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Property & Casualty Insurance Exam - Oklahoma > Commercial Lines > Flashcards

Commercial Lines Flashcards

1
Q

What four policies are NOT part of the Commercial Package Policy (CPP)?

A
  1. Umbrella
  2. Aviation
  3. Watercraft
  4. Workers Comp
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2
Q

The Commercial Package Policy (CPP) has a common _______ page and ________ form.

A

Declarations Page

Conditions Form

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3
Q

What are the Seven parts of the Commercial Package Policy (CPP)?

A
  1. Comm Property
  2. Comm General Liability
  3. Comm Auto
  4. Comm Crime
  5. Comm Inland Marine
  6. Equipment Breakdown Insurance (Boiler & Machinery)
  7. Farm Coverage
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4
Q

Each coverage under the Commercial Package Policy (CPP) has it’s own ______ page and _______ forms.

A

Declarations Page

Coverage Forms

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5
Q

What is the trigger of a comm policy?

A

Premium

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6
Q

Money is ________ in a comm policy.

A

Consideration

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7
Q

Is the insurance community concerned with OSHA rules?

A

NO

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8
Q

Who is the only party that change anything on the policy?

A

FIRST NAME INSURED

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9
Q

How long does the insurer have to notify insured before cancellation for nonpayment? for anything else?

A

10 days

45 days

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10
Q

How long does the insurer have to notify insured before cancellation for any reason other than nonpayment? for nonpayment?

A

45 days

10 days

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11
Q

Who is sent the refund (if there is one) in the event of a cancellation (comm)?

A

FIRST NAME INSURED

  • insurer cancels - pro rata refund
  • insureD cancels - may be less than pro rata
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12
Q

Changes to policy requested by first named insured must have _______ of insurer.

A

consent

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13
Q

Insurer may examine a comm policy insured’s records (audit) up to ____ years afterward.

A

3 THREE

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14
Q

What would be the reason for an insurer to examine (audit) an insured’s records?

A
  1. adjust premium

2. insurability

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15
Q

What are the two things that a premium is based on in a comm policy?

A
  1. Sales

2. Payroll

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16
Q

Who is responsible for paying premiums and receiving any returned premiums?

A

FIRST NAMED INSURED

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17
Q

If the first named insured on a comm policy dies, their rights and duties are transferred to who?

A

Legal Rep

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18
Q

Commercial Package Policy (CPP) provides coverage for what three direct loss categories?

A
  1. Real Property
  2. Business Personal Property
  3. Personal Property of Others

Indirect losses can also be covered (loss of business)

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19
Q

What are the four parts of the Commercial Package Coverage Part?

A
  1. Comm Property Declarations
  2. Comm Property Conditions Form
  3. One or More of the Coverage Forms
  • Building & Business Personal Property Coverage Form (DIRECT LOSS)
  • Business Income Coverage Form (INDIRECT LOSS)
  1. Causes of Loss Form - identifies covered perils
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20
Q

What type of loss does the Business Income Coverage Form delineate?

A

Indirect Loss

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21
Q

If an employee (not a named insured) commits fraud, concealment or misrepresentation, the insurer can do what?

A

Void the contract - cancel the policy

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22
Q

The Control of Property condition states what?

A

Any act or neglect of ANY PERSON OTHER THAN YOU (named insured) beyond your direction or control will not affect this insurance

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23
Q

How long may legal actions be taken against an insurer by an insured (comm policy) after the date of direct physical loss or damage?

A

2 Two Years

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24
Q

What are the three major coverages on the Building & Personal Property Coverage form?

