Chapter 19 Flashcards
The difference between Coverage E and Coverage F in the farm personal property coverage form is:
A) Coverage E is for liability while Coverage F is for medical payments.
B) Coverage E applies to other Private structures while Coverage F applies to loss of use.
C) Coverage E is a reporting form but Coverage F is not.
D) Insurance is scheduled under Coverage E but a blanket limit applies to Coverage F.
Answer: D
Classes of property are scheduled under Coverage E. Coverage F is covers farm personal property on a blanket basis both on and off the insured premises.
All of the following losses of cattle would be covered under a broad form farm policy EXCEPT:
A) loss due to accidental shooting of the cattle by a neighbor.
B) loss due to disease.
C) loss due to an accident while loading into railroad cars.
D) loss due to attacks by wild animals.
Answer: B
The causes of loss–broad form for the farm property form adds coverage for accidents involving loading or unloading, attacks on covered livestock by dogs or wild animals, and loss due to accidental shooting. Loss due to disease is not covered.
An insured who needs coverage against the breakdown of boilers and other machinery and equipment should purchase:
A) commercial property coverage.
B) difference in conditions coverage.
C) comprehensive general liability coverage.
D) equipment breakdown coverage.
Answer: D
Equipment breakdown coverage, also known as boiler and machinery coverage, can be used to insure boilers, machinery, and other equipment for both direct loss and indirect loss.
Which one of the following exposures to loss is NOT covered by the equipment breakdown protection coverage form?
A) Utility interruption.
B) Fire or combustion explosion.
C) Business income.
D) Spoilage damage.
Answer: B
Business income, spoilage damage, and utility interruption are coverages provided in the form. The policy excludes fire or combustion explosion because fire damage is covered by standard commercial property forms.
Aircraft hull insurance will provide coverage for which of the following?
A) Damage to or loss of the aircraft hull, fuselage, and property damage to others.
B) Damage to or loss of the aircraft hull, fuselage, and personal injury caused.
C) Damage to or loss of the aircraft hull or fuselage.
D) Damage to or loss of the aircraft hull, fuselage, and medical payments.
Answer: C
Aircraft hull insurance indemnifies the policyholder for damage to or loss of the aircraft hull or fuselage. These policies are similar to auto policies in terms of coverage’s offered.
An aircraft liability policy provides coverage for liability arising from the operation of an aircraft. All the following statements are true about aircraft liability EXCEPT:
A) bodily injury is covered.
B) property damage is covered.
C) coverage is provided for the insured or other person who operates the insured’s aircraft.
D) coverage is provided for the owner only.
Answer: D
An aircraft liability policy provides coverage for liability arising from the operation of an aircraft. It covers bodily injury and property damage, and coverage is provided for the insured or other person who operates the insured’s aircraft.
Which policy would provide coverage for a surgeon when his patient is injured because of the doctor’s failure to correctly perform a heart operation?
A) Personal umbrella.
B) Homeowners.
C) Professional liability.
D) General liability.
Answer: C
A professional liability insurance policy protects professionals against claims for damages resulting from providing, or failing to provide, professional services. General liability insurance is another term for commercial general liability insurance and provides protection against legal liability for commercial risks arising from ownership, maintenance, or use of business premises, defects in manufactured products, and completed operations. Umbrella policies provide broadened coverage and higher limits of liability for businesses, organizations, and individuals. Homeowners policies provide coverage for occupants of residential property.
Which policy provides coverage for professional liability?
A) Errors and omissions policy.
B) General liability policy.
C) Homeowners policy.
D) Personal umbrella policy.
Answer: A
Certain professionals must attain and maintain a minimum standard of special knowledge and ability and must exercise reasonable care in performing their services. A person who fails in this regard can be held liable to a client if the client is injured or damaged by such failure. Professional liability insurance protects professionals against claims for damages arising out of their providing, or failing to provide, services. Errors and omissions policies are a type of professional liability policy.
An errors and omissions policy could be issued to cover the following occupations EXCEPT:
A) architects.
B) accountants.
C) insurance agents.
D) veterinarians.
Answer: D
Errors and omissions policies are issued to cover professionals such as architects, engineers, insurance agents, and accountants. Veterinarians and other medical professionals are covered under medical malpractice insurance.
Of the following occupations, which would NOT use an Errors and Omission policy to provide coverage for professional losses?
A) attorney.
B) doctor.
C) insurance agent.
D) consultant.
Answer: B
Errors and omissions policies are designed for professionals such as architects, accountants, engineers, consultants, attorneys, stockbrokers, and insurance agents - not medical professionals. A doctor would need medical malpractice insurance.
