted from Acme Kitchen's: A. Per Occurrence aggregate limit. B. Personal Injury and Advertising aggregate limit. C. General aggregate limit. D. Products-Completed Operations aggregate limit.

D. Products-Completed Operations aggregate limit.

When Sally slips and falls at XYZ Furniture, she injures her back and incurs $145,000 in covered medical expenses. Assuming XYZ Furniture carries a CGL policy with a General Aggregate of $400,000, and a Per Occurrence limit of $100,000, how much would XYZ Furniture have to pay out-of-pocket? A. $100,000 B. $0 C. $45,000 D. $145,000

C. $45,000

Veronica needs to expand her pottery business and add an extra building to her property for the sole purpose of kiln firing her pottery. She adds Builder’s Risk coverage to her commercial property policy to cover the new structure (which is yet to be completed), and finds out she must carry: A. 125% coinsurance. B. 80% coinsurance. C. 100% coinsurance. D. 50% coinsurance.

C. 100% coinsurance.

A storm travels through town, partially destroying Wilma’s business. Wilma maintains a Business Income coverage policy with $120,000 limit, and the Monthly Limit of Indemnity coverage option. Wilma's business incurred the following expenses: ``` Monthly Expenses Month Amount Month 1 $29,000 Month 2 $36,000 Month 3 $24,000 Month 4 $31,000 How much would her policy pay for lost income if Wilma had a monthly limit of 1/4 in place? ``` A. $129,000 B. $113,000 C. $136,000 D. $120,000

B. $113,000

Which of the following is TRUE of the Policy Territory condition of a Commercial General Liability policy? A. CGL policies cover product liability claims if the product is made or sold in the US, Puerto Rico, or Canada. B. CGL policies only cover product liability claims where the damage occurred in the US, Puerto Rico, and Canada. C. CGL policies will cover occurrences anywhere in the world, as long as the company’s headquarters is based in the US, Puerto Rico, or Canada. D. CGL policies cover product liability claims anywhere in the world, regardless of where the product was made.

A. CGL policies cover product liability claims if the product is made or sold in the US, Puerto Rico, or Canada.

In a BOP, Newly Acquired Properties coverage provides _____ of insurance for new buildings under construction or newly acquired business properties located off the insured premises. A. 14 days B. 60 days C. 4 days D. 30 days

D. 30 days

The Newly Acquired Property extension in a commercial property policy provides ________ in coverage for buildings under construction at the insured premises, or for any newly acquired business property off the insured premises. A. $50,000 B. $250,000 C. $100,000 D. $1 million

B. $250,000

All of the following causes of loss are excluded from coverage in an Equipment Breakdown Protection Coverage Form, EXCEPT: A. mechanical failure. B. electrical testing. C. hail. D. combustion explosion.

A. mechanical failure. | By definition, this is one of the three main covered perils under an Equipment Breakdown Protection Coverage Form.

What is the main purpose of an Owners and Contractors Protective Liability Form that can be added to a CGL policy? A. As opposed to a CGL, it provides Medical Payments coverage to the insured. B. It provides separate insurance coverage for specific jobs performed by an independent contractor. C. It increases the General Aggregate limits on a standard CGL. D. It provides Completed-Operations liability for multiple locations at one time.

B. It provides separate insurance coverage for specific jobs performed by an independent contractor.

In the Business and Personal Property Form of a commercial property policy, Coverage A - Buildings and Structures coverage would apply to which of the following features of a commercial enterprise? A. A small copy machine in the break room B. A 40-ton printing machine affixed to a factory floor C. A briefcase left in the lunchroom by a client D. A leased mainframe computer

B. A 40-ton printing machine affixed to a factory floor

Which of the following losses would be covered by Section III of a BAP? A. Damaged factory-installed speakers B. Punctured tires C. Stolen CDs D. Legal defense costs

A. Damaged factory-installed speakers

If a Building and Personal Property Form has a Causes of Loss - Basic Form attached, which damages are NOT covered by this commercial property policy? A. Earthquake damage B. Damage caused by striking employees C. Smoke damage D. Damage caused by a non-owned airplane