A
  1. Buildings - completed additions, permanently installed fixtures, fire extinguishers, machinery, equipment, outdoor furniture, floor coverings and appliances (HARD WIRED)
  2. Business Personal Property - furniture, fixtures, machinery, INVENTORY, “STOCK” (merchandise, raw materials, supplies) ON INSURED PREMISES OR WITHIN 100 FEET
  3. Personal Property of Others - in insured’s care, custody or control ON INSURED’S PREMISES (insured is bailee)
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25
Q

Examples of items covered under BUILDINGS on the Building & Personal Property Coverage form:

A

Buildings -

completed additions,

permanently installed fixtures,

fire extinguishers,

machinery,

equipment,

outdoor furniture,

floor coverings and

appliances (HARD WIRED)

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26
Q

Examples of items covered under BUSINESS PERSONAL PROPERTY on the Building & Personal Property Coverage form:

A

furniture,

fixtures,

machinery,

INVENTORY,

“STOCK” (merchandise, raw materials, supplies)

ON INSURED PREMISES OR WITHIN 100 FEET

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27
Q

Examples of items covered under PERSONAL PROPERTY OF OTHERS on the Building & Personal Property Coverage form:

A

in insured’s care, custody or control ON INSURED’S PREMISES (insured is bailee)

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28
Q

What is covered within 100 feet of premises in a Building & Personal Property Coverage Form?

A

business personal property

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29
Q

What are the FIVE Coverage Extensions in Building & Personal Property Coverage?

A
  1. Property of Others - effects of employees - $2500 limit on insured’s premises
  2. Property Off the Insured Premises - $10,000 limit within the coverage territory
  3. Valuable Papers Restoration - $2500 limit
  4. Newly Acquired or Constructed Property - automatically covered for 30 days
  5. Outdoor Property
  • shrubs, plants, trees - $250 max each
  • fences, antennas max total of $1000 per occurrence
  • covered perils are very limited
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30
Q

What are THREE additional coverages in the Building & Personal Property Coverage Form?

A
  1. debris removal of covered property
  2. emergency removal (preservation of property) for 30 days at a new location
  3. Fire Dept Service Charge $1000
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31
Q

Eight examples of property NOT covered under the Building & Personal Property Coverage?

A
  1. Cash
  2. Animals (except owned as stock - pet store)
  3. Vehicles licensed for road use
  4. Exterior signs (unless attached to the building)
  5. Contraband
  6. Land
  7. Pilings, piers, wharves, docks
  8. Business personal property while AIRBORN or AFLOAT.
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32
Q

If a covered building is vacant for ____ days, what coverage is suspended?

A

60 days

  1. vandalism
  2. glass breakage
  3. water damage
  4. theft

AND reduces amount of payment on all other covered perils by 15%!!!

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33
Q

What would cause coverage to be reduced on a comm covered building and by how much?

A

60 days VACANT

15%

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34
Q

Another name for Indirect Loss?

A

Consequential Loss

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35
Q

In Business Interruption Insurance, what is coverage triggered by?

A

direct loss caused by covered peril

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36
Q

What is the dollar amount of coverage under the Business Interruption Insurance policy dependent on?

A

length of time the business is out of operation -

TIME ELEMENT

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37
Q

Loss of Business Income Coverage:

A
  • Indirect Loss Coverage
  • indemnifies insured for loss of profits
  • payment is made for losses incurred during Period of Restoration - after 72 hour deductible
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38
Q

With regards to Loss of Business Income Coverage, Net Income is:

A

Net profit before taxes - AMOUNT THE BUSINESS WOULD HAVE EARNED HAD NO DIRECT LOSS OCCURRED.

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39
Q

With regards to Loss of Business Income Coverage, Continuing Expenses is:

A

expenses including KEY PERSON salaries, rent, advertising, phones, etc

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40
Q

With regards to Loss of Business Income Coverage, Extra Expense Coverage does what?

A

pays additional costs to keep the business operational -

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41
Q

What are the FOUR “Cause of Loss” Forms in Commercial Property Insurance?

A
  1. Basic
  2. Broad
  3. Special - Open Peril
  4. Earthquake
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42
Q

Sprinkler Leakage is covered under which “Cause of Loss” forms?

A

ALL

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43
Q

Sinkhole Collapse is covered under with “Cause of Loss” forms?

A

ALL

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44
Q

What regards to Commercial Property Insurance, Volcanic Actions covers what?

A

Ash Cloud

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45
Q

What is the ONLY form to cover theft in Comm Property?

A

Special

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46
Q

Which forms cover Collapse in comm prop insurance?

A

Broad and Special

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47
Q

What are the three categories of loss coverage for the Earthquake form?

A
  1. Earthquake
  2. Volcanic Eruption (lava)
  3. Underground Lava
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48
Q

Which forms cover Flood in comm property?

