Commercial General Liability Flashcards

1
Q

Kim owns an Art studio where she offers painting lessons and sells painting and art supplies. She carries a Commercial General Liability policy to cover her business. Which of the following situations would be covered by Kim’s CGL insurance?

Answer Choices: Select the Correct Answer
Mitch slips and falls at Kim’s home on her slippery kitchen floor and sustains an injury to his back.
Kim drives her Dodge sedan into the picket fence that surrounds the floral shop across the street from her studio. The fence is destroyed.
A client slips and falls on wet paint that was dripped on the floor in Kim’s art studio. The client breaks her arm.
Kim is injured when she falls from a stepladder at work in her art studio.

A

A client slips and falls on wet paint that was dripped on the floor in Kim’s art studio. The client breaks her arm. is correct.

EXPLANATION:
The CGL policy is designed to cover “premises liability” and business liability exposures. This would cover the client who slipped and fell in the studio. The other answer choices would be covered under different types of liability policies.

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2
Q

Captain Spew’s Seafood Restaurant is covered by a Commercial General Liability policy. A customer is served oysters in the restaurant’s lovely seating area and 20 minutes later begins throwing up at the table. This claim will be paid under which of the following hazards?

Answer Choices: Select the Correct Answer
Premises liability because the customer was still on the premises when he ate the food.
Products liability because the food is a product of the restaurant.
Completed operation liability because the food preparation was complete.
Personal injury liability because the customer was injured by the food.

A

The correct answer is: Products liability because the food is a product of the restaurant.

EXPLANATION:
Food served in a restaurant is one of the only exceptions to the “products liability” coverage that the product be removed from the premises before coverage would apply.

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3
Q

Which of the following is NOT an “insured” under a CGL policy?

Answer Choices: Select the Correct Answer
The real estate manager of an LLC.
The spouse of a sole proprietor.
The spouse of an executive officer in an organization.
Employees.

A

The spouse of an executive officer in an organization. is correct.

EXPLANATION:
Please refer to the chart on Screen #13 in the CGL chapter; Module A to review “insureds” under a CGL policy.

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4
Q

The named insured’s spouse is considered to be an “insured” under all of the following named insured designations in a CGL policy, EXCEPT:

Answer Choices: Select the Correct Answer
Joint venture.
Individual.
Trust.
Partnership.

A

Trust. is correct.

EXPLANATION:
The spouse of the named insured is not covered as an “other insured” in a trust.

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5
Q

A business is looking to hire an independent contractor to perform some services for clientele of the business. The business would like to have an Owners & Contractors Protective Liability policy in place before the independent contractor begins working. Who purchases the policy and who is named on the policy as the insured?

Answer Choices: Select the Correct Answer
The business purchases the policy and names the independent contractor as the insured.
The independent contractor is the purchaser and the named insured on the policy.
The independent contractor purchases the policy and names the business as the insured.
The business is the purchaser and the named insured on the policy.

A

The independent contractor purchases the policy and names the business as the insured. is correct.

EXPLANATION:
The independent contractor purchases the policy and names the business as the insured. OCP insurance is used to cover the vicarious liability of a business that hires an independent contractor.

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6
Q

A customer looking at a new clothes iron in a department store did not notice the iron was plugged in, and was burned badly on one hand. The customer makes a claim of negligence against the store. This claim would fall under which of the following general liability exposures?

Answer Choices: Select the Correct Answer
Products liability.
Premises liability.
Operations liability.
Completed operations liability.

A

Premises liability. is correct.

EXPLANATION:
The scenario posed in the question was an example of a premises liability exposure because the accident occurred on the premises.

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7
Q

All of the following are “insured contracts” as defined by the Commercial General Liability policy, EXCEPT:

Answer Choices: Select the Correct Answer
Land and mine surveyor agreement.
Lease agreement.
Sidetrack agreement.
Elevator maintenance agreement.

A

Land and mine surveyor agreement. is correct.

EXPLANATION:
A land and mine surveyor agreement is not an “insured contract” that is covered by the CGL policy. The other three answer choices are covered by the CGL policy as “insured contracts”.

