Chapter 12 General Liability, Automobile, and Umbrella Insurance

Question 1

In a standard auto policy, your employees:

a. will be covered for cars owned by the employee and the company together
b. will not be covered by your insurance if they own the vehicle covered under your auto policy
c. will not be covered for rental cars
d. will not be covered for injury caused by company cars on-site

Answer 1

b. will not be covered by your insurance if they own the vehicle covered under your auto policy

Question 2

What type of insurance covers physical damage to an auto that is NOT the result of the vehicle turning over?

a. uninsured motorist insurance
b. automobile physical damage insurance
c. comprehensive insurance
d. collision insurance

Answer 2

c. comprehensive insurance

Question 3

Louisa and Robert have each applied for commercial automobile insurance. Louisa runs a catering business, traveling within a 70 mile radius of her kitchen. Her new van sits in the parking lot of her urban location. Robert drives his economy car, averaging 30 mile per week, to reach local job sites where he repairs office equipment. Robert’s car is garaged at his suburban home. In comparing Louisa and Robert, which is true?

a. Louisa will have lower premiums because her van is heavier and would sustain less damage upon impact.
b. Robert will have lower premiums because his car os lighter and would cause less damage upon impact.
c. Louisa will have higher premiums because her van travels a farther radius and is parked in an urban area
d. Robert will have higher premiums because his car travels more miles and is stored in a suburban area.

Answer 3

c. Louisa will have higher premiums because her van travels a farther radius and is parked in an urban area

Question 4

Whether or not a business owns any vehicles, it should be sure to have at least:

a. all of its employees purchase individual automobile insurance.
b. full auto insurance
c. additional personal injury protection
d. non-owned and hired automobile liability coverage

Answer 4

d. non-owned and hired automobile liability coverage

Question 5

Define Commercial General Liability (CGL) Insurance.

Answer 5

One of the most important ways in which a business can protect itself against claims of negligence involving bodily injury, property damage, or personal and advertising injury that arise out of an occurrence or offense

Question 6

A person slip down an icy stairway leading to an office building. The person is hurt and decides to take legal action against the building’s owners due to their negligence. the owners are protected through their:

a. bodily injury policy
b. CGL policy
c. personal injury policy
d. incidental injury policy

Answer 6

b. CGL policy

Question 7

Which of the following is NOT a typical exclusion of CGL policies?

a. intentional bodily injury
b. injuries from employment
c. claims involving aircraft
d. bodily injury from negligence

Answer 7

d. bodily injury from negligence

Question 8

Which of the following is a method of increasing the limits of general liability insurance?

a. purchase umbrella insurance
b. research typical CGL policy exclusions
c. consider multiple agents or brokers
d. purchase contractual liability insurance

Answer 8

a. purchase umbrella insurance

Question 9

What are the eight typical exclusions of a CGL policy?

Answer 9

• intentional bodily injury or property damage
• obligations under worker’s comp, disability benefits or unemployment compensation
• bodily injury to employees or their relative arising out of and in the course of employment (worker’s comp is needed)
• personal injury for which an insured has assumed liability in a contract or agreement
• most kinds of pollution claims
• claims involving autos, aircraft, or watercraft (separate coverage is needed)
• professional liability claims
• property damage to your owned or rented property

Question 10

What are the six limits typically found in a CGL policy?

Answer 10

• for bodily injury $1,000,000 for each occurrence
• for personal and advertising injury claims, separate single limit equal to bodily injury limit
• for fires $50,000 for any one loss
• for premises medical coverage, $5,000 per person
• general aggregate limit applies to all of the above and is twice the limit of each occurrence
• for products and completed operations coverage the limits are separate from from the coverage on the rest of the policy. limit of $1,000,000for claims from a single occurrence and annual aggregate limit of $2,000,000.

Question 11

As far as managers of a commercial property are concerned, the most likely cause of a bodily injury claim is:

a. related to the number of tenants in the building
b. related to the maintenance and upkeep of the building
c. related to the lack of emergency preparedness
d. related to crime in the building

Answer 11

b. related to the maintenance and upkeep of the building

Question 12

Who are the two categories of people covered as an insured under a standard auto policy?