A

NONE

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49
Q

What forms cover Sewer back up in comm property?

A

NONE

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50
Q

What is Section I of a BOP?

A

Property Coverage

Special Form - Open Perils - includes theft

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51
Q

Six examples of businesses that could be covered by a BOP:

A
  1. Apartments - condo association
  2. Offices - Office Buildings (included retail store, professional offices) - not more than 6 floors
  3. Convenience stores
  4. Contractors (trade contractors 0 carpentry, hvac, electrical) - GCon not eligible
  5. Limited- Cooking Restaurant - cold food - seating not exceeding 75
  6. Fast Food - exhaust and fire suppress required - seating capacity not exceeding 150
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52
Q

Four eligible risks for comm inland marine coverages:

A
  1. Personal Property Floater Risks
  2. Transportation & Communication Instruments
    - physical damage coverage for bridges, tunnels, piers, pipelines and power transmission lines
  3. Domestic Shipments - Cargo
    - Motor Truck Cargo - common carrier
  4. Commercial Property Floater Risks
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53
Q

Three types of Comm Property Floaters:

A
  1. Contractor’s Equipment Floater

construction machinery and TOOLS

  1. Bailee Floater
  2. Other Comm Inland coverages available
    - accounts receivable, comm articles, sign coverage, valuable papers and records
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54
Q

Examples of other Commercial Inland Marine Coverage Forms available (other than the primary three):

A 
Accounts Receivable 
Cameras&Musical instruments
Commercial Articles (fine arts for business)
Equipment Dealers Coverage
Film Coverage
Floor Plan Coverage
Sign Coverage
Jeweler's Block Coverage
Mail Coverage
Physicians&Surgeons Equipment
Theatrical Property Coverage
Valuable Papers and Records
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55
Q

What’s another name for Equipment Breakdown Coverage?

A

Boiler & Machinery Coverage

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56
Q

Equipment Breakdown Coverage (aka boiler & machinery) insured both ______ loss AND _______ loss.

A

DIRECT AND INDIRECT

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57
Q

Equipment Breakdown Coverage (aka boiler & machinery) has a major emphasis on what?

A

inspection and prevention (loss control)

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58
Q

Under Equipment Breakdown Coverage (aka boiler & machinery), the insurer can cancel the policy immediately if what is found?

A

dangerous condition of equipment

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59
Q

What is the insured machinery or equipment called in an Equipment Breakdown Coverage (aka boiler & machinery)?

A

OBJECT

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60
Q

What are the four categories of OBJECTS that could be defined in an Equipment Breakdown Coverage (aka boiler & machinery)?

A
  1. Pressure and Refrigeration
  2. Mechanical
  3. Electrical
  4. Turbine
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61
Q

What are the two coverage forms for Equipment Breakdown Coverage (aka boiler & machinery)?

A
  1. Equipment Breakdown Coverage Form
    - used ONLY for high-pressure objects
  2. Small Business Equipment Breakdown Form
    - automatically provides loss of business income coverage
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62
Q

What are Three coverage extensions (auto included) under Equipment Breakdown Coverage (aka boiler & machinery)?

A
  1. Expediting Expense
  2. Coverage for newly acquired equipment
  3. Defense Cost
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63
Q

Three primary exclusions to Equipment Breakdown Coverage (aka boiler & machinery)?

A
  1. Depletion, deterioration, corrosion, erosion, leakage, wear&tear
  2. Damage to the object while being tested
  3. POWER INN
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64
Q

In Equipment Breakdown Coverage (aka boiler & machinery), coverage is triggered by:

A

accident

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65
Q

What are the four categories of injuries or damages covered under a Commercial General Liability (CGL) Policy?

A
  1. Bodily Injury
  2. Property Damage
  3. Personal Injury
  4. Advertising Liability
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66
Q

Whose negligent acts are covered under a Commercial General Liability (CGL) Policy?