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8
Q

Frank’s Furniture, Inc. has hired Harry’s Handyman Services, Inc. to repair a staircase leading from the ground floor up to a furniture showroom on the second floor. While performing the repairs, a carpenter working for Harry drops a hammer and injures a Frank’s Furniture customer on the first floor. This situation would fall under which exposure of Harry’s Commercial General Liability?

Answer Choices: Select the Correct Answer
Contractual liability.
Products & Completed Operations liability.
Premises & Operations liability.
Independent Contractors legal liability.

A

Premises & Operations liability. is correct.

EXPLANATION:
The situation described in the question falls under the Premises & Operations liability exposure covered by a CGL policy. In this case, the “operations” are on going so the occurrence is not required to have happened on the premises.

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9
Q

Which of the following is NOT one of the five types of general liability exposures?

Answer Choices: Select the Correct Answer
Errors & Omissions.
Premises and operations.
Insured contracts.
Fire damage liability.

A

Errors & Omissions. is correct.

EXPLANATION:
Errors & Omissions is a specialized professional liability exposure, not a general liability exposure.

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10
Q

All of the following are examples of when “operations” or “work” is considered to be complete under a Commercial General Liability policy, EXCEPT:

Answer Choices: Select the Correct Answer
The operations (work) called for in the contract has been completed.
Work is completely finished at one work site, even if work is not complete at another site.
A portion of the work is complete and put to its intended use.
A portion of the work is complete and the remainder of the work has been turned over to a subcontractor.

A

A portion of the work is complete and the remainder of the work has been turned over to a subcontractor. is correct.

EXPLANATION:
When the contractor has turned over the remainder of the work (operations) to a subcontractor, the work is still considered to be incomplete.

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11
Q

Coverage A of a Commercial General Liability policy may provide all of the following coverages, EXCEPT:

Answer Choices: Select the Correct Answer
Bodily injury liability.
Premises and Operations liability.
Liability arising from slander.
Products liability.

A

Liability arising from slander. is correct.

EXPLANATION:
Liability from slander is NOT paid under Coverage A of the CGL policy.

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12
Q

Willie’s Widgets, Inc. holds a retirement party for a long-time employee with an open bar. One of Willie’s employees drinks too much, leaves the party and injures Matilda in a car accident. Matilda sues Willie’s Widgets for continuing to serve alcohol to an employee that was clearly drunk and then allowing him to drive. Which of the following statements BEST describes how Willie’s CGL policy will handle this third-party claim?

Answer Choices: Select the Correct Answer
The claim will be denied because liquor liability is excluded under the policy.
The policy will pay the claim because Willie’s Widgets is not a bar or liquor store in the business of selling alcohol.
The policy will pay to defend Willie’s against the claim but will not pay damages.
Willie’s must have endorsed their CGL policy to cover the social activities of the business for the claim to be covered.

A

The policy will pay the claim because Willie’s Widgets is not a bar or liquor store in the business of selling alcohol. is correct.

EXPLANATION:
The CGL policy excludes coverage for those in the alcoholic beverage business. Willie’s is in the “widget” business so the CGL policy will pay the claim.

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13
Q

Which of the following scenarios would NOT be excluded by the Coverage A - Exclusions section of the Commercial General Liability policy?

Answer Choices: Select the Correct Answer
Damage to the insured’s wheelchair ramp when one of his employees hits it while driving a truck into the insured’s warehouse.
Damage to a copy machine loaned to the insured by the office next door.
Damage from a fire caused by the insured in his rented office space.
Damage to a customer’s property that was given to the insured temporarily for safekeeping.

A

Damage from a fire caused by the insured in his rented office space. is correct.

EXPLANATION:
There is coverage for damage from a fire caused by the insured in his rented office space under the five exposures of Coverage A. You’ll remember that one of those five exposures is “Fire Damage Liability” or “Damage to Premises Rented to You”. The Coverage A exclusion for Damage to property the insured owns, rents, or occupies” is referring to damage caused by perils other than “a fire caused by the insured”.

All of the other answer choices are specifically excluded by Coverage A - Property Damage.