A. Earthquake damage

Tom leaves his personal laptop at Smith & Co. so a colleague can work on a presentation. While the laptop is in the care of Smith & Co., it is destroyed by a fire in the break room. The laptop was worth $3,200. How much indemnification would Smith & Co.’s Business and Personal Property Form provide for the damaged laptop? A. $0 B. $700 C. $2,500 D. $3,200

C. $2,500

In a CGL policy, the basic extended reporting period provides extended coverage for an "occurrence" transpiring within _____ days of the end of the policy period. A. 360 B. 30 C. 120 D. 60

D. 60

When a fire burns through The Chronicle newspaper company, it takes out two permanently-installed printing presses, three employees’ personal laptops, five rolls of newspaper stock, and in a twist of irony, two fire extinguishers. Which of these would be covered by the Building & Personal Property form under Coverage C - Personal Property of Others? A. The printing presses and fire extinguishers B. The employees’ personal laptops C. The printing presses and newspaper stock D. The rolls of newspaper stock

B. The employees’ personal laptops

A winter storm has left a lot of snow and ice on the roof of Helen’s business. The weight is too much for the roof to bear and it gives way, bringing with it a torrent of melting ice and snow cascading down on the interior of Helen’s warehouse. Her commercial property policy covers the damage, even though "weight of ice and snow" is not specifically listed as a covered peril. Therefore, which type of Causes of Loss form does Helen have attached to her Building and Personal Property Coverage Form? A. Basic Form B. Universal Form C. Special Form D. Broad Form

C. Special Form

Sam's Dry Cleaners’ power shuts off due to a lightning strike at the supplying power station just down the street. For three days the business cannot operate due to the damage incurred at the power station. Which endorsement would cover Sam's Dry Cleaners for the loss of business? A. Utility Services - Time Element B. Ordinance or Law C. Mechanical Breakdown D. Protective Safeguards

A. Utility Services - Time Element

Jeremy owns a business with several machines covered under an Equipment Breakdown Protection Coverage Form with a $500,000 limit. He has three deductibles on his policy: 1) a percentage deductible of 3% per loss, 2) a minimum deductible of $500, and 3) a maximum deductible of $10,000. After experiencing a covered loss of $85,000, how much will Jeremy have to pay out of his own pocket for the loss? A. $2,550 B. $10,000 C. $500 D. $15,000

A. $2,550

Acme Boats experiences a devastating fire in their factory. They turn to their Business Income coverage to recover their loss of income due to the fire. When Acme Boats initiated the policy, they chose the Maximum Period of Indemnity coverage option with a policy limit of $150,000. Acme Boats experienced the following loss of business income in the months after the fire: ``` Monthly Income Losses Month Amount Month 1 $20,000 Month 2 $20,000 Month 3 $15,000 Month 4 $15,000 Month 5 $10,000 Month 6 $10,000 How much money might Acme Boats be indemnified for the loss of business income? ``` A. $40,000 B. $90,000 C. $70,000 D. $20,000

C. $70,000

In a CGL policy, the Premises Liability hazard applies to claims arising from an occurrence on: A. the premises rented by the insured. B. the premises owned by the insured. C. the premises owned or rented by the insured. D. a third party's premises.

C. the premises owned or rented by the insured.

Jerome was shopping at ABC Imports when a light fixture fell from the ceiling and hit him on the head. Jerome's injuries resulted in an extended hospital stay, so he sued ABC Imports and was awarded $400,000. Assuming ABC Imports carries a CGL with a General Aggregate of $750,000 and a Per Occurrence limit of $250,000, what will the new General Aggregate Limit be after this claim is paid? A. $500,000 B. $750,000 C. $250,000 D. $350,000

