AD Banker AL P&C CH 9 Commercial General Liability Coverage

Which of the following is the main difference between the Occurrence Form and the Claims-Made Form under a CGL policy? A. The coverage trigger B. The occurrence date C. The per occurrence limit D. The general aggregate limit

A. Both forms are identical EXCEPT: at which point coverage is activated. The trigger for the Occurrence form is the date of the incident. The trigger for the Claims-Made form is the date the claim is made or submitted. This is the Coverage Trigger.

A contractor installs an air compressor system at a customers business. After the contractor leaves the premises the unit blows up causing injuries to their customers. The contractors liability would be covered under which of the following coverages? A. Completed operations B. Contractual liability C. Products liability D. Premises and operations

A. Completed operations covers the contractor once the job is completed and the contractor is no longer at the location. Operations covers the contractor while on site doing the work in case they are liable for damages caused by their operation. Products liability covers manufacturers of products and Premises covers the business liability.

The 'Each Occurrence' Limit applies to which of the following coverages under the Commercial General Liability policy? A. Coverage A & C only B. Coverage B only C. Coverage A only D. Coverage B & C only

A. Coverage A - BI/PD Pays 'Per Occurrence' and is subject to the 'Each Occurrence' Limit. Coverage B - Personal Injury/Advertising Injury - Pays 'Per Person or Organization' and is ONLY subject to the 'Aggregate Limit'. Coverage C - Med Pay - Pays Per Person for 'Each Occurrence'.

All of the following reduce the general aggregate limit in the CGL, EXCEPT: A. The products-completed operations limit B. The per occurrence limit C. The personal and advertising injury limit D. The medical expense limit

A. Coverages A, B & C in the Commercial General Liability part of the CPP all share in the general aggregate limits of insurance. Products and Completed Operations has its own separate aggregate limit that does not effect the general aggregate at all.

Which of the following would be covered under a Commercial General Liability policy? A. Host liquor liability B. Employee injuries C. All of the answers listed D. Pollution spill

A. Host Liquor Liability is where an employer has incidental exposure. If an employer serves alcohol at a holiday party once a year they have incidental liquor liability exposure and therefore the Liquor Liability Exclusion would not apply. (Pollution spill) and (Employee injuries) are both excluded from CGL coverage. Liquor Liability for those that sell or manufacture liquor and is excluded without an endorsement.

Which of the following is NOT true regarding Medical Expense or Med Pay benefits under a Commercial General Liability (CGL) policy? A. Pays for injuries sustained by the insured or their employees B. Coverage pays on a per person basis C. Pays for accidents that have occurred and reported within 1 year of the date of the accident D. Pays regardless of fault

A. Med Pay is for 'OTHERS' everywhere in this book, EXCEPT: Boats and Auto. Med Pay throughout the book pays on a Per Person Basis, Pays regardless of fault. Employees would be covered by Workers' Compensation.

The named insured on a Commercial General Liability policy is Sassy Department Store. Which of the following losses would be paid under the policy's Medical Payments coverage? A. A mannequin tips over and injures a customer B. An employee is injured while unloading inventory that has been delivered by a truck C. The store owner injures himself while climbing a ladder to set up a store display D. None of the answers listed

A. Medical Payments coverage provides for injuries sustained by other people injured in your business. The store owner and the employee would be covered by Workers' Compensation.

Do Supplementary Payments add to the general aggregate limits of a Commercial General Liability policy? A. No, they pay in addition to the limits of liability and do not effect the aggregate limits at all B. No, they are not available in Commercial General Liability C. Yes, they increase the general aggregate limits of the policy and may be used on a per person basis D. Yes, they increase the general aggregate limits of the policy and may be used on a per occurrence basis

A. Supplementary Payments ARE paid in addition to the policy's limits of liability. However, they Do Not increase the policy's General Aggregate Limits that apply to the other coverage parts.

Under the claims-made CGL, the supplemental extended reporting period: A. Provides an unlimited extension for making claims for losses that occurred during the policy period, but the insured must pay an additional premium B. Provides an unlimited extension for making claims for losses that occurred during the policy period, this extension is provided automatically without any additional charge C. Provides a 60 day Mini Tail period for the reporting of an incident that results from an occurrence that took place before the end of the policy period D. Provides a 5 year Midi Tail period for a claim arising from an occurrence that took place before the end of the policy period, provided the insurer was notified of that occurrence

A. The supplemental extended reporting period is a 'full tail' optional reporting period of unlimited duration that may be purchased by endorsement if requested within 60 days of the end of the policy term. It has a one time charge of 200% of the original premium. The 60 day mini tail and 5 year midi tail are both part of the Basic Extended Reporting Period which is automatically included in the claims-made form without charge.