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14
Q

The Coverage A insuring agreement of a Commercial General Liability policy was rewritten to clarify that:

Answer Choices: Select the Correct Answer
Insurance can be written to cover claims that occurred prior to the retroactive date if the circumstances of the loss fit the definition of “occurrence” and not “accident”.
Insurance can be written to cover losses due to “occurrences” no matter how long they last.
Insurance cannot be written to cover losses that are known to have already taken place.
Insurance can be written to cover losses that are known to have already taken place as long as the coverage is written during the extended reporting period.

A

Insurance cannot be written to cover losses that are known to have already taken place. is correct.

EXPLANATION:
The Coverage A insuring agreement of a Commercial General Liability policy was rewritten to clarify that insurance cannot be written to cover losses that are known to have already taken place. This is called the “Known Loss Rule”.

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15
Q

Gordon’s Carpentry built a garage for a client. Two weeks after the work was completed, the garage collapsed and damaged the client’s car, equipment in the garage, and caused bodily injury to the client. Gordon’s CGL policy would not cover:

Answer Choices: Select the Correct Answer
The damage to the car.
The damage to the other equipment.
The damage to the garage.
Bodily injury to the client.

A

The damage to the garage. is correct.

EXPLANATION:
The garage is Gordon’s “work” and the policy would not cover damage to his work. The other damage, along with the bodily injury would be covered by the CGL. Again, a specific part of any property that must be restored, repaired, or replaced because the work was incorrectly performed on it is excluded.

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16
Q

Adam’s Applesauce, Inc. has been sold in four states and caused a salmonella outbreak. All jars of Adam’s Applesauce sold have been recalled. In this situation, which of the following statements is TRUE with regard to the coverage provided by Adam’s Commercial General Liability policy?

Answer Choices: Select the Correct Answer
The CGL policy will provide coverage for the loss Adam’s experienced in reimbursing the customer’s for the purchase price of the recalled product but will not cover the bodily injury liability incurred when a lawsuit is brought by those who contracted salmonella poisoning.
The CGL policy will provide coverage for the bodily injury liability incurred when a lawsuit is brought by those who contracted salmonella poisoning and the cost to dispose of the tainted product.
The CGL policy will not provide coverage for the cost to dispose of the tainted product but will provide coverage for the cost to remove the tainted product from grocery store shelves and dispose of it.
The CGL policy will provide no coverage.

A

The correct answer is: The CGL policy will provide no coverage.

EXPLANATION:
The CGL policy does not provide coverage for damages related to the recall of products.

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17
Q

Which of the following would be an example of “impaired property” as defined by the Commercial General Liability policy?

Answer Choices: Select the Correct Answer
A tool shed being constructed by the insured business collapses.
The insured’s component, when installed in a finished product of the insured, causes the product to shut down.
Another business has not met their contractual obligation to supply the insured business with a component necessary for its finished product to function.
The insured’s component, when installed in the finished product of another business, causes the product to shut down.

A

The insured’s component, when installed in the finished product of another business, causes the product to shut down. is correct.

EXPLANATION:
The only answer choice that is an example of “impaired property” as defined by the CGL policy is: “The insured’s component, when installed in the finished product of another business, causes the product to shut down.”

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18
Q

All of the following are included in the definition of “mobile equipment” in a Commercial General Liability policy, EXCEPT:

Answer Choices: Select the Correct Answer
A vehicle with a permanently attached air compressor.
Forklift.
A snow blowing machine.
A truck with a cherry picker attached.

A

The correct answer is: A snow blowing machine.

EXPLANATION:
A snow blowing machine is not part of the definition of “mobile equipment” in a CGL policy.

19
Q

Malinda steps out of the shower in her hotel room to see a stranger standing in the bathroom doorway. Later, it is determined that the hotel mistakenly gave the man the wrong key and room number. Malinda is traumatized and sues the hotel. The hotel’s CGL policy covers the damages:

Answer Choices: Select the Correct Answer
Under Coverage C.
Under the supplementary payments.
Under Coverage A.
Under Coverage B.

A

Under Coverage B. is correct.

EXPLANATION:
This would be considered a “personal injury” claim covered under “Wrongful Entry, Eviction, or Invasion of Privacy” of Coverage B.

20
Q

In order to be covered under Coverage C - Medical Payments of the Commercial General Liability policy, bodily injury must be caused by:

Answer Choices: Select the Correct Answer
An accident.
An occurrence.
Legal liability.
Negligence.

