Class 4

Question 1

Extra Expense Coverage Form

Answer 1

Commercial property insurance that pays for additional costs in excess of normal operating expenses that an organization incurs to continue operations while its property is being repaired or replaced after having been damaged by a covered cause of loss. Profits are not covered since the firm is still operating.

Question 2

Business Income from Dependent Properties

Answer 2

♠ Contributing location
♠ Recipient location
♠ Manufacturing location
♠ Leader location

Question 3

Contributing location (Business Income from Dependent Properties)

Answer 3

When the location that provides you raw materials/services, fails to perform. That delay causes you to slow down your production.

Question 4

Recipient location (Business Income from Dependent Properties)

Answer 4

when the recipient fails to pay for the order

Question 5

Manufacturing location (Business Income from Dependent Properties)

Answer 5

when the manufacturing service fails to perform. For example, the factories that Nike uses in Bangladesh burn down.

Question 6

Leader location (Business Income from Dependent Properties)

Answer 6

when your business benefits form some larger business near by.

Question 7

Other Commercial Property Coverage

Answer 7

A. Builders Risk Insurance
B. Equipment Breakdown Insurance – aka Boiler and Machinery Coverage
C. Difference in Conditions (DIC) Insurance

Question 8

Difference in Conditions (DIC) Insurance (Other Commercial Property Coverage)

Answer 8

All risks coverage. A policy designed to broaden coverage by providing additional limits of coverage for specific perils when standard markets won’t provide adequate limits of coverage, providing coverage for perils that are excluded on standard coverage forms, or supplementing international policies that are written by admitted insurers in the applicable foreign countries.

Question 9

Transportation Insurance

Answer 9

A. Ocean Marine Insurance

B. Inland Marine Insurance

Question 10

Ocean Marine Insurance (Transportation Insurance)

Answer 10

Insurance covering the transportation of goods and/or merchandise by vessels crossing both foreign and domestic waters including any inland or aviation transit associated with the shipment. This type of marine insurance also encompasses coverage for damage to the vessels involved in shipments and any legal liability arising in the course of shipment.

Policies may also be written on an “particular/general average” basis.

Question 11

General Liability Loss Exposures

Answer 11

A.  Premises and Operations 
B.  Products Liability
C.  Completed Operations
D.  Contractual Liability
E.  Contingent Liability
F.  Other Liability Exposures

Question 12

Premises and Operations (General Liability Loss Exposures)

Answer 12

1. Liability because of operations on and off

2. Liability because of ownership and maintenance of premises.

Question 13

Products Liability (General Liability Loss Exposures)

Answer 13

Faulty work on your peremises

Question 14

Contingent Liability (General Liability Loss Exposures)

Answer 14

Potential liability that may occur, depending on the outcome of an uncertain future event. A contingent liability is recorded in the accounting records if the contingency is probable and the amount of the liability can be reasonably estimated.

Question 15

Other Liability Exposures (General Liability Loss Exposures)

Answer 15

1. Liability arising out of ownership or use of autos, aircraft or watercraft
2. Occupational injury or disease to employees
3. Suits by employees alleging discrimination
4. Professional liability
5. Directors and officers liability

Question 16

Commercial General Liability (CGL) Policy

Answer 16

A type of insurance policy that provides coverage to a business for bodily injury, personal injury, and property damage caused by the business’ operations, products, or injury that occurs on the business’ premises. Commercial general liability, or CGL, is considered comprehensive business insurance, though it does not cover all risks that a business may face.
♠ Occurrence policy
♠ Claims made policy

Question 17

Occurrence policy (Commercial General Liability (CGL) Policy)

Answer 17

Protects you from any covered incident that “occurs” during the policy period, regardless of when a claim is filed. An occurrence policy will respond to claims that come in – even after the policy has been canceled – so long as the incident occurred during the period in which coverage was in force.

Question 18

Claims made policy (Commercial General Liability (CGL) Policy)

Answer 18

A policy providing coverage that is triggered when a claim is made against the insured during the policy period, regardless of when the wrongful act that gave rise to the claim took place. (The one exception is when a retroactive date is applicable to a claims-made policy.

Question 19

Overview of the CGL Occurrence Policy

Answer 19

• Coverage A—bodily injury and property damage liability
• Coverage B—personal and advertising injury liability -slander, libel, malicious prosecution
• Coverage C—medical payments - covered regardless of liability. Why? It takes long to investigate who is liable.
• Supplementary payments—coverages A and B - cover bail bonds, pre and post judgment interest

Question 20

Retroactive date

Answer 20

A provision found in many (although not all) claims-made policies that eliminates coverage for claims produced by wrongful acts that took place prior to a specified date, even if the claim is first made during the policy period.

Question 21

Particular average insurance (Ocean Marine Insurance)

Answer 21

Insurance just for your cargo

Question 22

General average insurance

Answer 22

The law of general average is a legal principle of maritime law according to which all parties in a sea venture proportionally share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole in an emergency (for instance, when the crew throws some cargo overboard to lighten the ship in a storm).

Question 23

Contingent insurance

Answer 23

1. Secondary insurance cover taken to protect an insured (a tenant, for example) in case the primary insurance cover taken by another party (a landlord, for example) does not respond to the loss for one reason or another.
2. Insurance policy that covers several remote risks, and is bought generally where legal remedies to a loss are slow, uncertain, or non-existent.