Comm Chp 11

Question 1

Excess Liability Policy

Answer 1

a policy that covers liability claims in excess of the limits of an underlying policy or stated retention amount

Question 2

Umbrella Liability Policy

Answer 2

a liability policy that provides excess coverage above underlying policies and may also provide coverage not available in the underlying polices, subject to a self insured retention

Question 3

Self Insured Retention (SIR)

Answer 3

an amount that is deductable from claims that are payable under an umbrella liability policy and that are not covered at all by any primary policy

Question 4

Professional Liability INsurance

Answer 4

insurance that covers persons engaged in various occupations against liability resulting from their rendering or failing to render professional services

Question 5

Management Liability Insurance

Answer 5

insurance that covers organizations and in some cases their directors, officers and other employees against claims for damages resulting from various wrongful acts that are not covered under other commercial liability polices common examples are directors and officers liability, employment practices liabilty insurance, employee benefit liability insurance, and fiduciary liability insurance

Question 6

Retroactive Date

Answer 6

the date on or after which the injury, damage, or other insured event must occur in order to be covered in a claims made liability policy

Question 7

Extended Reporting Period (ERP)

Answer 7

an additional period also called a tail, following the expiration of a claims made policy, during which the expired policy will cover claims first made for injury or damage that occurred on or after the polices retroactive date and before policy expiration

Question 8

Directors and Officers (D&O) liability Insurance

Answer 8

insurance that covers a corporations directors and officers against liability for their wrongful acts covered by the policy and also covers the sums that the insured corporation is required or permitted by law to pay to the directors and officers and indemnification

Question 9

Entity Coverage

Answer 9

coverage extenstion of D&O liability policies for claims made directly against a corporation ( the entity) for wrongful acts covered by the policy

Question 10

Employment practices liability (EPL) insurance

Answer 10

insurance that covers an organizations, its directors and officers and its employees against claims alleging damages because of wrongful employment practices such as sexual harassment, wrongful termination, and unlawful discrimination

Question 11

Fiduciary liability insurance

Answer 11

insurance that covers the fiduciaries of an employee benefit plan against liability claims alleging breach of their fiduciary duties involving discretionary judgement

Question 12

Employee benefits liability insurance

Answer 12

insurance that covers an employer against liability claims alleging improper advice or other error or omissions committed while administering the employers employee benefit plan

Question 13

Site-specific environmental impairment liability (EIL) policy

Answer 13

an insurance policy that covers third party claims arising from either sudden or gradual releases of pollutants from specified locations

Question 14

Underground storage tank (UST) compliance policy

Answer 14

an insurance policy that provides proof of financial responsibility under governmental regulations that apply to the owners and operations of underground storage tanks containing fuel or other hazardous materials

Question 15

Remediation stop-loss policy (cost cap policy

Answer 15

a insurance policy purchased to insure remediation cost that exceed the projected or anticipated cost of preforming an environmental cleanup of a specific location that is being sold

Question 16

Contractors pollution liability (CPL) policy

Answer 16

an insurance policy that covers the pollution related loss exposures of a contractor

Question 17

Aircraft insurance

Answer 17

insurance that covers liability due to the insureds ownership, maintenance, or use of aircraft, physical damage to aircraft owned or used by the insured, and other aircraft loss exposures

Question 18

Intangible property

Answer 18

property that has no physical form

Question 19

Denial-of-service attack

Answer 19

an attempt to overwhelm a computer system or network with excessive communication in order to deny users access

Question 20

Malware

Answer 20

malicious software such as a virus that is transmitted from one computer to another to exploit system vulnerabilities in the targeted computer

Question 21

Infringement

Answer 21

the unauthorized use of an individuals intellectual property

Question 22

Obligee

Answer 22

the party to surety bond that receives the surety guarantee that the principal will fulfill an obligation or preform as promised

Question 23

Principal

Answer 23

the party to a surety bond whose obligation or performance the surety guarantees

Question 24

Suretyship

Answer 24

the obligation of one entity to answer for the debt default, or miscarriage of performance of duties by another entity

Question 25

Contract Bond

Answer 25

a surety bond guaranteeing the fulfillment of obligations under construction contracts or other types of contracts

Question 26

Surety

Answer 26

the party usually the insurer to a surety bond that guarantees to the obligee that the principal will fulfill an obligation or perform as required by the underlying contract, permit, or law

Question 27

Bid Bond

Answer 27

a contract bond guaranteeing that a contractors bidding on a construction or supply contract will enter into the contract and will provide a performance bond if the bid is accepted

Question 28

Performance Bond

Answer 28

a contract bond guaranteeing that a contractors work will be completed according to plans and specifications

Question 29

Payment Bond

Answer 29

a contract bond guaranteeing that the project will be free of liens

Question 30

Maintenance Bond

Answer 30

a contract bond guaranteeing that the work will be free from defects in material and workmanship for a specified period after the project is completed

Question 31

Public Official Bond

Answer 31

a commercial surety bond guaranteeing that a public official will preform his or her duties faithfully and honestly

Question 32

Court Bond

Answer 32

a classification of surety bonds guaranteeing that a person or organization will faithfully perform certain duties prescribed by law or by a court or will demonstrate financial responsibility for the benefit of another until the final outcome of a courts decisions

Question 33

Which one of the following statements concerning site-specific environmental impairment liability insurance policies is most accurate?