A. $500,000

A fire breaks out in Anton’s manufacturing plant, causing extensive damage which will take at least three months to repair. In the meantime, Anton has rent and employees who still need to be paid, and many other expenses that can’t wait until the business is up and running again. Which coverage form of his commercial property policy can help Anton with his cash flow? A. Builder’s Risk Coverage B. Manufacturer’s Risk Coverage C. Rent, Salary, and Repair Coverage D. Business Income Coverage

D. Business Income Coverage

ABC Sawmill has a Commercial General Liability policy which includes a $2,000,000 General Aggregate Limit, and a $150,000 Per Occurrence Limit. A covered accident occurs, and the injured party is awarded $150,000. After this unfortunate situation, what are the limits remaining in ABC Sawmill’s policy? A. Per Occurrence Limit: $0; General Aggregate Limit: $2,000,000 B. Per Occurrence Limit: $150,000; General Aggregate Limit: $2,000,000 C. Per Occurrence Limit: $0; General Aggregate Limit: $1,850,000 D. Per Occurrence Limit: $150,000; General Aggregate Limit: $1,850,000

D. Per Occurrence Limit: $150,000; General Aggregate Limit: $1,850,000

Coverage B of the BOP would provide indemnification for damages to all of the following except: A. windows. B. an office copy machine. C. inventory. D. office furniture.

A. windows.

Pat posts a scathing review of a rival business in the local paper. A week later he gets a phone call from the rival company's lawyer saying he will see him in court. According to Pat's CGL, this claim would be considered _____ and may be covered under Coverage B - Personal and Advertising Injury. A. Libel B. Wrongful Entry C. Malicious Prosecution D. Slander

A. Libel

Josh is driving through town in the company truck when he misses his turn. He decides just to make a U-turn and double back. Unfortunately, he doesn't see the car coming up alongside of him and the two collide. Josh files a claim with the company’s CGL, but the claim is denied because: A. Josh was at fault in the accident. B. a CGL does not cover U-turns. C. Josh was driving a commercial pickup truck. D. a CGL does not cover auto accidents.

D. a CGL does not cover auto accidents.

ABC Computers experiences a fire overnight at their corporate offices. ABC Computers had purchased an older building to house their offices, and the repair costs include upgrading the old building to adhere to modern fire codes. Which coverage might indemnify ABC Computers for the added expense of these upgrades? A. Legal Liability coverage B. Builders Risk coverage C. Ordinance or Law endorsement D. Extra Expense coverage

C. Ordinance or Law endorsement

Cyril recently purchased a small machining shop. When asked on his commercial property insurance application about how the property will be heated in the winter, he replies “central heat,” when in fact it will be heated by a wood stove. Under which condition could the insurer deny coverage? A. No Benefit to Bailee B. Changes to the Policy C. Control of Property D. Concealment, Misrepresentation, and Fraud

D. Concealment, Misrepresentation, and Fraud

Which of the following statements regarding Commercial Package Policies (CPP) is TRUE? A. A CPP is an example of a monoline policy. B. A CPP is an elective-based policy. C. A CPP requires a separate declarations page for each coverage. D. Workers' compensation insurance is automatically included with a CPP.

B. A CPP is an elective-based policy.

All of the following are coverages in a Commercial General Liability policy, EXCEPT: A. Coverage C- Prohibited Substances Liability. B. Coverage A- Bodily Injury and Property Damage Liability. C. Damage to Premises Rented to You. D. Coverage B- Personal and Advertising Injury Liability.

A. Coverage C- Prohibited Substances Liability.

When a fire burns through The Chronicle newspaper company, it takes out two permanently-installed printing presses, three employees’ personal laptops, five rolls of newspaper stock, and in a twist of irony, two fire extinguishers. Which of these would be covered under Coverage A - Buildings and Structures? A. The printing presses only B. The employees’ personal laptops C. The printing presses and newspaper stock D. The printing presses and fire extinguishers