A
  1. Named Insured - with respect to the conduct of business
  • individual, includes named insured AND SPOUSE
  • partnership, partners and their SPOUSES
  • corporation, officers, directors, stockholders (NOT SPOUSES)
  1. Employees - within the scope of employment
  2. Non-employee acting as real estate manager for the named insured
  3. Legal Rep in even of named insured’s death
  4. Newly acquired or newly formed organizations (for 90 days or upon policy expiration)
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67
Q

Under a Commercial General Liability (CGL) Policy, are mobile equipment operators considered employees?

A

YES!!

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68
Q

Who is NOT covered under a Commercial General Liability (CGL) Policy?

A
  1. visitors
  2. customers
  3. INDEPENDENT contractors
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69
Q

Four Exposures under a Commercial General Liability (CGL) Policy? - know the difference between these and Injuries or Damages

A
  1. Premises Liability
  2. Operations Liability
  3. Products Liability
  4. Completed Operations Liability
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70
Q

What determines the exposure in a Commercial General Liability (CGL) Policy?

A

Where

When

What

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71
Q

What are the THREE coverages provided automatically?

A

Coverage A: Bodily Injury and Property Damage

  1. Premises Liability
  2. Operations Liability
  3. Products Liability
  4. Completed Operations Liability

Coverage B: Personal Injury and Advertising Injury

Coverage C: Med Pay

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72
Q

Cov A for Commercial General Liability (CGL) Policy: What are the four parts?

A
  1. Premises Liability
    - injury to third party claimant ON an insured premises created by negligence of insured
  2. Operations Liability
    - injury to third party claimant OFF an insured premises - WHEN THE JOB IS NOT DONE
  3. Products Liability - injury to third party claimant of an insured premises - FAULTY PRODUCT
  4. Completed Operations Liability
    - injury to third party claimant OFF an insured’s premises - FAULTY WORKMANSHIP
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73
Q

What is Coverage B on a Commercial General Liability (CGL) Policy?

A

Personal Injury and Advertising Injury

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74
Q

What is Coverage C on a Commercial General Liability (CGL) Policy?

A

Med Pay

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75
Q

What is Coverage A on a Commercial General Liability (CGL) Policy?

A

Bodily Injury and Property Damage

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76
Q

What is the coverage triggered by in comm gen liability?

A

date of occurrence - accident

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77
Q

Exclusions to Coverage A on a Commercial General Liability (CGL) Policy?

A
  1. expected or intended from INSURED’S PERSPECTIVE (assaulting a customer)
  2. contractual liability - Liability assumed by a verbal or written agreement is EXCLUDED, however, if insured assumed liability in the form of premises lease, liability is provided
  3. Liquor Liability
  4. WC - law obligation
  5. Pollution Discharge
  6. Aircraft, Autos, Watercraft

7 Damage to property owned, rented, or controlled by insured - (Care, Custody, Control)

8 Property damage to the insured’s faulty product

9 Property damage to insured’s faulty work

10 product recall

78
Q

Two parts of Coverage B on a Commercial General Liability (CGL) Policy?

A
  1. Personal Injury
    - injury to reputation or mental state
  2. Advertising Injury
    - UNINTENTIONAL
79
Q

What are the exclusions to the Personal Injury part of Cov B of a Commercial General Liability (CGL) Policy?

A
  1. employment-related practices (discrimination, sexual harassment)
  2. libel or slander where insured knew it was false
  3. willful violation of law
  4. bodily injury
80
Q

What are the exclusions to the Advertising Liability part of Cov B of a Commercial General Liability (CGL) Policy?

A
  1. any insured in the advertising business
  2. failure of goods to conform to advertising quality
  3. wrong description of prices
81
Q

Med Pay under Cov C of Commercial General Liability (CGL) Policy can be paid up to ___ years after the accident? and what are the limits?

A

1 One year

$5000

82
Q

What’s another term form Additional Coverages under a Commercial General Liability (CGL) Policy? These are free.

A

Supplemental Payments

83
Q

What are the two limits of liability in a Commercial General Liability (CGL) Policy?

A
  1. Per Occurrence Limit
    - max coverage for any ONE occurrence, regardless of persons injured
    - Per Occurrence Limit - Cov A - Bodily Injury & Property Damage - $1,000,000
    - Per Occurrence Limit - Cov B - Personal Injury - $1,000,000
    - Per Person Limit - Cov B - Med Pay - $5000
  2. Aggregate Limit
    - max coverage during policy year (12months) regardless of number of separate occurrences.