The Commercial General Liability claims-made coverage form may contain a retroactive date. This is the date: A. Before which the claims-made form will not cover a claim B. That will automatically backdate a policy to any date in the past in order to cover an incident that occurs C. All of the answers listed D. That the insured may request to backdate the policy and the insurer must comply

A. Under the claims-made CGL form, the retroactive date is a date in the Declarations as the first date on which an event may occur and be covered by the policy. It will not cover a claim at any date in the past and the insurer is not required to accept the request to include this provision. The retroactive date will be included only at the insurers discretion.

Coverage for products and completed operations is provided under which of the following contracts? A. Both answers B. Neither answer C. Occurrence CGL D. Claims-made CGL

A.The occurrence and claims-made CGL forms contain basically the same coverages. The difference is in how the coverage begins. This is called the trigger. Occurrence form requires only that the incident occur while the policy is in force and the claim may be filed anytime, even after the policy has expired. Claims-made form also requires that the incident occur while the policy is in force AND the claim must also be made while the policy is in force. This is the only form that offers additional benefits: A Retroactive date, Basic Extended Reporting Period, and a Supplemental Extended Reporting Period can be added.

The Commercial General Liability coverage part can be used to insure against all of the following exposures, except: A. Completed Operations Liability B. Liquor Liability C. Premises Liability D. Products Liability

B. The Commercial General Liability policy covers a business's liability for premises and operations exposure and products-completed operations exposure. Liquor Liability is for those that sell liquor and is always excluded unless added by endorsement.

When replacing a CGL Claims Mode policy with a new policy, when should you set the retroactive date so that there is no loss in coverage? A. One year after the prior policy retroactive date B. The same as the prior policy retroactive date C. 60 days earlier than the new policy effective date D. One year earlier than the prior policy retroactive date

B. When replacing a Claims-Made policy you should always establish the coverage timeline identical as the replacing policy to cover all incidents that may result in a claim.

Which of the following is the main difference between the Occurrence Form and the Claims-Made Form under a CGL policy? A. The per occurrence limit B. The general aggregate limit C. The coverage trigger D. The occurrence date

C. Both forms are identical EXCEPT: at which point coverage is activated. The trigger for the Occurrence form is the date of the incident. The trigger for the Claims-Made form is the date the claim is made or submitted. This is the Coverage Trigger.

A man becomes ill after eating a meal in a restaurant. The cost of treatment at a local hospital is $1,700. Which coverage section of the restaurant's Commercial General Liability policy will respond to the claim? A. Contractual liability B. Med Pay C. Products D. Operations

C. By endorsement, food served in a restaurant becomes a product once served under 'product liability exposure'. Product liability does not provide any Med Pay. You must prove the product caused the illness and seek recovery under BI/PD coverage.

Which of the following would be covered under a Commercial General Liability policy? A. All of the answers listed B. Employee injuries C. Host liquor liability D. Pollution spill

C. Host Liquor Liability is where an employer has incidental exposure. If an employer serves alcohol at a holiday party once a year they have incidental liquor liability exposure and therefore the Liquor Liability Exclusion would not apply. (Pollution spill) and (Employee injuries) are both excluded from CGL coverage. Liquor Liability for those that sell or manufacture liquor and is excluded without an endorsement.

Who of the following would have coverage for liquor liability losses under the Commercial General Liability policy? Assume there are no endorsements attached to the policy. A. A grocery store that stocks and sells beer and wine B. A liquor lounge that serves alcoholic beverages C. An advertising agency that serves liquor at a holiday party D. All of the answers listed

C. Liability is for those who distribute and sell liquor. It is always excluded unless added by endorsement. Host Liquor Liability is provided for those who only have incidental exposure, such as serving alcohol at a company holiday party.

Under a CGL, Med Pay provides coverage and will make payments for up to how long following a loss? A. Only if found legally liable and up to 3 years B. Regardless of fault and up to 3 years C. Regardless of fault and up to 1 year D. Only if found legally liable and up to 1 year

C. Med Pay will pay regardless of fault and for up to a specified limit, provided the accident and/or expenses occur within 1 year of the date of the accident.