D. The printing presses and fire extinguishers

Acme Construction is in charge of building a new subdivision in the city, and hires Jim’s Masonry to lay the foundations. As part of the deal, Jim’s Masonry is required to purchase Owners & Contractors Protective Liability to protect Acme Construction in the event Jim makes a mistake that results in a liability claim. Who will be listed as the named insured on this policy? A. Jim’s Masonry B. The city C. Acme Construction D. The insurance agent

C. Acme Construction

Lance slips and falls in the icy parking lot of XYZ Consulting. Under which part of Coverage A in XYZ Consulting's CGL policy would this claim be covered? A. Premises Liability B. Product Liability C. Parking Liability D. Operational Liability

A. Premises Liability

When Herb was just starting out in the textile business, he purchased an older factory building in order to acquire as much square footage as possible, for the lowest cost. After a massive storm blows the roof off the building, Herb finds that the structure will require massive upgrades to bring it up to code. Which endorsement to his commercial property policy can help with this added cost? A. Ordinance or Law B. Legal Liability C. Protective Safeguard D. Differences in Conditions

A. Ordinance or Law

Which of the following situations would be covered by a standard CGL insurance policy with no endorsements? A. A company is sued for copyright infringement in their advertisement. B. An employee is injured in the stockroom by a falling package. C. A tavern over serves alcohol to a customer, who then goes out and causes a fatal car accident. D. A defective product is shipped en masse to the public and must be recalled.

A. A company is sued for copyright infringement in their advertisement.

Grace owns a high-end tea shop and, to improve the ambiance, has purchased some old antique furniture and statues. While these items have intrinsic value, it’s difficult to assign them an actual cash value. Which type of coverage in her commercial property policy could help assign value to these items in the event of a loss? A. Value Reporting B. Inflation Guard C. Replacement Cost D. Agreed Value

D. Agreed Value

A fierce windstorm blows through town, stripping the shingles off of the roof and shattering all of the windows at Gradient Industries. What commercial property coverage might pay for the cost of cleaning up the shingles and broken glass? A. Legal Liability coverage B. Preservation of Property C. Debris Removal D. Increased Construction Costs

C. Debris Removal

According to the Other Insurance provision in Commercial General Liability policies: A. claims-made forms will always pay out via contribution by equal shares. B. a claims-made form will always pay the excess after an occurrence form. C. an occurrence form will always pay the excess after a claims-made form. D. all CGL policies will cover claims on a pro rata basis.

B. a claims-made form will always pay the excess after an occurrence form.

When a gas line explodes close to Georgia’s business, it destroys most of her landscaping, leveling trees and uprooting shrubs. Which coverage extension could help cover the cost of replacing these plants? A. Property Off-Premise B. Shrubbery Endorsement C. Outdoor Property D. Property On-Premise

C. Outdoor Property

Helen owns a manufacturing company. She maintains a commercial property policy that includes Business Income and Extra Expense coverage. One evening, a windstorm blows a tree through the side of her building, leaving a hole in the wall and damaging a production machine. When Helen has to rent another machine to keep her business in operation, how long will she have to wait before she can be indemnified for this indirect loss? A. 24 hours B. 72 hours C. 0 hours—Extra Expense coverage kicks in immediately D. 12 hours

C. 0 hours—Extra Expense coverage kicks in immediately

In a typical commercial property policy, an insured building is considered “vacant” when: A. for 60 days, the building is either closed or has less than 31% of its available square footage occupied. B. for 25 days, the building is either closed or has no business personal property located in the building. C. for 30 days, the building is either closed or has less than 61% of its available square footage occupied. D. for 45 days, the building is either closed or has no business personal property located in the building.