Two aggregate limits:

  • General Aggregate Limit - $2,000,000
  • Products-Completed Operations Aggregate Limit - $2,000,000
84
Q

What are the two Aggregate limits in a Commercial General Liability (CGL) Policy?

A
  1. General Aggregate Limit - $2,000,000

2. Products-Completed Operations Aggregate Limit - $2,000,000

85
Q

What is the per occurrence limit for Cov A in a Commercial General Liability (CGL) Policy?

A

Bodily Injury & Property Damage

Per Occurrence Limit

$1,000,000

86
Q

What is the per occurrence limit for Cov B in a Commercial General Liability (CGL) Policy?

A

Personal Injury

Per Occurrence Limit

$1,000,000

87
Q

What is the per occurrence limit for Cov C in a Commercial General Liability (CGL) Policy?

A

Med Pay

Per Person Limit

$5000

88
Q

Three major conditions of a Commercial General Liability (CGL) Policy?

A
  1. Premium Audit
    - auditable policy - premium is based on sales or payroll (exposure base) - premium adjusted accordingly
  2. When Insurance does not renew
    - 45 days notice before the expiration date is required to be given to the first named insured.
  3. Coverage Territory
    - Premises, Operations & Completed Ops - USA, territories, Canada
    - Products - Worldwide if made in the US
89
Q

What is Owners and Contractors Protective Liability?

A
  • Optional Coverage
  • Sleep Well Coverage
  • MAKES DEFENSE COST FREE - LAWYERS ARE FREE
90
Q

Owners and Contractors Protective Liability covers against liability arising from what?

A

Negligence of a Contractor or Subcontractor hired by insured.

91
Q

Is wrong descriptions of prices covered under advertising and personal injury on a Commercial General Liability (CGL) Policy?

A

NO -

92
Q

Can a commercial auto form be issued as monoline?

A

Yes - or part of a package

93
Q

What type of business may be covered in a Comm Auto Policy?

A

ANY

94
Q

What are the Three types of Comm Auto Coverage Forms?

A
  1. Business Auto Coverage Form (BAP)
    - for insureds who own a operate autos in business activities
  2. Garage Coverage Form
    - for insureds in the business of driving, servicing, and working on NONOWNED autos
  3. Truckers Coverage Form
    - Common Carriers
    - PRIVATE PASSENGER AUTOS NOT AVAILABLE
95
Q

What is consider an AUTO under a Business Auto Policy (BAP)?

A
  • designed for travel on public roads
  • private or comm
  • mobile equipment designed for travel on public roads (drilling rig, crane truck)
96
Q

What is consider an OWNED AUTO under a Business Auto Policy (BAP)?

A
  • autos titled to a business entity
97
Q

What is consider an HIRED AUTO under a Business Auto Policy (BAP)?

A
  • USED IN INSUREDS BUSINESS
  • LEASED, HIRED, RENTED, BORROWED
  • NO OWNED BY EMPLOYEES
98
Q

What is consider an NON-OWNED AUTO under a Business Auto Policy (BAP)?

A
  • used in the insured’s business that are OWNED BY EMPLOYEES
99
Q

1 Covered auto under a Business Auto Policy (BAP)?

A

ANY AUTO

  • only available for LIABILITY coverage
100
Q

2 Covered auto under a Business Auto Policy (BAP)?

A

OWNED AUTOS ONLY

101
Q

7 Covered auto under a Business Auto Policy (BAP)?

A

Specifically described autos only

102
Q

8 Covered auto under a Business Auto Policy (BAP)?

A

Hired autos only

103
Q

9 Covered auto under a Business Auto Policy (BAP)?

A

Non-owned autos only

104
Q

What triggers coverage under a (BAP)?

A

of vehicle - 1,2,7,8,9

105
Q

Under symbole #7, how long does a insured have to notify the insurer of newly acquired autos?

A

30 days

106
Q

Under symbols #1,2,3,4,5,6 how long does a insured have to notify the insurer of newly acquired autos?

A

Autos covered until end of policy

107
Q

Only auto symbol that will have coverage for physical damage, towing and labor?

