Ch. 12 Miscellaneous Commercial Policies

Which of the following is not covered under the Installation Floater? A Construction equipment B Elevators C Electrical equipment D Carpeting

A Construction equipment Construction equipment is covered under the Equipment Dealers Floater.

Hull Coverage and Cargo Coverage under Ocean Marine Insurance are generally written on which basis? A Replacement Cost B Full Value C Market Value D Actual Cash Value

B Full Value Cargo and Hull Insurance are written on a full value basis. The valuation of the cargo includes the stated value of the invoice, import duties, and freight charges.

Which of the following is true regarding Transit Coverage Forms? A Annual transit forms are used to protect all kinds of property being shipped to others or received from others during the year using a common carrier B Trip transit forms are used by those that do not make regular shipments all year long, but wish to insure a single shipment C Both answers D Neither answer

C Both answers

The Equipment Breakdown Coverage does not cover which of the following? A Expediting expenses B Business income C Breakdown test D Spoilage damage

C Breakdown test Equipment Breakdown coverages include property damage, expediting expenses, business income, spoilage damage, newly acquired premises, ordinance or law, errors and omissions, and brands and labels.

The Mobile Agricultural Machinery and Equipment Coverage Form includes coverage for all of the following, except: A Hay balers B Farm tractors C Irrigation equipment D Cotton pickers

C Irrigation equipment

The Farm Liability Policy would not cover which of the following? A The insured is sued by a neighbor after falsely stating that the neighbor's livestock was diseased B A neighbor who is accidentally hurt on the insured's farm makes a claim for medical payments 4 years after suffering injury C The insured's daughter sells tainted pecans in a farm stand at the end of the farm driveway D While visiting the neighbor's farm, the insured's son accidentally starts a fire that burns down a shed

Coverage J - Medical Payments provides third-party payments, regardless of fault, for medical expenses due to an accident, if the expenses are incurred and reported within 3 years of the accident date.

All of the following are indirect loss coverages available under the Equipment Breakdown coverage form, EXCEPT: A Business income B Expediting expenses C Spoilage D Bodily Injury

D Bodily Injury Bodily injury is liability coverage and is not referred to as an indirect loss. Spoilage, Business income, and Expediting expenses all occur as a result of a direct loss to property, therefore are considered indirect or consequential losses.

All of the following are considered implied warranties, except: A Legality B No Deviation in Voyage C Seaworthiness D General Average

D General Average Implied warranties aren't always written into the contract, but are generally understood by all parties and binding upon them. Examples of implied warranties include no deviation in voyage, legality, and seaworthiness.

The Nationwide Marine Definition does which of the following? A Defines that Ocean Marine insurance covers cargo transported on land only B Defines that Inland Marine insurance covers everything on water only C Generally distinguishes Commercial liability risks from Personal liability risks D Generally distinguishes Marine risks from Property risks

D Generally distinguishes Marine risks from Property risks The Marine definition defines the types of risks that are marine risks and transportation risks as opposed to those that are considered to be a typical property or fire risk. Ocean Marine covers cargo on water, Inland Marine covers property on land.

The Commercial Inland Marine transportation form used to insure a carrier's liability for damage to cargo it is transporting is the: A Bill of Lading B Annual Transit form C Trip Transit form D Motor Truck Cargo policy

D Motor Truck Cargo policy The Motor Truck Cargo policy/form consists of three forms: Trucker's Form which insures public truckers for liability for damage to cargo while in their possession, Shipper's Form which provides coverage for the owner of goods that have been shipped by a public trucker and Owner's form which provides coverage for a business that owns the trucks in which it transports its own goods. A Bill of Lading is a receipt of the goods being shipped. Annual transit and Trip transit are specific transportation forms for single shipments or all shipments on an annual basis.

All of the following are true of Ocean Marine Insurance, except: A Property coverage must be written to full value to avoid a penalty B General average refers to a partial loss where the loss is shared C Coverage is voided if implied warranties are violated D Policies are standardized

D Policies are standardized Ocean Marine policies are generally unregulated and there is no 'standard' policy.

