Chapter 4. Types of Casualty Policies, Bonds, and Related Terms Flashcards
Who would need an umbrella policy?
Someone who needs coverage that is much higher than what can be offered in the primary policy
What three coverages are available under Section I of a Commercial General Liability policy?
Coverage A - Bodily Injury and Property Damage
Coverage B - Personal and Advertising Injury
Coverage C - Medical Payments
Compare CGL (Commercial General Liability) Bodily Injury vs Personal Injury
Bodily Injury - Legal liability from a physical injury or death
Personal Injury - injury to a person’s character (e.g., slander, libel, false arrest)
What is CGL (Commercial General Liability) Advertising Injury?
Nonphysical damage to a business (e.g. defamation)
Burglary vs robery
Burglary - theft by forced entry of a physical location
Robery - theft by threatening physical harm of a person
What three coverages are available under a Farm Coverage Liability policy?
Coverage H - Bodily Injury and Property Damage
Coverage I - Personal and Advertising Injury
Coverage J - Medical Payments
What are the six parts of PAPs (Personal Auto Policy)?
Part A - Liability
Part B - Medical payments
Part C - Uninsured motorists
Part C - Damage to your auto
Part E - Duties after a loss
Part F - General provisions
What four categories of vehicle are covered under PAPs?
- Those listed in the Declarations
- Newly acquired vehicle
- Owned trailers
- Temporary substitute vehicles
What four categories of people are covered by PAPs?
- Named insured
- Any person driving insured car with the insured’s permission
- Any person occupying a covered vehicle
- Any person entitled to recover damages due to injuries to the named insured or family members
Compare Collision vs Other-than-Collision
Collision - a covered vehicle collides with another vehicle or object
Other-than-Collision - damage to a covered vehicle cause by falling rocks, hail, fire, theft or breaking glass
Is a collision with birds or animals considered a Collision or Other-than-Collision?
Other-than-Collision
What is PAP Part A?
Liability - coverage to OTHER PARTIES, not the insured
What are the three categories of PAP Split Limit coverage?
- Per person bodily damage maximum
- Per accident bodily damage maximum
- Per accident property damage maximum
If PAP Split Limit coverage is 25/50/10, what does that mean?
$25,000 per person bodily damage maximum
$50,000 per accident bodily damage maximum
$10,000 per accident property damage maximum
What is PAP Part B?
Medical payments
What is PAP Part C?
Uninsured motorists
What percent of drivers are uninsured?
5% - 25%
Under what four circumstances does Part C of PAP kick in?
When the vehicle owner who caused the damages is:
- Uninsured
- Underinsured
- Insured by an insolvent company
- Cannot be identified (i.e. hit-and-run)
What is PAP Part D?
Damage to your auto
What is the limit of liability in Part D: Coverage for Damage to Your Auto?
Either ACV or the amount needed to repair or replace, whichever is lesser
What is PAP Part E?
Duties after an accident or a loss (e.g. reporting loss, proof of loss, etc.)
What is PAP Part F?
General provisions - which apply to the entire policy
What happens when an insurer goes bankrupt and where is it stipulated in PAP?
In Part F - General provisions - the insurer still has to honor all claims of all policies even if it goes bankrupt
How much notice must an insurer of PAP give to an insured for cancellation of a policy for nonpayment of premium?
10 days
In all instances other than nonpayment of premium, how much notice must the insurer of PAP give to the insured?
20 days
What PAP Endorsement covers motorcycles, motor homes, golf carts, etc.?
Miscellaneous Type Vehicle
What are the four Workers Compensation benefits?
- Medical payments
- Disability income
- Rehabilitation expenses
- Death benefit
How is the premium rate charged for Workers Compensation coverage?
Per each $100 of annual payroll
Who are the three parties to a bond?
POG
- The principal (or obligor): the party who is required to fulfill an obligation
- The obligee (or insured): the party who is protected by the bond
- The guarantor (or surety): the insurance company that issues the bond
What three types of entities can be insured under a General Liability policy?
Sole proprietors, partnerships and corporations
What are the 2 parts of the Garage Liability Coverage?