A

The correct answer is: An accident.

EXPLANATION:
Medical payments coverage applies to accidents and the limit of coverage applies per person per accident. Legal liability and negligence are not required to be proven.

21
Q

A customer is injured on the insured’s premises and the insured is not found legally liable. The insured carries a Commercial General Liability policy. Which of the following CGL coverages would apply to cover the cost of treating the customer’s injuries?

Answer Choices: Select the Correct Answer
Coverage A.
Coverage B.
Supplementary payments.
Coverage C.

A

Coverage C. is correct.

EXPLANATION:
Coverage C - Medical Payments under the CGL policy pays regardless of legal liability on the part of the insured.

22
Q

Tucker purchased an “occurrence form” Commercial General Liability policy on April 1st, 2020. In September of 2020, he is sued for using a slogan in an advertising blurb that looks suspiciously like another companies advertising. The occurrence took place on October 23rd, 2019. When Tucker contacts his CGL insurer, he is told that he:

Answer Choices: Select the Correct Answer
Is not covered because the advertising was published prior to the policy period.
Is not covered because he intentionally stole the advertising.
Is covered for both defense costs and any damages awarded by the court.
Is covered for defense costs only and any damages awarded by the court will not be covered.

A

Is not covered because the advertising was published prior to the policy period. is correct.

EXPLANATION:
Tucker is not covered because the advertising was published prior to the policy period. This is a specific exclusion of Coverage B of the CGL policy.

23
Q

An insured business is sued for bodily injury covered by their Commercial General Liability policy up to $200,000. The legal costs are $30,000, prejudgment interest is $10,000 and the damages awarded to the claimant against the insured are $200,000. How much will the policy pay on the claim?

Answer Choices: Select the Correct Answer
$200,000.
$240,000.
$230,000.
$210,000.

A

The correct answer is: $240,000.

EXPLANATION:
The damages are paid under Coverage A at $200,000 because that is the limit. The legal costs and prejudgment interest are also paid in full because they are “supplementary payments” that are paid IN ADDITION TO the policy limits. Neither of these supplementary payments has a coverage limit.

24
Q

Suspecting a customer of shoplifting collectible sports cards, a security guard at the Too-High Toy Store takes the customer and his child to the office to await police. When the police arrive it is discovered that the customer nor his child shoplifted anything. The toy store is sued for wrongful detention and the court awards damages to the customer. Payment for the damages awarded:

Answer Choices: Select the Correct Answer
Will be paid under Coverage B of the store’s CGL policy.
Will be paid under Coverage A of the store’s CGL policy.
Will be covered by the supplementary payments of the store’s CGL policy.
Is not covered by the store’s CGL policy.

A

Will be paid under Coverage B of the store’s CGL policy. is correct.

EXPLANATION:
The damages awarded in the scenario provided in the question are paid by Coverage B – Personal and Advertising Injury of the Commercial General Liability policy.

25
Q

Which of the following is NOT an exclusion of Coverage B under a Commercial General Liability policy?

Answer Choices: Select the Correct Answer
Being sued when the insured intentionally publishes false information about a competitor.
Being sued when another company accuses the insured company of stealing their slogan and using it in their advertising.
Being sued by a customer who says the insured’s product does not perform to the level stated in the insured’s advertising.
Being sued for using a competitor’s trade name on the insured’s website so search engines will find the insured’s site when they are looking for a competitor’s site.

A

Being sued when another company accuses the insured company of stealing their slogan and using it in their advertising. is correct.

EXPLANATION:
When an insured is sued when another company accuses the insured company of stealing their slogan and using it in their advertising, it is not excluded by the CGL policy, unless the insured KNOWINGLY steals a slogan. However, the other company would need to prove this.

26
Q

Larry owns and runs a political website that posts stories that are favorable to one political party and unfavorable to the other parties. Larry has a message board feature where he encourages his visitors to post their own negative opinions about the parties in which they do not agree. Many of these posts have gone beyond opinion and have sunk to the level of slander and Larry is sued. Larry’s Commercial General Liability insurer will:

Answer Choices: Select the Correct Answer
Cover the cost to defend Larry and pay any damages awarded by the court.
Deny coverage for defense costs and damages awarded by a court because the policy specifically excludes coverage for this exposure.
Deny coverage for damages awarded by a court, but will pay to defend Larry in court.
Sue Larry for participating in activities that are specifically excluded by the policy.