Which of the following statements about the Commercial Umbrella Liability policies is false? A Specific minimum limits for underlying coverage are required B Commercial Umbrella policies are excess policies C If the Umbrella Policy provides broader coverage than the underlying policy, the umbrella will cover the entire loss, less a retention D Policies generally cover first-party claims

D Policies generally cover first-party claims Umbrella policies are liability policies and therefore cover third-party claims.

The implied warranty of seaworthiness is understood to mean which of the following? A The ship has a full complement of emergency navigation equipment B The ship must have undergone a comprehensive inspection by the insurer C The crewmembers are all certified D The ship must be seaworthy and have a competent crew

D The ship must be seaworthy and have a competent crew Seaworthiness is of critical importance to the marine underwriter, and violation of this implied warranty will void the policy.

Fidelity bonds may be written to cover employee theft in which of the following types? A Industrial, Position, Multiple Group B Industrial, Commercial, Group C Individual, Fiduciary, Executor D Individual, Named Scheduled, Blanket

Individual, Named Scheduled, Blanket Fidelity bonds may be written on the following basis: Individual, Name Scheduled, Blanket, Commercial Blanket, Scheduled Position & Blanket Position.

Which of the following is NOT a type of coverage provided under a farm liability policy? A Professional liability B Bodily injury and property damage liability C Medical payments D Personal and advertising injury

A Professional liability

Which of the following is not covered under the Valuable Papers and Records Floater? A Securities B Blueprints C Maps D Mortgages

A Securities Money and securities are not covered under the Valuable Papers and Records Floater.

What type of Ocean Marine insurance provides physical damage coverage for the ship while it is in transit? A Cargo B Freight C Inchmaree D Hull

D Hull Hull insurance covers physical damage to the ship, Cargo insurance covers the goods being shipped, Freight insurance is an indirect loss coverage that protects the shipper, who is required to prepay freight charges in the event the voyage is not completed or the goods have been damaged and the shipper is unable to secure a refund.

Bonds that are used in court proceedings are called: A Permit Bonds B Tax Bonds C Performance Bonds D Judicial Bonds

D Judicial Bonds Judicial bonds include bonds on executors, administrators and guardians of estates; and appeal, injunction and attachment bonds.

The Ocean Marine policy is written as a: A Filed policy B Standard policy C Package policy D Manuscripted policy

D Manuscripted policy A Manuscripted policy is considered to be 'Not Filed'. Not filed simply means not filed with the Department of Insurance. These are considered 'Write your Own' policies, company specific, custom built.

Which of the following scenarios would be covered by E&O insurance? A An agent neglects to renew a customer's policy after they paid the premium B An agent deposits a commission check in the same account as the client's premium check C An agent is in a car accident with a customer in the agency parking lot and causes bodily injury D An agent is sued for personal injury for providing testimony in a lawsuit

A An agent neglects to renew a customer's policy after they paid the premium Failing to renew a policy is considered a negligent act resulting in the failure to meet reasonable standards of care in his or her field. E&O does not provide bodily injury coverage.

Which of the following is not a coverage under the Farm Property Coverage form? A Coverage H - Bodily Injury and Property Damage Liability B Coverage E - Scheduled Farm Personal Property C Coverage C - Household Personal Property D Coverage G - Other Farm Structures

A Coverage H - Bodily Injury and Property Damage Liability Coverage H is part of the Farm Liability form, not the Farm Property form. Property losses are first-party claims, while liability losses are third-party claims.

Fidelity Bonds are used in conjunction with: A Employee theft B Employee work related injuries C Employer liability D Employee liability

A Employee theft Fidelity Bonds are referred to a 'Honesty Bonds' or 'Dishonesty Insurance'. They are specifically used to cover an employer from direct loss due to dishonest acts by their employees. A company that is licensed and bonded uses fidelity bonds to cover employee theft allegations.

In bonding, the surety is also known as the: A Guarantor B Obligee C Principal D Obligor

A Guarantor The three main parties to a surety bond are the obligee -- the person who will be indemnified, the principal -- the person whose performance is being insured, and the surety -- the party that guarantees payment to the obligee if the principal fails to perform.