- Garage Operations: Covered Autos
- Garage Operations: Other than Covered Autos
What is the name for the deductible in liability umbrella policies?
Self-insured retention (SIR)
What three types of losses are indicated by the split limits in an auto insurance policy?
- Bodily injury per person
- Bodily injury per accident
- Property damage per accident
Coverage for medical payments under a Personal Auto Policy applies to expenses following a covered accident that are incurred and services rendered within what time period?
3 years
What do numerical symbols represent in auto policies?
They define the type of vehicle insured for specific coverages
What Personal Auto Coverage would pay for the insured’s travel expenses and loss of earnings while the insured is involved in the settlement process of a covered loss?
Part A: Liability
What does Coverage A of the Commercial General Liability (CGL) form provide coverage for?
Injury or death suffered by a third party, or damage to the property of others
What is the occurrence form trigger based on?
The date of the injury or damage
Underinsured Motorist (UIM) coverage will pay the difference between which 2 limits?
The insured’s UIM limits and the at-fault driver’s insurance bodily injury limits
What is the purpose of surety bonds?
To guarantee that specific duties and obligations of the principal will be fulfilled
Rental reimbursement endorsement is available only if an auto policy has what type of coverage?
Other than Collision Coverage
What are the 2 coverage triggers (forms) in Commercial Crime policies?
- Discovery Form
- Loss Sustained Form
A vehicle rented from a commercial rental company is known as what type of auto?
Hired auto
A person or business that requires coverage for all liability exposure should purchase what type of insurance?
Commercial General Liability (CGL) and Professional Liability
What Personal Auto coverage would pay for damages to a covered auto caused by a collision with a deer?
Other Than Collision (Comprehensive)
What is the minimum amount of additional coverage provided by umbrella policies?
$1 million
What is the exclusive remedy doctrine?
Injured employees cannot seek damages outside workers compensation
What is the purpose of a claims-made form?
To pay for bodily injuries or property damage reported during the policy period
What types of expenses are covered by Coverage C – Medical Payments in Commercial General Liability policies?
Medical, surgical, hospital, or funeral expenses for third parties injured because of the insured’s business operations
All of the following are factors in rating workers compensation insurance EXCEPT
A. Payroll
B. Sales
C. Loss experience
D. Job classification
B. Sales
The Employee Theft crime policy form includes a coverage extension that applies to employees temporarily outside the coverage territory for up to
90 days
Directors and officers liability insurance defends actions against a corporation or its officers and directors alleging wrongful acts. With regard to the coverage provided, wrongful acts include any of the following EXCEPT
A. Neglect
B. Embezzlement
C. Misstatements
D. Breach of duty
B. Embezzlement
Embezzlement is a criminal act. There is no “standard” director and officers policy; however, most policies specifically exclude coverage for defense or payment of claims resulting in fines or penalties resulting from criminal acts, nor will they pay punitive damages.
Which of the following personal auto coverages would pay for the insured’s travel expenses and loss of earnings while involved in the settlement process of a covered loss?
A. Collision coverage
B. Comprehensive coverage
C. Liability coverage
D. Medical payments
C. Liability coverage
Supplementary payments, found in Part A - Liability, include expenses incurred by the insured at the insurer’s request, including $200 per day for attending trials or hearings.
Under the commercial crime coverage inside the premises - robbery or safe burglary of other property, what is the special per occurrence limit that applies to loss or damage to precious metals, precious and semiprecious stones, pearls, furs, manuscripts, drawings, or records?
A. $10,000
B. $5,000
C. $1,000
D. $25,000
B. $5,000
A special limit of $5,000 per occurrence applies to loss or damage to precious metals, precious and semiprecious stones, pearls, furs, manuscrints. drawings or records.
After a claim-made insurance policy has been canceled, which of the following will help protect the insured against potential claims that may arise from an occurrence that happened during the policy period but is reported after the cancellation?
A. A Retro-Date endorsement
B. Supplemental Extended Reporting Period
C. A Midi-Tail coverage
D. A Mini-Tail coverage
B. Supplemental Extended Reporting Period
The Supplemental Extended Reporting Period is an optional reporting period of unlimited duration that will cover claims arising from occurrences that took place after the retroactive date and before the end of the policy period, subiect to the policy aggregate limit for the entire term.
