Chapter 16

Question 1

Who will get Professional Liability Insurance?

Select one:

a. a teacher
b. a doctor

Answer 1

The correct answer is: a doctor

Question 2

A mini-tail extended reporting period (ERP) provides additional coverage for:

Select one:

a. all future claims, no matter when filed.
b. claims reported within 60 days after the policy expires.

Answer 2

The correct answer is: claims reported within 60 days after the policy expires.

Question 3

A consent to settle provision protects the reputation of the:

Select one:

a. insured
b. insurer

Answer 3

The correct answer is: insured

Question 4

A supplemental or maxi-tail extended reporting period (ERP) provides liability coverage for claims filed:

Select one:

a. at any future time
b. only within 6 months

Answer 4

The correct answer is: at any future time

Question 5

To protect against client claims for failure to recommend the appropriate insurance, an insurance agent should have:

Select one:

a. Premises Liability
b. Professional Liability

Answer 5

The correct answer is: Professional Liability

Question 6

A physician’s E&O policy has no Extended Reporting Period. A loss occurred during the policy period, but the policy expired before a claim was filed. What action should be taken by the claims adjuster?

Select one:

a. deny the claim
b. pay the claim

Answer 6

Under a Claims Made Form, the claim must be filed during the policy period, unless the policy contains an Extended Reporting Period (ERP).

The correct answer is: deny the claim

Question 7

A midi-tail extended reporting period (ERP) provides professional liability coverage:

Select one:

a. where the insurer is notified of the occurrence within 60 days after the policy expires, although the actual claim may then be filed within 5 years.
b. for claims reported at any future date.

Answer 7

The correct answer is: where the insurer is notified of the occurrence within 60 days after the policy expires, although the actual claim may then be filed within 5 years.

Question 8

The consent to settle provision is found in:

Select one:

a. property policies
b. CGL
c. professional liability
d. auto policies

Answer 8

The correct answer is: professional liability

Question 9

A professional liability policy could be used to cover:

Select one:

a. Errors and Omissions for an architect.
b. a piano owned by a concert pianist.
c. harmonicas owned by a professional musician.

Answer 9

The correct answer is: Errors and Omissions for an architect.

Question 10

A “claims made” policy pays claims if they:

Select one:

a. Occurred before the retroactive date.
b. Are reported during the policy period.

Answer 10

The correct answer is: Are reported during the policy period.

Question 11

Professional liability insurance is available for:

Select one:

a. wholesalers
b. dry cleaners
c. plumbers
d. pharmacists

Answer 11

The correct answer is: pharmacists

Question 12

What triggers an insurer’s liability under a “claims made” form?

Select one:

a. the reporting of the claim
b. the occurrence

Answer 12

The correct answer is: the reporting of the claim

Question 13

Under an E&O policy, claims occurring during the policy period may be reported after the policy expires if the policy has:

Select one:

a. a Retroactive Date
b. an Extended Reporting Period

Answer 13

The correct answer is: an Extended Reporting Period

Question 14

A real estate agent’s Professional Liability Policy covers:

Select one:

a. theft of client’s funds.
b. negligent failure to give a client a copy of a completed document.
c. an auto accident.
d. fraud involving the valuation of a property.

Answer 14

The correct answer is: negligent failure to give a client a copy of a completed document.

Question 15

Who should get a Professional Liability Policy?

Select one:

a. an auto mechanic
b. a plumbing, heating and general contractor
c. a beautician or barber
d. an electrical contractor

Answer 15

The correct answer is: a beautician or barber

Question 16

Professional Liability is known as:

Select one:

a. Errors and Omissions
b. Commercial General Liability

Answer 16

The correct answer is: Errors and Omissions

Question 17

E&O forms cover:

Select one:

a. fines
b. defense costs
c. auto accidents
d. penalties

Answer 17

E&O won’t cover government fines. But, like every liability policy, it covers Supplementary Payments (the defense costs - lawyers, expert witnesses, appeal bonds).

The correct answer is: defense costs

Question 18

Which policies are usually written on a “claims made” basis with a consent to settle provision?

Select one:

a. Commercial General Liability
b. Professional Liability

Answer 18

The correct answer is: Professional Liability

Question 19

A “claims made” policy will always pay a covered claim that occurs:

Select one:

a. During the policy term even if it is presented after the policy term.
b. Any time.
c. During the policy term if it is reported and presented during the policy term.
d. Before the retroactive date.

Answer 19

The “Claims Made” form will only cover an event that occurred after the Retroactive Date and before the policy expires. If there is an ERP (Extended Reporting Period), the victim may have additional time after the policy expires to file a claim.

The correct answer is: During the policy term if it is reported and presented during the policy term.

Question 20

A beautician inadvertently injures a customer when the beautician mistakenly applied a toxic chemical to the customer’s skin. This would be covered by the beautician’s:

Select one:

a. products liability
b. premises liability
c. bodily injury liability under the CGL
d. E&O

Answer 20

As is true with other businesses, a barber or beautician needs a CGL (Commercial General Liability policy) to cover the routine accidents, such a slip and fall. However, because barbers and beauticians are considered to be professionals, they should have an E&O policy to cover professional wrongs.

The correct answer is: E&O

Question 21

Claims arising from failure to meet the expected standard of care are covered by:

Select one:

a. Property insurance
b. Professional Liability

Answer 21

The correct answer is: Professional Liability

Question 22

E&O covers claims arising from:

Select one:

a. felonious acts
b. intentional acts
c. wrongful acts
d. auto accidents

Answer 22

E&O policies do better than merely covering negligence. E&O policies also cover “wrongful acts” where there is an error in judgment that doesn’t necessarily rise to the level of negligence. This is better coverage than provided by the typical liability policy. The victim has to show that the professional made a mistake but doesn’t have to prove that negligence occurred.

The correct answer is: wrongful acts