A

2 - Owned Autos - business only

108
Q

When is coverage triggered in a Business Auto Policy?

A

date of occurrence - accident

109
Q

What are the two physical damage coverages available under a BAP?

A
  1. Comprehensive

2. Collision

110
Q

Is Med Pay included under a BAP?

A

Must be added by endorsement -

111
Q

What is the difference between Med pay in Personal Auto and Med Pay in BAP?

A

BAP - coverage is provided for only ONE year from the date of the accident

112
Q

Is Uninsured Motorist Coverage included in a BAP?

A

Must be added by endorsement

  • IF COVERAGE IS ADDED TO THE BUSINESS AUTO, COVERAGE IS NOT AUTOMATICALLY PROVIDED ON ALL VEHICLES!!!
113
Q

What are the Two types of coverages available under a Garage Coverage Form?

A
  1. Garage Liability

2. Garagekeepers Coverage

114
Q

What does the Garage Liability Form combine?

A

Business Auto Policy (BAP

and

Commercial General Liability

115
Q

What is the coverage designed for in Garage Liability?

A
  • insure businesses that drive, service and work on NON-OWNED autos
  • auto dealers, auto repair shops, service stations, parking garages
116
Q

What is the Garagekeepers Coverage designed for?

A
  • a bailee coverage providing physical damage coverage for CUSTOMER’S AUTOS in care, custody, control (CCC) of the insured for storage, service or repair
  • EXCLUDES coverage for all other types of business property including inventory, supplies, machinery and mechanic tools
117
Q

Why Commercial Crime Insurance be necessary?

A
  1. Comm Coverage EXCLUDES loss of money, cash, securities

2. peril of THEFT excludes caused by EMPLOYEES

118
Q

With regards to Commercial Crime Insurance, what is a Custodian?

A
  • named insured, partner, employee
  • inside premises
  • war wagon
119
Q

With regards to Commercial Crime Insurance, what is a Messenger?

A
  • named insured, partner, employee

- outside premises

120
Q

With regards to Commercial Crime Insurance, what is a Burglary?

A
  • taking property from inside premises
  • forced entry, unlawful entry
  • business is closed
121
Q

With regards to Commercial Crime Insurance, what is a Robbery?

A
  • taking property and threatens bodily harm

- no weapon required

122
Q

With regards to Commercial Crime Insurance, what is a Larceny?

A
  • taking property when there IS access to the area

- shoppliftin or domestic employees

123
Q

With regards to Commercial Crime Insurance, what is a Extortion?

A
  • away from premises

- threat of bodily harm to a hostage

124
Q

With regards to Commercial Crime Insurance, what is a Mysterious Disappearance?

A
  • unexplained loss of property

- presumption of theft

125
Q

With regards to Commercial Crime Insurance, what is a Securities?

A
  • negotiable or NON-negotiable instruments

- tokens, tickets, revenue stamps

126
Q

With regards to Commercial Crime Insurance, what is a Occurrence?

A
  • loss by one or more persons
  • single act or series of related acts
  • limit of liability is per occurrence and NOT per person
127
Q

With regards to Commercial Crime Insurance, what is a Discovery Period?

A
  • aka Discovery Form

- period of ONE year for a loss to be discovered AFTER policy expiration IF it occurred during policy period

128
Q

What are the two ways coverage can be written under Employee Theft (Comm Crime Coverage)?

A
  1. Blanket Basis
  • all employees for a single amount
  • limit applies per loss and not per employee
  • premium for new employees is adjusted annually
  1. Schedule Basis
    - Name Schedule
  • Position Schedule
    (new employees filling specified job position are covered automatically)
129
Q

How is the deductible applied under Employee Theft (Comm Crime Coverage)?

A

Per Occurrence

130
Q

What are the Three exclusions under Employee Theft (Comm Crime Coverage)?

A
  1. loss is committed by insured or his/her partners
  2. coverage is cancelled immediately with regards to a SPECIFIC EMPLOYEE on the discovery of a dishonest act by the insured, partner or officer
  3. Inventory Shortage
131
Q

Where does Forgery or Alteration occur?

A

OFF the insured’s premises

132
Q

What else is covered under Inside the Premises - Theft of Money & Securities?