Super value Store has a commercial general liability policy written with a general aggregate limit of $300,000 and an occurrence limit of $100,000. A customer injured on the premises was awarded $45,000 for medical expenses and loss of earnings, and $60,000 for pain and suffering. The court costs and attorney fees were $15,000. How much will the GL policy pay?
A. $100,000
B. $105,000
C. $120,000
D. $115,000
D. $115,000
The policy will pay up to the occurrence limit ($100,000 in this scenario), plus the cost of the court and attorney fees over and above the limit
All of the following conditions must exist for injury or damage to be included in the products and completed operations hazard of a commercial general liability policy EXCEPT
A. The injury or damage must arise out of the insured’s product or work.
B. The injury or damage must occur after the insured has released physical possession of the product to another.
C. The injury or damage must occur within 90 days after the insured’s work is completed.
D. The injury or damage must occur away from the insured premises.
C. The injury or damage must occur within 90 days after the insured’s work is completed.
The products and completed operations hazard includes injuries or damage that occur after the insured has completed its job and left the site, or relinquished control of a product it manufactured or sold. There is no time limit on the injury or damage.
An insured has a personal auto policy with both collision and other-than-collision coverage. The insured’s car is stolen and recovered five days later. If the insured claims transportation expenses of $30 per day, how much will the policy pay?
A. $60
B. $30
C. $150
D. $90
D. $90
The policy will pay $30 per day after 48 hours, not to exceed 30 days in total. In this case, the policy will pay for days 3-5, so $90.
Which of the following symbols is available to an insured with vehicles subject to no-fault coverage?
A. Symbol 9
B. Symbol 6
C. Symbol 7
D. Symbol 5
D. Symbol 5
Which of the following symbols is available to an insured with vehicles subject to non-owned vehicles used in connection with the insured’s business coverage?
A. Symbol 9
B. Symbol 6
C. Symbol 7
D. Symbol 5
A. Symbol 9
Which of the following symbols is available to an insured with vehicles subject to owned vehicles in states with compulsory uninsured motorist laws coverage?
A. Symbol 9
B. Symbol 6
C. Symbol 7
D. Symbol 5
B. Symbol 6
Rental Reimbursement is only available if the policy includes which coverage?
A. Towing and Labor Costs
B. Named Nonowner Coverage
C. Extended Nonowned Coverage for Named Insured
D. Other Than Collision Coverage
D. Other Than Collision Coverage
This endorsement will reimburse the insured for rental charges incurred because the covered auto is out of use because of a covered loss
In order for a watercraft to be covered under a businessowners policy, the watercraft cannot exceed the length of
51 feet
Watercrafts are not covered under the businessowners liability coverage form, unless the watercraft is less than 51 feet in length and is not used to carry people or property for a fee, or if the watercraft is located on shore at the insured’s owned premises.
An insured is driving her automobile and strikes a large pothole that causes a flat tire. Which coverage of the insured’s personal auto policy will pay for the repair?
A. Comprehensive
B. Transportation expenses
C. Loss is not covered.
D. Collision
C. Loss is not covered.
A flat tire that occurs from a cause other than vandalism is considered a road hazard and is specifically excluded from coverage in the policy.
If a commercial vehicle is stolen, the policyholder may obtain coverage for transportation expenses, subject to which of the following limits?
A. $15 per day; $300 maximum
B. $30 per day; $900 maximum
C. $25 per day; $800 maximum
D. $20 per day; $500 maximum
B. $30 per day; $900 maximum
All of the following are true statements regarding the supplementary payments of a commercial general liability policy EXCEPT
A. They pay defense costs even after the aggregate limit has been reached.
B. They pay all expenses incurred by the insurer.
C. They pay pre-judgment and post-judgment interest.
D. They pay all reasonable costs incurred by the insured in helping to investigate or defend a claim.
A. They pay defense costs even after the aggregate limit has been reached.
Once the aggregate has been reached, the insurer will not be responsible for paying further claims; therefore, the insurer no longer pays to defend.
