Section 8

Question 0

Who is responsible for damage to improvements in a leased building?

1. Tenant
2. Building owner
3. Improvements to a leased building are not covered
4. Both the tenant and the building owner

Answer 0

Building owner

Pg 97

Question 1

Equipment breakdown insurance covers all of the following, except:

1. Equipment powered by internal pressure
2. Mechanical equipment used to produce energy
3. Tools subject to regulate replacement
4. Communication equipment

Answer 1

Tools subject to regulate replacement

Expected losses are not covered

Question 2

Hull coverage in an ocean marine policy covers which if the following?

1. The freight charged for the transportation of the cargo
2. The ship owner’s&s liability
3. Cargo being transported on the ship
4. The vessel itself, including engines and fuel

Answer 2

The vessel itself, including engines and fuel

Hull coverage is for the ship itself, and any lost (not used) fuel

Question 3

All of the following are differences surety bonds and insurance except:

1. Reserves are not established
2. The principal is responsible for the guarantor in the case of a loss
3. 3-party contract
4. The surety should not suffer a loss

Answer 3

Reserves are not established

Pg 97

Question 4

If a bartender allows a patron to leave the bar, and the patron is involved in a drunk driving accident, what would the bar owner need to cover their liability?

1. Professional liability
2. Host liquor
3. Commercial general liability
4. Liquor liability

Answer 4

Liquor liability

Liquor is used to cover those in the alcohol business

Question 5

What causes a loss are covered under the Business income coverage form?

1. Broad form perils only
2. Those included in business income form
3. All perils
4. Those shown on the declarations

Answer 5

Those shown on the declarations

Pg 97

Question 6

When an employer has a choice to purchase workers compensation insurance from a state fund or a private carrier, the state fund would be called: @

1. A competitive state fund
2. A residual fund
3. A private fund
4. A monopolistic fund

Answer 6

A competitive state fund

Workers comp. through private carriers or state fund= competitive state fund

Question 7

A commercial general liability (CGL) policy is quite broad in scope. However, there are a substantial number of exclusions. Three of the four following loss exposure are excluded. Identify the loss exposure that is covered by an unendorsed CGL- property damage or liability arising out of: @

1. The ownership of an airplane
2. An employee being insured while working on the insured’s premises
3. An employee accidentally injures a customer while working at the customer’s home
4. An accident while driving an owned automobile on a public highway

Answer 7

An employee accidentally injures a customer while working at the customer’s home

CGL exclusions include: aircraft, employee injuries, auto liability

Question 8

If an insured discovers an occurrence 75 days after the expiration of a claims-made Commercial General Liability policy, what must the insured have in order for the loss to be covered? @

1. nothing; as long as the loss occurred during the policy period
2. The loss will be covered because it was not reported during the policy period
3. Umbrella policy
4. Basic extended reporting prior endorsement

Answer 8

Basic extended reporting prior endorsement

The basic ERP covers losses discovered up to 60 days after the end of the policy period

Question 9

What is the purpose of the inspections and surveys condition of the commercial package policy? @

1. To determine the rate to be charged
2. To determine if the premises comply with ADA requirements
3. To ascertain if the premises has maintained the required building codes
4. To specify if the premises comply with OSHA requirements

Answer 9

To determine the rate to be charged

The inspections and surveys help to determine the rate to be charged

Question 10

Why is the examination of books and records condition important in a commercial policy?

1. To ensure that the insurance business is profitable
2. To ensure that the proper amount of premium is charged
3. To ensure that the insured is using generally accepted accounting principles
4. To ensure that the insurance business is solvent

Answer 10

To ensure that the proper amount of premium is charged

Examination of books and records is primarily a rating provision

Question 11

Under the business income coverage form, extra expenses are:

1. Covered without limit during the period of restoration
2. Covered up to the amount they reduce the business income loss
3. Covered up the monthly limit specified in the declarations
4. Excluded ugh

Answer 11

Excluded

Business income can be bought with extra expenses coverage, but it is not included automatically.

Question 12

All of the following are covered by protection and indemnity insurance, except:

1. Injury to persons on other ships
2. Damages to piers
3. Injuries passengers on the ship
4. The cost of reasonable measures that insured must take to prevent damage at the time of loss

Answer 12

The cost of reasonable measures that insured must take to prevent damage at the time of loss

Reasonable measures taken to prevent damage are implied warranties in an ocean marine policy

Question 13

The inspections and surveys condition of a Commercial Package Policy is important to the insurer for all of the following reasons, EXCEPT:

1. To determine the insurability of the insured’s operations
2. To set proper insurance rates
3. Guarantee that the insured is in compliance with safety regulations
4. Make loss control recommendations

Answer 13

Guarantee that the insured is in compliance with safety regulations

3) Inspections and Surveys performed are not safety inspections.

Question 14

All of the following are typical exclusions in Inland Marine Policy, EXCEPT: @

1. Wear and tear
2. Electrical breakdown
3. Earth movement
4. Insects or vermin

Answer 14

Earth movement

3) Earth movement is not a typical exclusion in Inland Marine.

Question 15

If the vacancy permit endorsement is added to a Building and Personal Property coverage form, the vacancy condition under the basic policy is:

1. Waived after the policy period
2. Waived only for designated perils during the policy period
3. Waived only for designated perils during the permit period
4. Waived during the permit period

Answer 15

Waived only for designated perils during the permit period

3) The permit reinstates the designated perils of vandalism and sprinkler leakage during the permit period.

Question 16

Under the commercial Building and Personal Property coverage extensions, property off-premises is covered while the property is located:

1. At a trade show or a fair
2. In a building the named insured has leased for five years
3. In a delivery truck
4. At a salesperson’s home

Answer 16

At a trade show or a fair

1) Pg. 99

Question 17

If the named insured is not the owner of the building, improvements and betterments are covered under the:

1. Newly constructed property
2. Agreed value
3. Building
4. Business personal property

Answer 17

Business personal property

4) Improvements and betterments are concerned with tenant’s personal property.

Question 18

Which of the following is eligible for Business owners Policy? @

1. A sports bar
2. A credit union
3. A furniture store
4. An auto repair shop

Answer 18

A furniture store

3) BOP excludes auto repair facilities, bars, and financial institutions.

Question 19

All of the following are mandatory coverages of a Business owners Policy, EXCEPT:

1. Business income coverage
2. Professional liability coverage
3. Building coverage
4. Extra expense coverage

Answer 19

Professional liability coverage

2) BOP includes elements that can be part of a Commercial Package Policy. Professional liability is not included in commercial packages.

Question 20

All of the following are listed on a Commercial General Liability declaration page, EXCEPT: @

1. Pollution liability limit
2. Products & completed operations limit
3. Medical expenses limit
4. Personal advertising injury limit

Answer 20

Pollution liability limit

1) CGL excludes pollution liability.

Question 21

Insurance which covers ships owners against vicarious liability claims, due to operations of the insured vessel, is: @

1. A voyage policy
2. The sue and labor laws
3. Protection and indemnity insurance
4. Hull insurance

Answer 21

Protection and indemnity insurance

3) P & I covers liability imposed due to the actions of others (vicarious liability).