A

Damage to the building, safe, vault, and cash register caused by theft or attempted theft.

133
Q

What is covered under Inside the Premises - Robbery or Safe Burglary of Other Property?

A
  1. Any tangible property other than money and securities
  2. Damage to the building, safe, vault, and cash register caused by theft or attempted theft.

JEWELRY STORES

134
Q

What is covered under Outside The Premises in a Comm Crime Coverage?

A

Losses resulting from theft, mysterious disappearance, destruction of money, securities, tangible property -

  • PROPERTY OUTSIDE THE PREMISES MUST BE IN THE CUSTODY OF AN ARMORED MOTOR VEHICLE OR A MESSENGER
135
Q

What is covered under Computer Fraud in a Comm Crime Coverage?

A

Losses resulting from the use of a computer OFF THE INSURED’S PREMISES to fraudulently transfer property

  • NO COVERAGE FOR THE COMPUTER
136
Q

Bonds are used to:

A

Guarantee Promises (obligations)

137
Q

What are the three parties involved in a bond?

A
  1. Principal
  2. Surety
  3. Obligee
138
Q

Who is the promise MADE TO in a bond agreement?

A

Obligee

139
Q

Losses are expected in what agreement?

A

Insurance

140
Q

Losses are NOT expected in what agreement?

A

Bonds

141
Q

In a bond agreement, the Surety can ______ against the Principal.

A

subrogate

142
Q

What is the Penalty with regards to Bonds?

A

The amount of the bond

  • Penalty is paid by surety if the principal does not fulfill promise (obligation)
143
Q

What three criteria does a Surety consider underwriting a Bond?

A
  1. Ability to perform
  2. Financial Strength
  3. Reputation and Character
144
Q

What is another name for a Fidelity Bond? An example of a company that might have one?

A

Dishonesty Bonds - PROTECTS AGAINST DISHONEST EMPLOYEES

Merry Maids - House Cleaners

145
Q

What is a Capacity Bond?

A

NO SUCH THING

146
Q

What does a Surety bond guarantee?

A

Performance

147
Q

What is the Principal with regards to Bonds?

A

Obliger

party who has agreed to fulfill obligation

148
Q

What is the Obligee with regards to Bonds?

A

party for whose benefit the bond is written

I am the Obligee - the bond benefits me

149
Q

What is the Surety with regards to Bonds?

A

guarantees an obligation

150
Q

What do Fidelity bonds protect against?

A

Dishonest Employees

151
Q

How long are Fidelity (dishonesty) bonds good for?

A

no expiration

152
Q

Fidelity bonds provide the same coverage as ______ ______ ________ - _______ ______.

A

Commercial Crime Coverage - Employee Theft

153
Q

What are the two ways in which a Fidelity Bond can be written?

A
  1. Blanket

2. Schedule

154
Q

What are Surety Bonds sometimes referred to as?

A

Suretyship

155
Q

Surety bonds are similar to a ________.

A

Co-signer

156
Q

What are contractual surety bonds used for?

A

guarantee the fulfillment of contractual obligations

157
Q

What are Three types of Contractual Surety Bonds?

A
  1. Performance Bond
  2. Bid Bond
  3. Labor and Material Bond
158
Q

What is a Labor and Material Bond?

A

Payment Bond

  • guarantees the contractor (principal) will complete and deliver the project free of any liens.
159
Q

A fiduciary is a person ___ __ ____.

A

Held In Trust

160
Q

In a Judicial or Litigation Surety Bond, a fiduciary, :

A

guarantees the faithful job performance of PEOPLE IN HIGH POSITIONS OF TRUST.

Legal Guardian

Administrator (Executor)

161
Q

What are two examples of fiduciaries with regards to a Judicial or Litigation Surety Bond?

A

Legal Guardian

Administrator ( Executor )

162
Q

What is a Bail Bond and example of?

A

Judicial or Litigation Surety Bond

163
Q

A Permit & License Bond guarantees:

A
  1. certain types of taxes are paid
  2. specific laws and regulations are followed

Liquor Store Licenses

164
Q

Three major parts of Professional Liability Policies:

A
  1. Do not require underlying insurance policies
  2. Provide coverage for financial damages (not punitive)
  3. Provide defense cost
165
Q

What are the Two categories of Professional Liability Policies?