What are the two forms of crime insurance?
A. Occurrence and claims-made
B. Discovery and loss sustained
C. On premises and off premises
D. Commercial entity and government entity
B. Discovery and loss sustained
The claims-made trigger is based on which of the following?
A. The date when injury or damage occurs
B. The place where the injury or damage occurs
C. The amount of the insured’s deductible
D. The date the claim is first made
D. The date the claim is first made
The claims-made trigger is based on the date the claim is first made in writing against an insured for injury or damage that occurred on or after the policy’s retroactive date.
Which of the following symbols is available to an insured with vehicles subject to commercial vehicles listed in the policy?
A. Symbol 9
B. Symbol 6
C. Symbol 7
D. Symbol 5
C. Symbol 7
All of the following are supplemental payments included in the liability section of a personal auto policy EXCEPT
A. Premiums on appeal bonds in any suit the insurer defends.
B. Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident.
C. Up to $200 a day for loss of earnings due to attendance at hearings or trials.
D. Up to $250 for bail bonds required because of a covered accident.
B. Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident
Coverage for medical payments under a personal auto policy applies to expenses following a covered accident that are incurred and services rendered within what maximum time period?
3 years
What is another name for liquor liability insurance?
Dram shop insurance
What is the maximum dollar amount an insurer will pay for loss to sound equipment permanently installed in a vehicle insured under a business auto policy?
$1,000
The maximum paid for loss of audio, video, and data electronic equipment is $1,000 for equipment permanently installed in the vehicle, or removable from a permanently installed housing unit.
Which of the following statements is true concerning a bonded contractor who defaults on a construction performance contract?
A. The contractor will lose his license to operate in the state.
B. The surety may cancel the bond and avoid paying any losses or expenses.
C. The obligee may engage another contractor and then seek reimbursement from the surety.
D. The principal has no obligation to complete any remaining work or to pay for the expenses.
C. The obligee may engage another contractor and then seek reimbursement from the surety.
The bonding company would have to see that the job was completed and then seek recovery for its expenses from the bonded contractor (principal).
All of the following are supplemental payments included in the liability section of a personal auto policy EXCEPT
A. Premiums on appeal bonds in any suit the insurer defends.
B. Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident.
C. Up to $200 a day for loss of earnings due to attendance at hearings or trials.
D. Up to $250 for bail bonds required because of a covered accident.
B. Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident.
A personal auto policy does not pay the cost of the release of a vehicle impounded by a law enforcement agency.
Most fidelity bonds have a period of time in which losses which occurred while the bond was in force are covered even though not found until after the coverage has terminated. This is known as
A discovery period
Normally a year after the bond coverage terminates, claims for losses which occurred while bond was in force but not known about until after coverage ended, will be paid. This is the discovery period.
What is the deductible of a commercial liability umbrella policy called?
A. The SIR
B. The PIL
C. The CGL
D. The CPP
A. The SIR (self-insured retention)
The self-insured retention (SIR) is an initial part of a loss the insured pays before the umbrella pays if no other policy covers the loss.
The businessowners policy liability coverage will pay for necessary medical expenses of others incurred within what maximum time period?
1 year
Which of the following would be covered under a business liability insurance policy?
A. Loss of electronic data due to a burglary
B. Damage to a watercraft while on shore at the insured’s premises
C. Bodily injury resulting from environmental pollution
D. Bodily injury to an employee covered by workers compensation insurance
B. Damage to a watercraft while on shore at the insured’s premises
Which type of policy covers loss that occurs during the policy period, regardless of when the claim is made?
Occurrence policy
One advantage of claims-made liability forms from the insurer’s point of view is that
A. The insurer does not pay claims years after the occurrence causing the damage.
B. The insurer will always know when to expect the claim to be filed.
C. It prevents stacking of limits.
D. It allows stacking of limits.
C. It prevents stacking of limits
Because of the occurrence trigger, if an occurrence happened in more than one policy period, claims could be filed on all policies. Because of the claims-made trigger, only the policy in force would be in play.
