Commercial Liability Insurance Quiz

Question 1

1.	If an insurer decides to not renew the CGL policy, how many days’ notice of nonrenewal must be provided to the first named insured?
A.	7
B.	10
C.	15
D.	30

Answer 1

1. D. The nonrenewal condition states that if the insurer decides to not renew the CGL
   policy, it must mail or deliver written notice of nonrenewal to the first-named insured at least 30 days before the expiration date of the policy.

Question 2

2. Which of the following would NOT be excluded under Coverage C of the CGL?
   A. A shopper is injured in the insured’s retail
   store when a box falls on him from an overhead shelf.
   B. The insured sponsors a foot race on the land surrounding his retail store. A participant is injured during the race.
   C. An individual hired by the insured to paint her business office falls off a ladder and is injured.
   D. One of the insured’s employees is injured while on the job.

Answer 2

2. A. Coverage C excludes injuries to the insured’s employees and injuries that occur while participating in athletics.

Question 3

3. Which of the following is excluded under Coverage A of the CGL?
   A. Damage the insured causes intentionally
   B. Pollution losses caused by the insured
   C. Liquor liability for those in the business of serving liquor
   D. All of these

Answer 3

3. D. There are a number of very important exclusions that apply to Coverage A.

Question 4

4.	Which of the following is NOT required in a CGL coverage part?
A.	CGL declarations
B.	One or more CGL coverage forms
C.	Causes of loss form
D.	Common policy conditions

Answer 4

4. C. Causes of loss forms are not used with the CGL coverage part.

Question 5

5. The general aggregate limit is the limit that will be paid for the sum of all of the following coverages EXCEPT
   A. Coverage A
   B. Coverage B
   C. Coverage C
   D. Products-completed operations exposure

Answer 5

5. D. The products-competed operations aggregate limit represents the most that will be paid under Coverage A because of injury or damage arising out of the projects-completed operations exposure.

Question 6

6. A woman chips a tooth on a rock that somehow got into a box of cereal. This is an example of
   A. the premises and operations exposure
   B. the products-completed operations exposure
   C. the contingent liability exposure
   D. the contractual liability exposure

Answer 6

6. B. The products-completed operations hazard includes all BI and PD occurring away from the premises owned or rented by the insured and arising out of the insured’s product or work, other than products that are still in the insured’s physical possession and work that has not yet been completed or abandoned.

Question 7

7. An insured has primary coverage with two companies. Company ABC has policy limits of
   $35,000, and Company XYZ’s limits are $40,000. Both policies permit contribution by equal shares. If a $60,000 covered loss occurred, how much would company ABC pay?
   A. $40,000
   B. $35,000
   C. $30,000
   D. $25,000

Answer 7

7. C. Under contribution by equal shares, all insurers contribute equally up to the limit of the policy with the lowest limit. Once the insurer with the lowest limit contributes up to that limit, the other insurers share the remainder of the loss.

Question 8

8.	Which of the following would NOT be considered mobile equipment under the CGL form?
A.	Bulldozers
B.	Self-propelled cherry pickers
C.	Forklifts
D.	Farm machinery

Answer 8

8. B. Cherry pickers and similar devices that are mounted on an automobile, and truck chassis, are not considered mobile equipment and are considered autos.

Question 9

9. Which of the following statements about the
   60-day basic extended reporting period is NOT correct?
   A. It becomes effective automatically if needed
   when a claims-made policy expires.
   B. The insured must request it in writing within 60 days after the policy expires.
   C. It does not require additional premium.
   D. No separate endorsement is required to provide this extended reporting period.

Answer 9

When a claims-made policy is terminated, a 60-day basic ERP automatically becomes available. The insured does not have to apply for it, and no premium is charged.
It provides automatic coverage for any valid claim made during the 60 days after the policy expires, as long as the incident occurred between the expiring policy’s retroactive date and its expiration date.

Question 10

10.	Which of the following coverages would apply if one of the insured’s competitors sues the insured for slander on social media?
A.	Coverage A
B.	Coverage B
C.	Coverage C
D.	Coverage D

Answer 10

10. B. This coverage applies to offenses such as libel or slander.