A
  1. Medical Professional - malpractice

2. Non-Medical - ERRORS & OMMISSIONS

166
Q

What are the basic (minimum) limits in WC?

A

100/100/500

Bodily Accident - $100,000 each accident (per accident

Bodily Injury by Disease - $100,000 each employee

Bodily Injury by Disease - $500,000 aggregate (policy limit)

167
Q

Definition of Compensable Injury with regards to WC?

A
  • injury or disease arising out of and in the course of employment
168
Q

What is also covered under wages in a WC claim?

A
  • reasonable value of rent, lodging and board
  • severance
  • NOT SICK PAY
169
Q

What does the Oklahoma WC Court do?

A
  • applies the law

- responsible for resolution of DISPUTES

170
Q

What are some excluded employers with regards to WC?

A
  1. Farm employers - annual payroll less than $100,000
  2. Domestic Employees - annual payroll less than $10,000
  3. Employer with FIVE or less total employees, all of whom are related by blood or marriage
  4. Federal Government Employees such as Longshoreman & Harbor Workers Act
171
Q

Is a volunteer covered under WC?

A

NO

172
Q

Three examples of excluded employees with regards to WC:

A
  1. Sole proprietors
  2. Members of Partnership
  3. Stockholders owning more than 10% of a Corp
173
Q

The Insurer underwriting the WC coverage can ______ against the responsible party.

A

subrogate

174
Q

Does WC have a retirement benefit?

A

NO

175
Q

Four Benefits of WC:

A
  1. Medical Benefits
  2. Loss of Income Benefits
  3. Death Benefit
  4. Rehabilitation Benefit
176
Q

Medical Benefits in WC claims:

A

Unlimited

  • benefits are effective from the date of injury or loss
  • no coverage for pain & suffering
  • Employer must provide med care within 7seven days of KNOWLEDGE of actual injury
177
Q

Loss of Income Benefits in WC claims:

A

70% of loss wages

  • paid weekly
  • exempt from federal and state income taxes
  • no compensation allowed for the first 7 calendar days of loss of income- benefits begin after 7 day waiting period
178
Q

Types of disability:

A

Temporary Partial

Temporary Total

Permanent Partial

Permanent Total

179
Q

Temporary Partial disability provides what WC benefits?

A

70% of employees average weekly wage

max number of weeks - 156

180
Q

Temporary Total disability provides what WC benefits?

A

70% of employees average weekly wage

period determined by doctore

181
Q

Permanent Partial disability provides what WC benefits?

A

70% of employees average weekly wage

schedule determined by type of injury

lump sum payment will be made according to schedule set by law based on the type of injury (finger, limb, etc)

182
Q

Permanent Total disability provides what WC benefits?

A

70% of employees average weekly wage

until employee reaches the age of maximum social security benefits

183
Q

Death Benefit (Survivor Benefit)

A

70% of employees average weekly wage WILL BE PAID TO SPOUSE

lump sum payment will be made to the spouse ($100,000) and $25,000 to each child (dependent).

184
Q

Rehabilitation Benefits:

A

unlimited

185
Q

Does employer provide disability coverage?

A

NO - just workers comp, which provides coverage in the event of a disability cause by something while on the job

186
Q

What are the Three methods for funding WC?

A
  1. Commercial Insurance
  2. Competitive State Fund
  3. Self Insurance
187
Q

Who sets WC rates?

A

STATE - NOT OID

188
Q

Rating of WC:

A

Job Classification - Code - Rate Per $100 X $ Payroll Per 100 = annual premium

189
Q

Are contractors responsible for WC of subcontractors?

A

YES -

Contractors should require a Cert for every Sub

190
Q

The only type of disability that pays a lump sum in addition to weekly pay:

A

Permanent Partial - loss of limb, etc

191
Q

What part of the OK WC Policy protects against Common Law Claims?

A

Part II - Employer’s Liability Coverage

192
Q

What part of the OK WC Policy protects against Statutory Claims?

A

Part I - WC Benefits

Property & Casualty Insurance Exam - Oklahoma (6 decks)

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