Which employee fidelity bond pays no more than its limit of liability for each separate occurrence no matter that several separately identifiable employees were involved in a single loss?
A. Blanket position
B. Position schedule
C. Commercial blanket position
D. Individual
C. Commercial blanket position
Commercial blanket position = per occurrence. It will pay no more for any one loss no matter how many separately identifiable employees were involved.
Blanket position = per employee
Which of the following circumstances would be EXCLUDED under medical payments coverage of a personal auto policy?
A. The insured’s friend is injured in an accident while riding as a passenger in the insured’s car.
B. The insured’s mother is injured while exiting from the insured vehicle.
C. The insured is injured while driving his motorcycle on his resident premises.
D. The insured is struck by another vehicle while crossing the street.
C. The insured is injured while driving his motorcycle on his resident premises.
Coverage does not apply when the insured is occupying a vehicle with fewer than 4 wheels.
For the newly acquired auto coverage to apply, the named insured must notify the insurer about the vehicle within how many days of becoming the vehicle owner?
14 days
Which of the following statements would be an example of a product liability claim?
A. Someone tampers with the insured’s product causing the insured to have to recall all products that are on the shelf.
B. Faulty packaging of a cereal caused spoilage that resulted in someone getting sick.
C. The insured’s product has to be recalled because of an expiration date.
D. An insured, while delivering product to a customer, hits another car with the delivery truck causing bodily injury and property damage.
B. Faulty packaging of a cereal caused spoilage that resulted in someone getting sick.
Product liability covers damage done by the product but not damage to the product.
In a participation plan, the insured may be eligible for which of the following?
A. Guaranteed dividends
B. An increase in insurance over time
C. Lower premiums
D. A partial premium refund
D. A partial premium refund
Partial premium refund = dividend. But they’re not guaranteed
Employee fidelity may be written in all the following ways EXCEPT
A. Position schedule.
B. Name schedule.
C. Individual.
D. Location schedule.
E. Blanket position.
D. Location schedule
Position schedule: several positions are listed and whoever is occupying a scheduled position is covered
Name schedule: several employees are named
Individual: named individual
Blanket position: anyone working in that role
Which of the following is covered under the physical damage coverage of a personal auto policy?
A. Custom furnishings or equipment in a pickup or van exceeding coverage of $1,500
B. A covered auto seized and destroyed by a government authority
C. A cellular phone in a locked vehicle
D. Sound reproduction equipment permanently installed in the covered auto
D. Sound reproduction equipment permanently installed in the covered auto
If manufacturer installed
In addition to the common policy conditions, all of the following conditions apply to liability coverage EXCEPT
A. Separation of insured.
B. Legal action against insurer.
C. Employers liability.
D. Bankruptcy.
C. Employers liability.
What is the business auto coverage territory for?
A. United States and its territories, Canada, or worldwide for private passenger hired autos
B. United States and Mexico
C. Only for the specific location of the business
D. United States only
A. United States and its territories, Canada, or worldwide for private passenger hired autos
What method of premium computation relates an employer’s losses, payroll, and premiums to the rating bureau’s classifications of operations?
A. Arbitration plan
B. Experience modification factor
C. Merit rating plan
D. Workers classification factor
B. Experience modification factor
If a covered auto is involved in an auto accident in another state, what happens to the limits of policy liability in a personal auto policy?
A. They do not change.
B. They adjust to at least the minimum limits of the other state.
C. They decrease based on the state law.
D. They do not apply.
B. They adjust to at least the minimum limits of the other state.
Supplementary payments on a GL provide all of the following EXCEPT
A. $100 in gasoline costs by the insured driving a witness to and from court.
B. The cost of bonds to release attachment.
C. Pre-judgment and post-judgment interest.
D. Up to $500 a day for lost earnings and $2,000 for the cost of bail bonds.
D. Up to $500 a day for lost earnings and $2,000 for the cost of bail bonds.
Supplementary payments will cover only $250 for these.
The designation symbols used in commercial auto policies can be found in which policy section?