A

Deny coverage for defense costs and damages awarded by a court because the policy specifically excludes coverage for this exposure. is correct.

EXPLANATION:
Coverage will be denied because this exact scenario is specifically excluded under Coverage B of the policy.

27
Q

Coverage B - Personal & Advertising Injury of the Commercial General Liability policy provides coverage for all of the following, EXCEPT:

Answer Choices: Select the Correct Answer
Invasion of privacy.
Failure of product to meet advertising standards.
Use of another’s advertising ideas.
Slander.

A

The correct answer is: Failure of product to meet advertising standards.

EXPLANATION:
“Failure of product to meet advertising standards” is NOT a coverage of the Commercial General Liability policy.

28
Q

Under the “supplementary payments” section for Coverages A and B of a CGL policy, which of the following is TRUE?

Answer Choices: Select the Correct Answer
Provides a specific limit of $250 for the cost of bail bonds.
Contains a specific limit for defense costs.
Contains a specific limit for interest accruing after a judgment.
Does not pay for all costs taxed against the insured in case of a lawsuit.

A

The correct answer is: Provides a specific limit of $250 for the cost of bail bonds.

EXPLANATION:
The policy specifies a limit for the cost of bail bonds in the amount of $250. Remember, only the cost of bail bonds and the insured’s loss of earnings are the only two “supplementary payments” under the CGL that contain a specific limit.

29
Q

Which of the following sections of a CGL “occurrence” form is different under a “claims-made” CGL form?

Answer Choices: Select the Correct Answer
The “definitions”.
Coverage A.
The “supplementary payments”.
The “conditions”.

A

The “conditions”. is correct.

EXPLANATION:
There are differences in the “conditions” section of an “occurrence form” versus a “claims-made” form.

30
Q

Which of the following statements is TRUE of the supplemental extended reporting period (tail) of a claims-made CGL form?

Answer Choices: Select the Correct Answer
The SERP replaces the BERP because it provides better coverage.
An additional premium is not charged for the SERP.
The SERP becomes effective on the date the BERP is no longer in effect.
The SERP extends the period of time to report claims to 5 years.

A

The correct answer is: The SERP becomes effective on the date the BERP is no longer in effect.

EXPLANATION:
The only answer choice that is TRUE is: “The SERP becomes effective on the date the BERP is no longer in effect.”

31
Q

Which of the following statements is TRUE regarding an Extended Reporting Period (ERP) of a CGL policy?

Answer Choices: Select the Correct Answer
Extended Reporting Periods extend the policy period.
Extended Reporting Periods expand the scope of coverage.
Once in effect, Extended Reporting Periods may not be cancelled.
Extended Reporting Periods apply to bodily injury or property damage that occurs before the retroactive date.

A

Once in effect, Extended Reporting Periods may not be cancelled. is correct.

EXPLANATION:
The only TRUE answer choice is: “Once in effect, Extended Reporting Periods may not be cancelled.” ERP’s do not extend the policy period or expand the scope of coverage and they apply to BI & PD that occurs before the end of the policy period, but not before the retroactive date.

32
Q

The “occurrence” form of a CGL policy provides coverage for bodily injury and property damage that:

Answer Choices: Select the Correct Answer
Occurs during the policy period regardless of when the claim is made.
Occurs during the policy period as long as the claim is made during the policy period.
Is claimed during the policy period with no regard to when the bodily injury or property damage occurred.
Occurs after the policy period and the claim is made after the policy period.

A

Occurs during the policy period regardless of when the claim is made. is correct.

EXPLANATION:
The occurrence form provides coverage for claims that occur during the policy period regardless of when the claim is filed.

33
Q

An insured has a CGL policy written on an occurrence form with a $100,000 general aggregate limit and a $25,000 “per occurrence” limit. The insured had one occurrence settled for $35,000 and a second occurrence, which took place during the same policy period, was settled for $20,000. How much of the general aggregate limit remains for the payment of future claims?