Which of the following is NOT considered to be an insured under the Commercial General Liability (CGL) coverage form? A. An individual, partnership including spouse, joint venture named in the declarations B. Person acting as the insured's real estate manager and the insured's legal representative in the event of the insured's death C. An individual, partnership including spouse, joint venture not named in the declarations D. Volunteer workers, employees, operators of mobile equipment

C. Partnerships including spouses, joint ventures, LLC's, MUST be named in the Declarations to be an insured under the CGL. Individuals, volunteer workers, employees, mobile equipment operators, etc. need not be named in the Declarations.

Under the Commercial General Liability policy, a separate Aggregate Limit applies to the: A. Bodily injury and property damage liability coverage B. Personal and advertising injury coverage C. Products and completed operations hazard D. Medical expense coverage

C. Product and completed operations has its own separate aggregate limit, this limit does not reduce the general aggregate limit. Medical expense, Personal and Advertising Injury and BI/PD all share in the general aggregate.

The Owners and Contractors Protective form covers the insured for liability: A. Arising out of contractual liability exposure B. Arising out of products exposure C. Arising out of the operations of independent contractors or subcontractors D. Arising out of damage to impaired property

C. The Owners and Contractors Protective form AKA: Contingent Liability Exposure (Independent Contractors Liability) is specifically designed to cover the insured's liability for operations of independent contractors. Ex. A building owner may become vicariously liable for the actions of a painting contractor or sub-contractor they have hired because they did not give adequate instructions and the contractor painted the wrong building.

Under the CGL, the products-completed operations hazard limit is subject to: A. A product-completed operations aggregate limit B. A per occurrence limit C. Both answers D. Neither answer

C. The products-completed operations hazard has its own aggregate limit. It is not included in the policy general aggregate limit at all. It is also subject to a per occurrence limit.

Under the CGL, the products-completed operations hazard limit is subject to: A. Neither answer B. A per occurrence limit C. Both answers D. A products-completed operations aggregate limit

C. The products-completed operations hazard has its own aggregate limit. It is not included in the policy general aggregate limit at all. It is also subject to a per occurrence limit.

Under the claims-made Commercial General Liability coverage form, the first date that a loss may occur and still be covered under the policy is the: A. Mini-tale date B. Reporting date C. Retroactive date D. Policy effective date

C. The retroactive date is a date in the past; anything that occurred before that date will not be covered. It serves as a way to back date the policy to cover any claims that may have occurred after the retroactive date and during the policy period or an extended reporting period provided.

The maximum that a CGL policy will pay in any one policy period is known as which of the following? A. Per Occurrence limit B. Per Person limit C. Aggregate limit D. Full Policy limit

C. Think of the aggregate limit as The Bank. As long as there is coverage remaining in the aggregate, their is coverage remaining. Once the aggregate is exhausted, the bank is empty. Coverages A, B, & C all share in the general aggregate.

If a restaurant serves a customer a bowl of clam chowder and later becomes ill, the customers illness would be covered by which of the following? A. Completed operations exposure B. Premises exposure C. Products and completed operations exposure D. Products exposure

D. By endorsement, food served in a restaurant becomes a product once served under 'product liability exposure'. They are basically treated as a manufacturer of a product, therefore: Products Exposure applies.

Each of the following is a primary coverage provided under the Commercial General Liability policy, EXCEPT: A. Bodily Injury and Property Damage Liability B. Personal and Advertising Injury C. Medical Payments D. Liquor Liability

D. The CGL form includes Coverage A-Bodily Injury and Property Damage Liability, Coverage B-Personal and Advertising Injury Liability, Coverage C-Medical Payments. The CGL always excludes Liquor Liability unless it is added to the policy by endorsement.

Which of the following IS true regarding a premium audit in a Commercial General Liability (CGL) policy? A. The advanced premium is known as a premium deposit B. The final premium is known as the actual earned premium C. Neither answer D. Both answers

D. The business must deposit money in advance into an advanced premium fund known as a premium deposit. The business must maintain records so at the end of the policy period the insurer can compute the actual earned premium, which is considered to be the final premium. This final premium is based on the sales, receipts, payroll, etc.

Under the claims-made Commercial General Liability coverage form, the first date that a loss may occur and still be covered under the policy is the: A. Mini-tail date B. Policy effective date C. Reporting date D. Retroactive date

D. The retroactive date is a date in the past; anything that occurred before that date will not be covered. It serves as a way to back date the policy to cover any claims that may have occurred after the retroactive date and during the policy period or an extended reporting period provided.