A. Covered Auto
B. Definitions
C. Conditions
D. Liability Coverage
A. Covered Auto
Which would NOT be covered by the inside the premises - robbery or safe burglary of other property coverage?
A. A store clerk is forced into the storage room and locked in while the intruder steals high-value merchandise.
B. An employee is caught stealing cash from the register.
C. Someone breaks in after business hours, pries open a wall vault and steals several valuable paintings.
D. Two men break a window during an attempted robbery.
B. An employee is caught stealing cash from the register.
Which of the following would be covered under the Garage Liability Coverage
Form?
A. Fellow employees
B. Loss of use
C. Product recalls
D. Insured’s business premises
D. Insured’s business premises
The garage coverage form provides liability protection for the insured’s premises, autos, products, and work performed. All the other answer choices are exclusions from coverage.
Under the personal auto policy, liability for bodily injury resulting from the insured’s use of a nonowned automobile is
A. Not covered.
B. Provided by the insured’s policy on a primary basis.
C. Shared on a pro rata basis.
D. Provided by the insured’s policy on an excess basis.
D. Provided by the insured’s policy on an excess basis.
A bond is written for a set limit, and the surety will be liable only for this amount of the limit. This limit is known as the
A. Limit of liability.
B. Penalty.
C. Face value.
D. Stated amount.
B. Penalty.
Which of the following statements is true regarding the commercial general liability policy’s Coverage C - Medical Payments?
A. The coverage provides high limits of insurance for bodily injury losses.
B. The coverage is liability insurance because it pays only if the insured is legally liable.
C. The coverage applies to bodily injury to the named insured.
D. The coverage is considered good will because payments are made without regard to fault.
D. The coverage is considered good will because payments are made without regard to fault.
B&B Market was sued when an employee detained a person he believed to be a shoplifter, but the person turned out to be the meter reader. Which coverage would apply to this suit?
A. Personal and advertising injury liability
B. Bodily injury liability
C. Crime coverage part
D. Property damage liability
A. Personal and advertising injury liability
This suit would fall under the coverage of personal injury, damage to the character of the claimant.
A premium discount is the term that describes when an insured owes a total standard premium greater than
A. $15,000.
B. $5,000.
C. $1,000.
D. $10,000.
B. $5,000.
Which federal act provides benefits to injured civilians who are employed by the federal government?
A. The Jones Act
B. U.S. Longshore and Harbor Workers Compensation Act
C. Federal Employers Liability Act (FELA)
D. Federal Employees Compensation Act
D. Federal Employees Compensation Act
A bank manager has had several instances of employee dishonesty involving transfer of funds. His risk manager is researching the best coverage for this situation. Which bond rider should he recommend to the bank manager?
A. Cash bond rider
B. Computer systems rider
C. Electronic data rider
D. Servicing contractors rider
B. Computer systems rider
What’s the difference between a fidelity bond and a surety bond?
A. The trigger is different.
B. A fidelity bond guarantees something will happen; a surety bond guarantees something will not happen.
C. A fidelity bond is a court bond; the surety bond is an honesty bond.
D. A surety bond guarantees something will happen; a fidelity bond guarantees something will not happen.
D. A surety bond guarantees something will happen; a fidelity bond guarantees something will not happen.
A fidelity bond is sometimes called an honesty bond and pays if someone has been dishonest. A surety bond is a guarantee someone will perform as promised and pays if they do not.
A provision found in most claims-made liability policy forms that provide a specified period of time following the policy expiration, during which claims arising out of occurrences during the policy period may be made against the policy at no extra cost, is called
A. Extension of coverage.
B. Basic extended reporting period.
C. Grace period.
D. Supplemental extended reporting period.
B. Basic extended reporting period.
Which of the following statements is true regarding the premium computation for workers compensation insurance?
A. The premium is set at the beginning of the policy period and will not change.
B. The insured pays a guaranteed premium based on an estimated value of the annual income received.
C. A premium auditor has the right to examine the insured’s compensation records at the end of the policy period to determine the actual premium basis.
D. The premium basis for workers compensation insurance varies by the type of industry in which the insured is involved.
C. A premium auditor has the right to examine the insured’s compensation records at the end of the policy period to determine the actual premium basis.