A. for 60 days, the building is either closed or has less than 31% of its available square footage occupied.

The BOP provides loss of income on an “actual loss” sustained basis for up to: A. 24 months B. 6 months C. 18 months D. 12 months

D. 12 months

Jerome was shopping at ABC Imports when a light fixture fell from the ceiling and hit him on the head. Jerome's injuries resulted in an extended hospital stay, so he sued ABC Imports and was awarded $400,000. Assuming ABC Imports carries a CGL with a General Aggregate of $750,000 and a Per Occurrence limit of $250,000, what will the new Per Occurrence Limit be after this claim is paid? A. $150,000 B. $250,000 C. $0 D. $100,000

B. $250,000

Which of the following will NOT appear on the Declarations page of a commercial property policy? A. Address of the insured business B. Coverage limits C. Coverage deductibles D. Covered perils

D. Covered perils

James runs a window washing business and services a lot of the city’s large skyscrapers. While out on a job, James accidentally knocks the wash bucket off his scaffold from seven stories up. It lands on a parked car, injuring no one, but causing $12,000 in damage to the vehicle. What type of coverage in James' Commercial General Liability policy would a claim for this damage fall under? A. Operations Liability B. Product Liability C. Premises Liability D. Falling Objects Coverage

A. Operations Liability

In a commercial property policy, Coverage C of the Building and Personal Property Coverage Form provides coverage for: A. personal property of others. B. liability and medical payments. C. business personal property. D. buildings and structures.

A. personal property of others.

In a commercial property policy, Builders Risk coverage is sold based on which of the following values? A. The value of the land underneath the new construction B. The highest value of a building currently insured by the policyholder C. The value of the completed building D. The value of labor and materials used in construction

C. The value of the completed building

After a tornado completely destroys the roof and windows of Calah’s business building, she finds that there are new codes in place requiring thicker shingles and reinforced window frames. Calah insured her business using a replacement cost policy. Which commercial property coverage can help Calah with the added costs of bringing her building up to code? A. Debris Removal B. Business Interruption C. Preservation of Property D. Increased Construction Costs

D. Increased Construction Costs

Which of the following claims may be covered under an Equipment Breakdown Protection Coverage Form? A. Hazardous material remediation was needed after a mechanical breakdown of the exhaust system’s turbine caused ammonia to be released into the factory, contaminating the entire area. B. A severe hail storm damaged a company’s air conditioning units. C. While adjusting a pressurized boiler, an employee accidentally set the calibrations to incorrect levels, which damaged the boiler to the point of needing repair. D. A self-propelled machine used to transport heavy objects within the factory experienced a malfunction in its computer program, causing it to run into a wall, which damaged it to the point of needing repair.

A. Hazardous material remediation was needed after a mechanical breakdown of the exhaust system’s turbine caused ammonia to be released into the factory, contaminating the entire area.

When Shawn purposefully set fire to Jim’s restaurant, Jim was covered under his commercial property policy. Which condition allows Jim’s insurer to attempt to reclaim those damages from Shawn? A. Vandalism B. Legal Action Against the Insurer C. Misrepresentation D. Subrogation

D. Subrogation

A fire in John’s factory causes him to shut the doors for 90 days. While repairs take place, John rents another building, along with some machinery and manufacturing supplies, for $90,000. John’s total loss is $300,000, but by renting the new building and equipment he manages to reduce that loss by $50,000. Assuming John's commercial property policy includes Business Income Coverage With Extra Expense, how much will his insurer indemnify him? A. $420,000 B. $300,000 C. $340,000 D. $120,000

C. $340,000

A fire in John’s factory causes him to shut the doors for 90 days. While repairs take place, John rents another building, along with some machinery and manufacturing supplies, for $90,000. John’s total loss is $300,000, but by renting the new building and equipment he manages to reduce that loss by $50,000. Assuming John's commercial property policy provides Business Income Coverage Without Extra Expense, how much will his insurer indemnify him? A. $300,000 B. $210,000 C. $260,000 D. $50,000

A. $300,000

Mackey Manufacturing signs a five-year lease at a new location, only to have the building burn down one year into their new lease. Now they have to lease a new property, and the rental prices have increased, so the company now has to pay higher rental costs. Which commercial property coverage form might indemnify Mackey Manufacturing for the difference in lease costs? A. Property Off-Premises Coverage Form B. None C. Leasehold Interest Coverage Form D. Preservation of Property Coverage Form

C. Leasehold Interest Coverage Form

Who is NOT covered for their legal liability under a CGL? A. Employees B. Managers C. Executives D. Customers

D. Customers

In a Commercial General Liability policy, the basic extended reporting period is also known as a(n): A. representation. B. tail. C. premium. D. insured contract.