A common carrier would need to purchase Common Carrier Cargo Liability to protect against: A Legal liability for loss or damage to property in their custody B Damage to goods improperly packaged by the shipper C An inherent flaw in property that manifests itself while in the shipper's possession D

A Legal liability for loss or damage to property in their custody

All of the following may be covered under a Motor Truck Cargo policy, EXCEPT: A Pre-paid freight charges B Trucks you own C Cargo you own D Trucks you hir

A Pre-paid freight charges A Motor Truck Cargo policy includes: Owners form, truckers form and shippers form. It has nothing to do with pre-paid freight charges.

Which of the following is correct regarding Umbrella Liability policies? A Their coverage is identical to that provided by the underlying policy B The umbrella policy coverage territory is the same as that of the underlying policy C They are designed to cover losses excluded by the underlying policy D No underlying policy is required

C They are designed to cover losses excluded by the underlying policy Umbrella Liability policies are generally broader in coverage than the underlying policies and they often provide worldwide coverage.

Ocean Marine Protection and Indemnity insurance provides: A Cargo insurance B Freight insurance C Hull insurance D Marine liability coverage

D Marine liability coverage Protection and Indemnity insurance provides Marine liability insurance. It covers liability for job related injuries to sailors, longshore workers, harbor workers, etc. It covers damage to cargo through the insured's negligence, damage caused to other property by collision and other than collision. Hull insurance, Cargo insurance and Freight insurance are all property type coverages, not liability.

Under the Equipment Breakdown Coverage form, what is the most the insurer will pay to clean up an ammonia spill causing damage to property? A $10,000 B $25,000 C $50,000 D $100,000

B $25,000 A $25,000 limit applies to the following types of losses: Ammonia Contamination, Consequential Loss (Indirect), Data and Media, Hazardous Substance, and Water Damage.

The Contractor's Equipment Floater requires that newly acquired equipment must be reported by the insured to the insurance company within: A 90 days B 60 days C 30 days D 45 days

B 60 days Most every newly acquired item already insured in this book is required to be reported within 30 days, EXCEPT: for fine arts, which is 90 days, with one EXCEPTION: Contractors Equipment, which is 60 days.

Which of the following describes the term General Average under Ocean Marine Insurance? A The average value per item of all the cargo on the ship B A partial loss where the loss is shared C The average freight charges on the entire cargo of the ship D A partial loss where the loss is not shared

B A partial loss where the loss is shared General Average refers to loss resulting from a voluntary sacrifice of any part of the vessel or cargo to safeguard the vessel and the rest of the cargo. When such a loss occurs, the ship owner and all cargo owners pay it on a pro rata basis.

An insurance agent who needs insurance for his or her professional liability exposure should purchase: A A Voluntary Workers' Compensation policy with a professional liability extension of coverage added B An Errors and Omissions policy C A Businessowners policy with a fiduciary liability endorsement D A Commercial Umbrella policy

B An Errors and Omissions policy Errors and Omissions insurance provides coverage against claims of negligent acts when performing duties for another that are associated with an individuals profession such as, Agents, Brokers, etc. E & O Insurance is not provided under a BOP, Workers' Compensation or Commercial Umbrella.

Which of the following is correct regarding coverage under the Farm Property Coverage Form? A Coverage B - Other Private Structures includes farm buildings and silos B For coverage to apply, there must be a limit shown in the Declarations C The limit for Coverage G is the same as the limit of Coverage A D Coverage G includes loss of use

B For coverage to apply, there must be a limit shown in the Declarations

Farm property loss conditions include which of the following? A Reasonable Repairs B Loss to pairs or sets C Debris removal D Collapse

B Loss to pairs or sets Other loss conditions include abandonment, appraisal, duties, other insurance, legal action against the insurer, loss payment, recovered property, subrogation, and unoccupancy and vacancy.

All of the following can be covered under the Farm coverage part of the Commercial Package policy, except: A Personal liability B Household personal property C Growing crops D Farm buildings

C Growing crops Growing crops are not covered under a Farm policy coverage form. Crop insurance may be purchased separately. Farm coverage provides coverage for personal and business exposures to loss. Coverages A,B,C & D are identical to a H.O. Policy providing coverage for the household. Farm Coverage C provides coverage for household personal property. Farm Coverage G provides coverage for farm buildings. Farm Coverage I provides personal liability.

