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RIBO Training > Commercial Insurance (Word Problems) > Flashcards

Commercial Insurance (Word Problems) Flashcards

Understanding Commercial Insurance via word problems.

1
Q

What three perils does the Basic Fire Policy cover?

A

ELF aka:
- Explosion (of coal, natural, and manufactured gas)
- Lightning (except for damage to appliances
- Fire.

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2
Q

How is the peril of lightning broadened in the Named Perils Form?

A

Includes damage to appliances.

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3
Q

How is the peril of explosion broadened in the Named Perils Form?

A

Includes other types of explosions.

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4
Q

What perils does the Broad Form cover?

A

All risks subject to policy conditions and exclusions.

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5
Q

What is the Professional Liability Insurance we use in our field as brokers?

A

Errors and Omissions.

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6
Q

What is included under the definition of Building?

A
  • Buildings
  • Additions
  • Fixtures and fittings (permanently attached)
  • Maintenance supplies
  • Growing plants
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7
Q

What is included under the definition of Equipment?

A
  • Equipment
  • Contents (including fixtures, fittings, and utensils)
  • Tenant’s improvements
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8
Q

What is included under the definition of Stock?

A
  • Stock
  • Merchandise
  • Packaging
  • Wrapping
  • Advertising materials
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9
Q

What is the coverage amount based on for a Builder’s Risk?

A

Completed value of the building.

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10
Q

What are the three exclusions under Glass Insurance?

A
  • Fire
  • War
  • Nuclear
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11
Q

What signs can be covered under a Sign Floater?

A

Exterior signs.

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12
Q

What does the by-law exclusion do?

A

Excludes additional cost to rebuild in compliance with bylaws.

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13
Q

What are the two requirements that must be met before the Farm Rebuilding Clause will pay the full amount of the farm buildings?

A
  • Rebuild within 9 months
  • 200 feet from the original site
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14
Q

How many months’ worth of the Rental Value Endorsement should be insured?

A

12 months.

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15
Q

What form would be used to cover stock where the stock values are fairly consistent?

A

Premium Adjustment Clause.

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16
Q

What form would be best used to cover stock where sales vary substantially from month to month?

A

Peak Season Endorsement.

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17
Q

What coverage does the Consequential Loss Assumption Clause provide?

A

Covers losses due to failure of a cold storage unit.

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18
Q

What does the Gross Earnings Form cover in the event of a loss?

A

Loss of earnings from the date of loss to the date the business reopens.

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19
Q

What does the Profits Form cover?

A

Loss of earnings from the date of loss to the date the profits return to what they were prior to the loss.

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20
Q

What does Extra Expense cover?

A

Costs associated with keeping business open at another location.

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21
Q

What is the major difference between the Gross Earnings Form and the Profits Form?

A

Period of indemnity.

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22
Q

What does the Contractor’s Equipment Floater cover?

A

Moveable equipment from site to site.

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23
Q

What does a Tool Floater cover?

A

Moveable tools from site to site.

24
Q

What does the Boiler and Machinery Policy cover?

A

Explosion and rupture of boilers and breakdown of machinery.

Aka B + E and E + B - Boiler Explosion and Equipment Breakdown.

25
Q

What does the term Floater mean?

A

A type of insurance that covers property that is easily moveable.

26
Q

What does the Supplementary Payments section of the CGL cover?

A
  • Defence costs
  • Post-judgement interest
  • Other litigation expenses
27
Q

What is included in Theft?

A

Burglary and Robbery.

28
Q

Does Burglary and Robbery include Theft?

A

No.

29
Q

What does the 3D Policy cover?

A
  • Employee “D”ishonesty
  • “D”isappearance
  • “D”estruction of property.
30
Q

Does the 3D Policy cover safe burglary and robbery on the premises?

A

Yes.

31
Q

What kind of losses does the Co-Insurance Clause concern itself with?

A

Partial losses.

32
Q

Who are the three parties to a bond contract?

A
  • Principal (the applicant for the bond)
  • Surety (the bonding company)
  • Obligee (who the obligation is owed to)
33
Q

What do Fidelity Bonds cover?

A

Dishonesty of employees.

34
Q

What does Products Liability cover?

A

Lawsuits resulting from goods that cause injury or damage to the purchaser like defective or dangerous products.

35
Q

What does Garage Liability pay for?

A

Garage Liability covers lawsuits resulting from the garage premises.

Protects against a lawsuit resulting from injury or damage to others arising out of the ownership of a garage such as slip and falls.

36
Q

What does Stated Amount Co-Insurance Clause base the amount of insurance required on?

A

Appraisal of the property’s rebuilding cost.

37
Q

What is the Co-Insurance Clause formula?

A

DID
——————— x LOSS (If applicable subtract deductible)
(SHOULD x %)

38
Q

What are the criteria set out in the 2% Waiver of Co-Insurance?

A
  • Loss must be less than $5,000
  • Loss must be less than 2% of the amount of insurance on the property.
39
Q

Why would Contingent Employers’ Liability be required?

A

When the employees are not covered by worker’s compensation.

40
Q

Why would Owners & Contractor’s Protective Liability be required?

A

Protects against a lawsuit resulting from the negligent work of sub-contractors.

41
Q

Why would Blanket Contractual Liability be required?

A

When your business assumes the liability of others in a contract.

42
Q

What coverage does By-Law Endorsement provide?

A

It removes the exclusion and allows the insurer to pay the increased cost to rebuild made necessary due to by-laws.

43
Q

How does Stated Amount Co-Insurance Clause differ from the traditional Co-Insurance Clause?

A

Based on appraisal and a specified value as opposed to percentage of rebuild.

44
Q

What does Completed Operations Liability cover?

A

Liability arising from faulty workmanship.

45
Q

What is a Manuscript Policy?

A

Policy written to cover a unique risk.

46
Q

What is a Subscription Policy?

A

Policy where more than one insurer provides coverage.

47
Q

What does Burglary require?

A

Forcible entry.

48
Q

What does the care, custody, and control exclusion of the CGL policy not cover?

A

Damage to property the insured is in the care, custody, and control of, see Tenant’s Legal Liability.

49
Q

When does the Self-Insured Retention liability deductible come into play under an Umbrella Liability Policy?

A

When the policy covers something the underlying policy does not.

50
Q

What is the territorial limit of the Umbrella Liability Policy?

A

Worldwide.

51
Q

What does the Named Perils Form cover?

A

SWILLER + Fire aka:
- Fire
- Smoke
- Windstorm
- Impact
- Lightning
- Leakage from fire protective equipment (e.g. Sprinkler system)
- Explosion
- Riot

52
Q

What is Construction, Occupancy, Protection Exposure (COPE)

A

A set of risks that property insurance underwriters review when determining whether to offer an insurance policy.

53
Q

What is required to make a Theft Insurance claim?

A

The insured will only have to prove that their property was taken without their consent.

54
Q

Who is the principal and obligee in a surety bond?

A

The person doing the work (e.g. a contractor) is the Principal and the person who the work is being done for is the Obligee.

55
Q

Who is the principal and obligee in a fidelity bond?

A

The Principal is the employee and the Obligee is the employer.

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