Because the initial premium calculation is based on estimated payrolls, a premium auditor may inspect actual payrolls paid to ensure that adequate premiums are being paid.
Under the business auto coverage form, mobile equipment is covered for liability insurance
A. When being carried or towed by a covered auto.
B. On an excess basis.
C. When coverage is written as Symbol 1.
D. When listed on the declarations.
A. When being carried or towed by a covered auto.
The bankruptcy provision found in the personal auto policy states that bankruptcy of the insured
A. Will waive all future premiums.
B. Is one of the reasons an insurer can cancel the policy.
C. Will not relieve the insurer of its policy obligations.
D. Will suspend the physical damage coverage.
C. Will not relieve the insurer of its policy obligations.
Which of the following statements is NOT true regarding a personal umbrella liability policy?
A. It may cover certain exposures not provided under the primary layer.
B. It provides errors and omissions coverage for an agency.
C. It provides excess liability coverage over underlying personal liability.
D. It may require the payment of self-insured retention.
B. It provides errors and omissions coverage for an agency.
Personal umbrella policies cover the personal exposure of the insured. Errors and omissions coverage is provided only in a professional liability policy.
What is another name for a Professional Liability policy in fields other than medical?
Errors and Omissions
Retroactive dates in claims made GL policies apply to
A. Both BI and PD and PIL and Advertising Liability.
B. BI and PD, PIL and Advertising Liability, and Med Pay.
C. PIL and Advertising Liability only.
D. Bl and PD only.
A. Both BI and PD and PIL and Advertising Liability.
For Medical Payments to apply, the expense must be incurred and reported within one year of the accident.
Which commercial crime form would provide coverage for a loss that did not necessarily happen during the policy period but was revealed during the policy period?
A. Retro form
B. Loss sustained form
C. Discovery form
D. Reporting form
C. Discovery form
An uninsured motor vehicle includes all of the following EXCEPT
A. A vehicle which flees a hit-and-run accident.
B. A vehicle not covered by an auto insurance policy.
C. A vehicle that has no liability bond in force.
D. A vehicle owned and operated by a self-insurer.
D. A vehicle owned and operated by a self-insurer.
A parking garage owner completed major renovations to a parking garage just prior to selling it to another company. Three months later, overhead concrete fell onto cars in the second floor level. Under the garage coverage policy conditions, which of the following is true?
A. The damage occurred when the renovations were done.
B. The renovation contractor is liable.
C. The first owner is responsible for the damage.
D. The damage occurred when the concrete fell.
D. The damage occurred when the concrete fell.
Under the conditions of a garage coverage policy, the loss occurs at the time of the incident, not when the faulty work was done.
Erroneous Publishing copied all the material from Angels Inc.’s book. The only changes made by Erroneous were to rename the title and chapters, put a different cover on it, and distribute it as its own. Angels Inc. files a claim against Erroneous and seeks damages. Will a commercial general liability policy cover the claim?
A. No, because this event does not meet the definition of infringement.
B. Yes, because the claim is a result of Erroneous products and work.
C. No, because the claim results from copyright infringement and is not in an advertisement.
D. No, because there is no bodily injury or property damage.
C. No, because the claim results from copyright infringement and is not in an advertisement.
An insured is involved in an auto accident in another state. The state has a financial responsibility law that specifies limits of liability higher than the limits shown in the declarations. What amount will the insured’s policy pay?
A. Higher limits
B. Lower limits
C. Only the limits specified in the policy
D. The insurer will not pay for out-of-state accidents
A. Higher limits
According to the out-of-state coverage provision in the personal auto policy (PAP), if the state or province has a financial responsibility law specifying limits of liability higher than the limits shown in the declarations, the insured’s policy will provide the higher specified limits.
The members of a limited liability company are insureds under a businessowners policy (BOP) if
A. Each individual is listed as a named insured on the policy.
B. A single individual member of the limited liability company is listed as the named insured.
C. The limited liability company is designated as the named insured.
D. Members of a limited
C. The limited liability company is designated as the named insured.
If the named insured is designated as a limited liability company, the named insured and members also are insureds, but only with respect to the conduct of the business.