Answer Choices: Select the Correct Answer
$55,000.
$45,000.
$35,000.
$20,000.

A

$55,000. is correct.

EXPLANATION:
The policy can only pay up to its “per occurrence” limit on any one occurrence. The insurer will pay $25,000 for the first occurrence, and will pay all of the $20,000 settlement for the second occurrence. The general aggregate limit has thus been reduced by a total of $45,000. This leaves just $55,000 to cover any other premises and operations or medical payments claims during that policy period.

34
Q

A business insured under a Commercial General Liability policy has a general aggregate limit of $1,000,000 and a “per occurrence” limit of $100,000. If an injured party is awarded $100,000 in damages for injuries arising out of premises hazards today, what will the company’s general aggregate limit and “per occurrence” limit be tomorrow?

Answer Choices: Select the Correct Answer
General aggregate limit of $900,000; each occurrence limit of $100,000.
General aggregate limit of $1,000,000; each occurrence limit of $100,000.
General aggregate limit of $1,000,000; each occurrence limit of $0.
General aggregate limit of $900,000; each occurrence limit of $0.

A

General aggregate limit of $900,000; each occurrence limit of $100,000. is correct.

EXPLANATION:
Amounts paid under the “per occurrence” (each occurrence) limit are subtracted from the general aggregate limit for all claims except those arising from the products and completed operations hazards. The remaining amount is the total amount available for the rest of the policy period for payment of covered claims.

35
Q

Which of the following BEST DESCRIBES the function of a retroactive date in a Commercial General Liability policy?

Answer Choices: Select the Correct Answer
It establishes the date when claims-made coverage begins.
It establishes the date when claims-made coverage terminates.
It establishes the date when the CGL policy renews.
Establishes the date when occurrence coverage begins.

A

It establishes the date when claims-made coverage begins. is correct.

EXPLANATION:
A retroactive date is applicable only on a claims-made CGL policy and it establishes the date when that coverage begins under the current policy.

36
Q

Which of the following statements is FALSE regarding the supplemental reporting period of a Commercial General Liability policy?

Answer Choices: Select the Correct Answer
It extends the basic reporting period to an unlimited duration.
It must be added to the CGL policy by endorsement.
Must be requested in writing within 60 days of the CGL policy expiration date.
It extends the time for incidents that occurred during the policy period to be covered for an unlimited duration.

A

The correct answer is: It extends the time for incidents that occurred during the policy period to be covered for an unlimited duration.

EXPLANATION:
The SERP does NOT “extend the time for occurrences to be covered to an unlimited duration”. The SERP does not extend the policy period, it simply extend the time period for claims to be reported for occurrences that took place during the policy period.

37
Q

The insured is covered by two CGL policies. One is written on a “claims-made” basis and the other on an “occurrence” basis. Which of the following statements best describes how this claim will be settled between the two policies?

Answer Choices: Select the Correct Answer
Contribution by Equal Shares.
Contribution by Limits.
The “occurrence” policy is primary and the “claims-made” policy is excess.
The “claims-made” policy is primary and the “occurrence” policy is excess.

A

The correct answer is: The “occurrence” policy is primary and the “claims-made” policy is excess.

EXPLANATION:
Claims-made policies are always excess over any other policy that is not claims-made. This makes the occurrence form primary.

38
Q

The “claims-made” CGL policy is “excess” insurance over any other policy:

Answer Choices: Select the Correct Answer
With a higher limit.
That is not “claims-made”.
With a supplemental reporting period.
That will not permit claim settlement by “equal shares”.

A

That is not “claims-made”. is correct.

EXPLANATION:
The “claims-made” CGL policy is “excess” insurance over any other policy that is not “claims-made”. If two policies are paying on the same loss and one policy is “claims-made” and the other is “occurrence”, the “claims-made” policy is excess and the “occurrence” policy is primary. All the other answer choices do not apply to the question in any way.