B. tail.

Jeff’s commercial property policy includes coverage for Fire Department Service Charge, with a limit of $500. When one of Jeff's business premises catches fire, he calls 911. The fire department arrives and puts out the fire, saving the majority of Jeff’s business. Later that week, Jeff has to call the fire department again when another fire breaks out, this time at his second business location. When the bill arrives for the fire department’s services, it shows a $600 fee for each call, totaling $1,200. Jeff files a claim with his insurer for the charges. How much of the bill will Jeff have to pay? A. $0 B. $700 C. $1,200 D. $200

D. $200

In a commercial property policy, the Monthly Limit of Indemnity coverage option for Business Income insurance: A. requires an insured to parcel the stated policy limit into a fractional maximum amount of coverage available per month during the period of restoration. B. automatically raises the policy limit every month, to protect against the effects of inflation. C. requires the insured to maintain at least an 80% level of coinsurance on the insured property. D. establishes a separate aggregate limit for each month of the entire policy period.

A. requires an insured to parcel the stated policy limit into a fractional maximum amount of coverage available per month during the period of restoration.

Frank found a “favorable lease” for his business two years ago at $10/sq.ft. per year. He ended up leasing a 20,000 sq.ft. space for 6 years to lock in that yearly lease of $200,000. Yesterday, Frank's business was struck by lightning and burned to the ground, forcing him to lease a new building. Unfortunately the going rate now is $15/sq.ft. and Frank still needs 20,000 sq.ft. of space. How much could Frank’s Leasehold Interest Coverage pay for the additional costs of leasing a new space for the remaining 4 years? A. $1,200,000 B. $100,000 C. $300,000 D. $400,000

D. $400,000

Celina’s business is growing and she needs more space for her inventory. A week ago, a crew started work on constructing a new building on Celina’s business premises. Last night, a bolt of lightning set fire to the still-unfinished new building and burned it to the ground. Celina’s property is fully insured under a commercial property policy. Which coverage extension in her policy would cover this loss? A. Personal Effects B. Property On-Premise C. Outdoor Property D. Newly Acquired Property

D. Newly Acquired Property

The retroactive date in the claims-made version of the CGL policy is: A. the latest date an injury can occur for coverage to apply. B. the latest date a claim can be made for coverage to apply. C. the earliest date a claim can be made for coverage to apply. D. the earliest date an injury can occur for coverage to apply.

D. the earliest date an injury can occur for coverage to apply.

A CGL can protect businesses from claims arising out of all of the following, EXCEPT: A. personal injury. B. damage to a rented premise. C. auto accidents. D. damages caused by contractors.

C. auto accidents.

Acme Construction is in charge of building a new subdivision in the city, and hires Jim’s Masonry to lay the foundations. As part of the deal, Jim’s Masonry is required to purchase Owners & Contractors Protective Liability to protect Acme Construction in the event Jim makes a mistake that results in a liability claim. Who will end up paying the premiums for this additional policy? A. Jim’s Masonry B. Acme Construction C. The city, or local municipality D. Jim's Masonry and Acme Construction split the cost

A. Jim’s Masonry

Which of the following is NOT one of the differences between a BAP and a truckers policy? A. Liability coverage in a truckers policy includes coverage for people who hire out or lend their cars to the insured for business purposes. B. A BAP typically excludes businesses that transport the property of others. C. A BAP uses coverage symbols to designate covered autos. D. A truckers policy includes trailer interchange coverage.