Answer 33

A. Site-specific environmental impairment liability policies typically cover only losses that arise from pollution conditions beyond the policy site listed in the declarations, but may be endorsed to cover on-site cleanup.

Question 34

A multinational enterprise may purchase coverages and combine them with a difference in conditions (DIC) policy written to wrap around the admitted coverages, thereby accomplishing which one of the following?

Answer 34

Maintaining uniform coverage for all the insured’s location

Question 35

Insurers that offer professional liability and management liability policies usually have a claims-made trigger. The reason for this is which one of the following?

Answer 35

. Claims are sometimes not settled until long after the policy has expired.

Question 36

Aircraft insurance differs from auto insurance in which one of the following?

Answer 36

Operators (pilots) are required to provide a strict medical certification

Question 37

What type of bond guarantees that a construction contractor will enter into a contract?

Answer 37

Bid bond

Question 38

The two most common aircraft hull coverages are all risks–ground and flight and

Answer 38

All risks–not in motion

Question 39

Insurance covering an employer against liability claims alleging improper advice in the administration of a group health program is

Answer 39

Employee benefits liability insurance.

Question 40

Which one of the following elements would you find in the Conditions of an umbrella liability insurance policy?

Answer 40

Maintenance of underlying insurance conditio

Question 41

Fiduciary bonds are commonly required of a person who does which one of the following?

Answer 41

. Holds property in trust for the benefit of others

Question 42

Drop-down coverage in an umbrella liability policy is provided for claims that are which one of the following?

Answer 42

Not covered by an underlying policy, including claims not covered due to the depletion of the underlying policy’s aggregate limits

Question 43

Ace Builders is considering purchasing a large tract of land where a local fuel oil company had its
storage facility for more than 100 years. Ace knows that because of the long-time operation at the site, some environmental clean-up will be necessary. However, the amount of clean-up and its cost are unknown and cannot precisely be estimated.
What is a specific policy that Ace should consider purchasing to address clean-up costs in excess of what it might estimate?

Answer 43

A remediation stop-loss policy

Question 44

In many cases, the law of a particular nation requires that coverage for properties in that nation be purchased from which one of the following

Answer 44

In many cases, the law of a particular nation requires that coverage for properties in that nation be purchased from which one of the following

Question 45

nsurers in a particular nation selling insurance in that same nation are known as admitted insurers.
These admitted insurers provide which one of the following?

Answer 45

admitted coverage

Question 46

Insurance agreements that are commonly found in cyber risk insurance policies include many categories, one of which is coverage for electronic data protection. Which one of the following losses would be covered by an electronic data protection insuring agreement?

Answer 46

computer virus corrupts the insured’s software and database, requiring the insured to purchase replacement software and restore the corrupted data

Question 47

What is the two-fold purpose of a Terrorism Risk Insurance Act (TRIA) aggregate limit endorsement?

Answer 47

o limit the insurer’s exposure and to provide limited coverage for acts of terrorism at a reduced premium

Question 48

Like auto liability insurance, aircraft liability coverage is usually not subject to which one of the following?

Answer 48

agrregate limit

Question 49

Darlene was appointed by a court as conservator of her aunt’s estate. If Darlene is required to post a bond with the court it would most likely be a

Answer 49

fiduciary bond

Question 50

Which one of the following statements best describes the purpose of a remediation stop-loss policy?

Answer 50

he purpose of remediation stop-loss insurance is to facilitate real estate sales where there is known pollution contamination on the property, but the total cleanup costs are unknow

Question 51

Professional liability and management liability policies can provide duty-to-defend coverage in the
same manner as the typical commercial general liability policy. However, some professional liability policies provide defense costs reimbursement coverage requiring that the insurer do which one of the following?

Answer 51

Reimburse the insured for defense expense covered by the policy

Question 52

excess liability coverage

Answer 52

following form, subject to the same terms as the underlying policy

self contained policy, its own terms

combination of two

Question 53

A number of endorsements have been developed by ISO to implement the provisions of Terrorism Risk Insurance Act (TRIA), including the aggregate limit TRIA endorsement. The ISO aggregate limit
TRIA endorsement is used to

Answer 53

mit the insurer’s exposure and provide limited liability coverage for certified acts of terrorism at a reduced premium when the insured initially rejects certified acts of terrorism coverage.

Question 54

Which one of the following statements is true regarding aircraft liability insurance?

Answer 54

surers may impose a sublimit on claims by passengers.

Question 55

hen insurers offer to sell new policies or offer to renew existing policies that are reinsured under the Terrorism Risk Insurance Act (TRIA), the law requires that certain disclosures be made to the policyholder at the time the offer is made. Which one of the following is a required disclosure under TRIA?

Answer 55

The portion of the policy premium that is attributed to certified acts of terrorism