39
Q

All of the following are provisions of the “Inspections & Surveys” condition of a Commercial General Liability policy, EXCEPT:

Answer Choices: Select the Correct Answer
The inspections and surveys performed by the insurer is considered to be “loss control” in the insurance industry.
This condition permits insurers to perform inspections and make recommendation to the insured that will aid in the prevention of claims.
This condition does not require the insurer to make “loss control” reports and recommendations.
The condition specifies that the insurer can be held liable for any claims arising from the recommendations they made to the insured.

A

The condition specifies that the insurer can be held liable for any claims arising from the recommendations they made to the insured. is correct.

EXPLANATION:
The condition specifies that the insurer can NOT be held liable for any claims arising from the recommendations they made to the insured.

40
Q

Which of the following statements is TRUE regarding endorsements to a Commercial General Liability policy?

Answer Choices: Select the Correct Answer
The Liquor Liability Coverage Form endorsement provides coverage for businesses that serve alcohol at company parties and picnics.
The Nuclear Energy Liability Exclusion endorsement excludes coverage for a business or person who is listed as an insured under another liability policy issued by a nuclear risk insurance company.
The Laser Beam Exclusion endorsement can be used with either an occurrence or a claims-made CGL policy.
The Pollution Liability Extension endorsement provides for the clean-up costs that are a result of a pollution incident.

A

The Nuclear Energy Liability Exclusion endorsement excludes coverage for a business or person who is listed as an insured under another liability policy issued by a nuclear risk insurance company. is correct.

EXPLANATION:
The only answer choice that is TRUE is: “The Nuclear Energy Liability Exclusion endorsement excludes coverage for a business or person who is listed as an insured under another liability policy issued by a nuclear risk insurance company.”

41
Q

The conditions section of a Commercial General Liability policy specifies that the insured may not make any voluntary claim payment without the insurer’s permission, except for:

Answer Choices: Select the Correct Answer
Property replacement.
First-aid.
Hospital expenses.
Physician expenses.

A

First-aid. is correct.

EXPLANATION:
Under a CGL policy, the insured is permitted to provide first aid and still expect to be reimbursed by the insurer even if they did not seek the insurer’s permission. All of the other expenses listed as answer choices will not be reimbursed by the insurer unless the insured received permission from the insurer before making those payments.

42
Q

The coverage territory for “products” coverage to apply under a Commercial General Liability policy is BEST DESCRIBED by which of the following statements?

Answer Choices: Select the Correct Answer
Worldwide coverage is provided as long as the product is manufactured or sold in the covered territory and any lawsuit regarding the claim is brought within the coverage territory of the policy.
Products are covered while being manufactured anywhere in the world.
The products must be made in the United States, its territories and possessions, Puerto Rico and Canada, if a lawsuit is brought in a foreign country.
The product must be consumed or used within the United States and Canada for coverage to apply.

A

The correct answer is: Worldwide coverage is provided as long as the product is manufactured or sold in the covered territory and any lawsuit regarding the claim is brought within the coverage territory of the policy.

EXPLANATION:
The products must be manufactured within the coverage territory. This includes the US, its possessions, Canada and Puerto Rico. The suit must also be brought within the coverage territory, unless otherwise agreed to by the insurer.

43
Q

Insurers issuing Commercial General Liability policies include a condition that reserves their right to examine the books and records of the insured:

Answer Choices: Select the Correct Answer
Throughout the policy period and for up to three years afterward.
For up to three years after the policy inception date.
For three years before the policy is written as part of the underwriting process.
Only if the insurer suspects fraud.

A

Throughout the policy period and for up to three years afterward. is correct.

EXPLANATION:
The insurer may inspect the books and records of their insured throughout the policy period and for up to three years afterward.

44
Q

Which of the following statements regarding the “Pollution Liability Coverage Form” endorsement to a CGL policy is NOT TRUE?

Answer Choices: Select the Correct Answer
It provides coverage for bodily injury due to a “pollution incident” that occurred after the retroactive date.
It can be attached to either an occurrence or claims-made CGL policy.
It provides coverage for the clean-up costs resulting from a pollution incident that causes environmental damage.
It provides coverage for property damage to others due to a “pollution incident” that occurred after the retroactive date.

A

The correct answer is: It can be attached to either an occurrence or claims-made CGL policy.

EXPLANATION:
The “Pollution Liability Coverage Form” endorsement may only be attached to a claims-made CGL policy.