The type of professional liability policy that provides coverage for insurance agents, as well as certain other types of professionals, is typically referred to as a/an:
A) Malpractice policy.
B) Contractual liability policy.
C) Errors and Omissions policy.
D) Directors and Officers policy.
Answer: C
An Errors and Omissions (E&O) policy provides liability coverage for insurance agents. E&O policies also provide professional liability coverage for certain other types of professionals as well, including accountants, architects, stockbrokers, engineers, consultants and attorneys.
What type of coverage is typically found in a professional liability policy?
A) Business contractual obligations of the insured.
B) Wrongful acts, errors, or omissions the insured commits and in some cases bodily injury.
C) All liability exposures that the insured has.
D) Wrongful acts, errors, or omissions the insured commits.
Answer: B
Unlike the commercial general liability policy, which provides coverage for bodily injury, property damage, and medical payments, a professional liability policy typically covers wrongful acts, errors, or omissions the insured commits. In some cases, such as medical malpractice and architects’ and engineers’ policies, bodily injury is a covered cause of loss due to the nature of the profession.
Which of the following entities could bring an errors and omissions claim against an insurance agent?
A) Clients an agent represents and state insurance departments.
B) Companies an agent represents and state insurance departments.
C) Companies an agent represents and clients they represent.
D) Companies an agent represents, clients they represent, and state insurance departments.
Answer: C
There are two sources of professional liability claims against insurance agents and brokers. The first is any insurance company an agent represents. If an agent exceeds his authority and causes an insurance company to suffer a loss by paying a claim that should not have been covered, the insurer may sue the agent to recover the loss. The second is the agent’s client, who may sue for actions that adversely affect the collection of a claim.
Directors and officers may be held liable for all of the following EXCEPT:
A) confeasance, which is a person’s failure to conform to the performance of an act in a proper manner.
B) misfeasance, which is the performance of an act in an improper manner.
C) nonfeasance, which is a person’s failure to perform an act he has a duty to perform.
D) malfeasance, which is the commission of an illegal act.
Answer: A
There are three items for which a director and officer can be held liable. They are misfeasance, which is the performance of an act in an improper manner; nonfeasance, which is a person’s failure to perform an act he has a duty to perform; and malfeasance, which is the commission of an illegal act.
Which one of the following would NOT be covered under an employment practices liability insurance policy?
A) Age discrimination.
B) Wrongful discharge.
C) Mass layoffs of employees.
D) Sexual harassment.
Answer: C
Employment practices liability insurance policies typically cover wrongful acts, including sexual harassment, discrimination, and wrongful discharge. Mass layoffs of employees is excluded under most policies.
An ex-employee files suit against her former employer. She believes she was dismissed for missing work to perform jury duty. Which one of the following policies would cover damages paid to the employee if she proves her case?
A) Commercial general liability (CGL).
B) Employment practices liability (EPL).
C) Errors and omissions (E&O).
D) Directors’ and officers’ liability (D&O).
Answer: B
Being dismissed for taking time off for jury duty would be grounds for a wrongful termination suit, and this would be covered under an employment practices liability insurance policy. E&O policies cover injuries that occur as a result of rendering or failing to render a service by a professional other than a doctor or lawyer. D&O policies protect against liability resulting form the breach of corporate duties by corporate officers and directors. CGL policies provide protection against liability for commercial risks.
Of the following statements regarding employment practices liability (EPL) insurance, which is NOT a correct statement?
A) EPL insurance may be issued as a separate policy.
B) Policy provisions with EPL insurance differ among insurers.
C) Only standard ISO forms are used to issue EPL insurance.
D) EPL insurance may issued as an endorsement to a D&O policy.
Answer: C
Employment practices liability insurance insurance may be issued as an endorsement to a Director and Officers (D&O) Liability policy or as a separate policy. While standard ISO forms for EPL insurance are available, many insurance companies issue their own policies. EPL insurance policy provisions differ among insurers.
A Difference in Conditions contract is a(n):
A) endorsement used to modify the covered perils in a surety bond.
B) modification of the duties of the insured condition in inland marine insurance.
C) exclusion that applies when there has been an increase in hazard under the insured’s control.
D) policy issued to cover what is normally excluded in other property insurance contracts.
Answer: D
A DIC policy is designed to cover events commercial property policies typically exclude. It provides coverage for the difference between a very broad open perils policy and the insured’s property coverage, typically provided by a building and personal property coverage form.