C. A BAP uses coverage symbols to designate covered autos.

A Commercial General Liability policy could protect a business in all of the following situations, EXCEPT: A. An employee moving a pallet of plasma televisions accidentally hits the brakes. The pallet falls, destroying the stack of televisions. B. A consumer purchases an appliance from XYZ Company. When the consumer plugs in the appliance, it catches on fire and burns down the consumer’s kitchen. C. An employee accidentally trips a customer, causing serious back injuries to the customer. D. A woman is browsing through an antique store when a shelf collapses on top of her, causing her serious injuries.

A. An employee moving a pallet of plasma televisions accidentally hits the brakes. The pallet falls, destroying the stack of televisions.

Ryan occasionally uses his new personal iPad at work to handle business matters since it’s portable and can easily set up video conferences. He has a computer and another tablet at home, so he usually leaves the iPad at work, locked in his desk drawer. One morning Ryan arrives at work to find a massive sinkhole has opened up underneath the business, swallowing the interior. Which coverage extension in a commercial property policy may pay for Ryan's iPad? A. Newly Acquired Property B. None C. Personal Effects and Property of Others D. Property Off-Premise

C. Personal Effects and Property of Others

A processing and servicing company would qualify for a BOP only if they have less than _____ in annual revenues. A. $3 million B. $10 million C. $8 million D. $5 million

A. $3 million

In a BOP, the purpose of Supplementary Payments in conjunction with liability coverage is to: A. cover the cost of additional damage that was discovered after the settlement was paid. B. make incidental payments to an injured claimant before the final settlement amount is reached. C. cover a claimant’s lost wages after suffering an injury caused by the insured. D. cover costs associated with defending and investigating a claim against the insured.

D. cover costs associated with defending and investigating a claim against the insured.

Matt, a real estate developer, must submit a report to his insurer every 30 days listing the value of all his properties over the past month. In turn, the insurer adjusts Matt’s premiums based on the values he submits. Which optional coverage does Matt subscribe to? A. Value Reporting B. Optional Reporting C. Agreed Value D. Adjusted Income

A. Value Reporting

In what part of a commercial property policy would you look to see if flood damage to your factory is covered? A. Causes of Loss Forms B. Declarations page C. Conditions page D. Coverage Forms

A. Causes of Loss Forms

William owns a paint store and employs Brent. One day, while Brent is decorating the window display, he gets carried away dancing to the music in his headphones, falls off his ladder, and smashes through the glass. What policy condition allows William to collect for the loss on his insurance contract? A. Subrogation B. Other Insurance C. Liberalization D. Control of Property

D. Control of Property

What is the primary difference between the Pollution Liability Coverage-Broad Form and the Pollution Liability Limited Coverage Form? A. The Broad Form pays for pollution clean-up costs, while the Limited Form does not. B. The Broad Form applies only to independent contractors, while the Limited Form applies to the hiring business. C. The Broad Form is cheaper than the Limited Coverage Form. D. The Broad Form covers bodily injury and property damage, while the Limited Form only covers bodily injury.

A. The Broad Form pays for pollution clean-up costs, while the Limited Form does not.

Which Business Auto Policy endorsement covers employees while using their personal cars for business purposes? A. Mobile Equipment B. Drive Other Car C. Employee as Additional Insured D. Individual Named Insured

C. Employee as Additional Insured

In order for a statement to qualify as libel or slander, which of the following conditions must be met? A. The untruths must be printed or announced in an advertisement. B. A third party must prove a financial loss. C. The statement must be made about a third party. D. There must be intent to defraud.

C. The statement must be made about a third party.

After a fire burns through XYZ Condominiums, they have to replace most of the interior. Which of the following WILL be covered under the Condominium Coverage Form of the condo association's commercial property policy? A. Computers used by one of the commercial units B. Upgrades within individual condos C. Personal property of a commercial unit D. Computers used by the condo as a whole

D. Computers used by the condo as a whole

Jane's Bakery has Equipment Breakdown Protection coverage on a large industrial oven used in producing several hundred loaves of bread a day. One day, the oven malfunctions and catches fire, rendering her business inoperable for four days. In order to fill bread orders, Jane must ship her dough to a warehouse where she found another oven to rent while her oven is repaired. Under which coverage would Jane be indemnified for the shipping and oven rental costs? A. Valued Business Interruption Coverage B. Automatic Coverage C. Extra Expense Coverage D. Supplementary Payments Coverage