When does a business need to purchase a liquor liability policy?
A. When it is in the business of manufacturing, distributing, serving, or furnishing alcoholic beverages
B. When it does not have a general liability policy
C. When it entertains customers or employees at events where liquor is served
D. When employees consume alcoholic beverages
A. When it is in the business of manufacturing, distributing, serving, or furnishing alcoholic beverages
What are the two major sections of commercial crime policies?
A. Occurrence and claims made
B. Property and liability
C. Discovery form and loss sustained form
D. Commercial entities and government entities
D. Commercial entities and government entities
When an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays
A. The excess over the self-insured retention.
B. The amount specified in the policy under the additional coverage provisions.
C. The amount in excess of the policy’s limits of liability.
D. A percentage of the loss as described on the declarations.
A. The excess over the self-insured retention.
A passenger in a friend’s car is injured while getting into the car. Which of the following statements would apply if both the passenger and the driver had medical payments coverage under a personal auto policy?
A. The driver’s policy will act in excess of the passenger’s policy.
B. Both policies will share equally in the loss.
C. The passenger’s policy would be primary.
D. The driver’s policy would be primary.
D. The driver’s policy would be primary.
Medical payments coverage pays all necessary medical and funeral expenses incurred and services rendered to the insured or passengers in the insured’s vehicle, regardless of fault.
Under the examinations of books and records condition, the insurance company has the right to examine and audit the insured’s books and records related to the policy
A. Only during the policy period.
B. Only after the policy period.
C. During the policy period and for up to 3 years after the termination of the policy.
D. During the policy period and for up to 5 years after the termination of the policy.
C. During the policy period and for up to 3 years after the termination of the policy.
Which type of commercial crime policy coverage is triggered by a loss that happens during the policy period but is not necessarily discovered during the policy period?
A. Loss sustained form
B. Discovery form
C. Retroactive form
D. Mysterious disappearance form
A. Loss sustained form
Loss sustained crime coverage pays for losses that occur during the policy period and are found for up to 1 year after the policy is terminated.
If a crime policy includes the extended reporting period in the discovery form, general losses must be reported within how many days of policy cancellation?
A. 60 days
B. 90 days
C. 20 days
D. 30 days
A. 60 days
When would uninsured motorist coverage apply?
A. When the other party is legally liable but has no insurance
B. When the insured is legally liable, but does not have sufficient coverage
C. When the insured is legally liable
D. When the insured drives an uninsured vehicle
A. When the other party is legally liable but has no insurance
Uninsured motorist coverage applies only if the other driver is at fault but has no coverage.
All of the following situations would be covered under a professional liability policy EXCEPT
A. An accountant’s error that inflated a bid and caused a client to lose a maior account.
B. Failure of a doctor to render the quality of care that is customary in the medical field.
C. Negligence of an architect who designed an unsafe building.
D. The failure of an attorney to properly defend a client due to his personal dislike of the client.
D. The failure of an attorney to properly defend a client due to his personal dislike of the client.
Intentional breach of duty would not be covered.
A provision found in most claims-made liability policy forms that provide a specified period of time following the policy expiration, during which claims arising out of occurrences during the policy period may be made against the policy at no extra cost, is called
A. Basic extended reporting period.
B. Extension of coverage.
C. Grace period.
D. Supplemental extended reporting period.
A. Basic extended reporting period.
The ISO commercial general liability claims-made form provides an additional 60 days to report claims at no additional cost. The supplemental extended reporting period provides unlimited time, but costs an additional 200% of the annual renewal premium.
Under the personal auto policy, liability for bodily injury resulting from the insured’s use of a nonowned automobile is
A. Provided by the insured’s policy on an excess basis.
B. Shared on a pro rata basis.
C. Provided by the insured’s policy on a primary basis.
D. Not covered.
A. Provided by the insured’s policy on an excess basis.
Automobile insurance follows the insured auto, so the coverage written on the auto is primary. Automobile insurance also follows the insured as excess over other collectible insurance.