Answer 12

• You for any covered auto

- anyone else while using with your permission a covered auto that you own, rent, or borrow

Question 13

If, during a business errand using their own vehicle, a business’s employee hits another motorist, what insurance will cover the liability?

Answer 13

the employees insurance

Question 14

Who is insured under a standard CGL policy covering a partnership or joint venture?

Answer 14

You, your members, your partners, and their spouses

Question 15

What is umbrella liability insurance?

Answer 15

insurance designed to provide catastrophe excess liability insurance coverage beyond the coverage provided by other liability insurance policies for commercial general liability, auto liability, and the employer’s liability section of worker’s comp insurance

Question 16

As far as owners and managers of commercial property are concerned, what is the most likely cause of bodily injury claims?

Answer 16

condition on the premises relating to safety, maintenance and upkeep, or general management. Most common is slip-and-fall claim.

Question 17

Property Management, Inc., wants to be sure it has insurance to cover itself against accidents involving hit-and-run drivers. Which of the following types of insurance meets this need?

a. no-fault insurance
b. drive-other-car insurance
c. automobile medical payments insurance
d. uninsured/underinsured motorist insurance

Answer 17

d. uninsured/underinsured motorist insurance

Question 18

What is defined as bodily injury?

Answer 18

Under a CGL policy, refers to any bodily injury, sickness, or disease sustained by a person, including death resulting from these causes

Question 19

If you are the sole owner of a business and your spouse is covered by your commercial general liability insurance (CGL), when is the spouse actually covered?

Answer 19

only with respect to the conduct of a business

Question 20

What are some of the common exclusion in an automobile insurance policy?

Answer 20

• loss to sound equipment unless permanently installed in the auto
• loss to CB radios radar detectors, etc.
• wear and tear, freezing, or mechanical or electrical breakdown
• blowouts, punctures, or other road damage to tires

Question 21

All of the following accurately describe umbrella insurance EXCEPT:

a. it is liability coverage against catastrophes
b. it generally steps in to cover liabilities after other insurance policies have reached their policy limit
c. it can provide coverage to intentional acts that cause harm that other liability insurance cannot.
d. it is almost always provided with liability limits in increments of $1,000,000.

Answer 21

c. it can provide coverage to intentional acts that cause harm that other liability insurance cannot.

Question 22

In his commercial general liability insurance policy, Mr. Sanchez’s business is listed as a named insured and designated as a partnership. Who can be covered by the policy besides Mr. Sanchez?

a. his children, his members, and his partners
b. his spouse, his partners, and his subcontractors
c. his members, his partners, and his partner’s spouses while working for the company.
d. his members, his spouse (even if not working for the company), and his partners

Answer 22

c. his members, his partners, and his partner’s spouses while working for the company.

Question 23

Eva’s accident expenses of $3,000 were covered by the premises. medical payments insurance included in her employer’s commercial general liability insurance because:

a. the employer had paid extra for this additional coverage
b. the accident occurred on her way to the work premises
c. the expenses exceeded $1,000
d. the accident occurred on or next to the work premises

Answer 23

d. the accident occurred on or next to the work premises

Question 24

What is the purpose of non-owned and hired automobile liability coverage?

Answer 24

it is designed to protect the business, not the employee, from liability

Question 25

Who is insured under a standard CGL policy covering a limited liability partnership?

Answer 25

You and your members are insured buttony with respect to the conduct of your business. Your managers are covered but only with respect to their duties

Question 26

For insurance purposes, automobile insurance will also cover what other vehicles?

Answer 26

• trailers with a load capacity of 2,000 lbs. or less
• mobile equipment while it is being carried or towed by a covered auto
• any auto you do not own when used, with the permission of its owner, as a temporary substitute for a covered auto you own that is out of service

Question 27

Which of the following is NOT a common automobile liability exclusion?

a. injuries to employees or their relatives arising out of unemployment
b. bodily injury or property damage intended or expected by the insured
c. damage to autos in the insured’s care, custody, or control
d. injuries to an employee arising out of his or her employment but not covered by worker’s compensation

Answer 27

d. injuries to an employee arising out of his or her employment but not covered by worker’s compensation

Question 28

What part of an automobile policy covers glass breakage?

Answer 28

comprehensive coverage covers physical damage to the auto that is not the result of the vehicle turning over or being involved in a collision.