C. Extra Expense Coverage

Which of the following terms refers to the time elapsed between a covered loss to a commercial building and the return to full business operations of the same building? A. Period of Construction B. Period of Restoration C. Period of Indemnity D. Property Preservation Window

B. Period of Restoration

What CGL coverage form would protect a business from liability related to pollution and related clean-up costs? A. Standard Commercial General Liability policy B. Pollution Liability Coverage: Broad Form only C. None. Clean-up costs are never covered. D. Pollution Liability Coverage: both the Limited and Broad forms

B. Pollution Liability Coverage: Broad Form only

Which of the following statements about the Accounts Receivable coverage extension in a BOP is TRUE? A. It only provides coverage if the loss occurred on the insured premises. B. It provides coverage for lost income resulting from having to write off accounts receivable due to nonpayment by the insured’s customers. C. It provides coverage for money the insured expects to collect, but cannot because of damage to accounting records caused by a covered peril. D. It provides coverage for the insured’s lost business income resulting from a covered loss suffered by a major customer.

C. It provides coverage for money the insured expects to collect, but cannot because of damage to accounting records caused by a covered peril.

Which endorsement to a garage-keepers policy would cover the theft of a vehicle by someone who was pretending to take it for a test-drive? A. Drive Other Car Coverage B. Theft Coverage C. Collision Coverage D. False Pretense Coverage

D. False Pretense Coverage

James owns a metal machining shop where he does contract work for local mechanics, manufacturing hard-to-find parts or custom fittings. Being a cautious man, James wants commercial property insurance that provides coverage on an open-peril basis. Which Causes of Loss Form would best suit James’ needs? A. Universal Form B. Special Form C. Basic Form D. Broad Form

B. Special Form

Thomas runs a computer repair shop. One morning he arrives to find the front glass window broken and a number of his customers’ computers stolen. Thomas’ Legal Liability Coverage Form would pay for: A. the cost of replacing the front window. B. Thomas’ own personal computer. C. cash taken from the register. D. his clients’ computers.

D. his clients’ computers.

"Permanently installed fixtures" would fall under which coverage of a commercial property policy? A. Building and Structures B. Personal Property of Others C. Preservation of Property D. Business Personal Property

A. Building and Structures

Jim receives a letter in the mail from his insurer notifying him that his commercial policy will not be renewed thirty days from now. Jim protests, saying he needs at least two months time to find a new policy. Jim ends up receiving an additional 30 days' coverage at the same premium as before, because: A. Jim prepays his insurance two months at a time. B. Jim’s insurer did not notify him by phone. C. Jim is an exceptional negotiator. D. Jim’s insurer did not provide him with 45 days' notice.

D. Jim’s insurer did not provide him with 45 days' notice.

When an insurer decides to not renew an existing commercial property policy, it is obliged to follow the Cancellation and Nonrenewal condition of supplying notice to the policyholder 45 days in advance. If the insurer fails to meet this deadline, it must: A. offer the same premium rates and policy coverage as before for an additional 3 months. B. offer an additional 30 days of coverage without charging any premium. C. offer the same premium rates and policy coverage as before for an additional 30 days. D. pay a fine of up to $5,000.

C. offer the same premium rates and policy coverage as before for an additional 30 days.

Which of the following BEST describes how covered losses are settled under a typical Equipment Breakdown Protection Coverage Form? A. Losses are paid at replacement cost if the replacement or repair occurs within 12 months of the accident. B. Losses are normally paid at replacement cost, but an insured may change this with an Actual Cash Value endorsement. C. Losses are paid at actual cash value. D. Losses are normally paid at actual cash value, but an insured may change this with a Replacement Cost endorsement.

B. Losses are normally paid at replacement cost, but an insured may change this with an Actual Cash Value endorsement.