What type of policy can broaden coverage and increase the limits of the underlying insurance? A Difference in Conditions B Legal Liability Coverage C Umbrella D Contingent Liability

C Umbrella An umbrella policy can cover losses not provided for in the underlying policy.

An Aircraft Hull Policy provides all the following coverage, except: A Damage to the insured aircraft while it is in motion on the ground B Damage to the insured aircraft while it is in flight C Damage to the insured aircraft while it is not in motion on the ground D Passenger Liability Coverage

D Passenger Liability Coverage The Hull policy provides coverage against risk of physical loss or damage while it is on the ground and while it is in flight.

Which Ocean Marine insurance provision protects against direct damage caused by bursting of boilers? A Mechanical Failure Clause B Running Down Clause C Boiler & Machinery Clause D Inchmaree Clause

D. Inchmaree Clause The Inchmaree Clause covers direct damage caused by the bursting of boilers, breaking of propeller shafts, or loss due to faults or errors in navigation by the crew.

All of the following are Basic Form Perils in a Farm policy, EXCEPT: A Electrocution of Covered Livestock B Sinkhole Collapse C Riot or Civil Commotion D Windstorm or Hail

A Electrocution of Covered Livestock Electrocution of covered livestock is considered to be a Broad Form Peril in a Farm policy. Wind, Hail, Riot, Civil Commotion, and Sinkhole are all Basic Form perils.

Which of the following is NOT a category of the Nationwide Definition? A Personal auto B Commercial Property floater risks C Exports D Instruments of transportation

A Personal auto The Nationwide Marine Definition defines risks that are eligible for Ocean or Inland Marine insurance. These categories are imports, exports, domestic shipments, instrumentalities of transportation or communication, personal property floater risks, and commercial property floater risks.

Coverage is open peril on the Jewelers Block Floater but there is no coverage for ___________ unless added as an optional coverage. A Wear and tear B Broken or smashed show windows C Off-hours D Loss of market

B Broken or smashed show windows The show window optional coverage provides theft coverage for articles in a display window if the window is broken or smashed.

While working together on the roof of a barn, the insured's neighbor fell off and broke his ankle. Which of the following is true about the resulting claim under the insured's Farm policy? A The neighbor's medical expenses are only payable under a Workers' Compensation insurance policy B Coverage J - Medical Payments is no-fault coverage and will pay for necessary medical expenses that the neighbor incurred regardless of negligence C There would be no coverage for this injury under any part of a Farm Policy D Coverage J - Medical Payments will not cover the neighbor's medical expenses unless the insured's negligence caused the accident

B Coverage J - Medical Payments is no-fault coverage and will pay for necessary medical expenses that the neighbor incurred regardless of negligence Medical payments are paid regardless of fault.

Which of the equipment is covered under the Equipment Breakdown Protection Coverage Form? A Insulating and refractory material B Electrical and mechanical equipment used in the utilization of energy C Equipment manufactured by the insured for sale D Catalysts

B Electrical and mechanical equipment used in the utilization of energy Catalysts insulating and refractory material, and equipment manufactured by the insured for sale are not included as covered equipment.

A business can obtain coverage for liability arising out of discrimination and sexual harassment by purchasing: A Businessowners Liability insurance B Personal Liability supplement C Employment Practices Liability insurance D Fiduciary Liability insurance

C Employment Practices Liability insurance Employment Practices Liability Insurance provides coverage for employment discrimination, sexual harassment, and wrongful termination. The Businessowners Policy, Personal Liability supplement, and Fiduciary Liability insurance provides no coverage related to employment practices liability.

Which of the following covers equipment during transportation, unloading and installation up to the point control is given to the buyer? A Electronic Data Processing Floater B Equipment Dealer's Coverage Form C Installation Floater D Contractor's Equipment Floater

C Installation Floater The Installation Floater is designed to cover contractors for the equipment they are installing on contracted jobs while that equipment is being transported or being installed on the job site.

In Surety bonding, which party seeks and pays for the bond? A Obligee B Guarantor C Principal D Executor

C Principal There are three parties to a bond. The principal is the party who promises to do or not do a specific thing. The Guarantor or Surety is the bonding company that agrees to be responsible for the loss if the principal does not comply. The obligee is the party that benefits from the bond, the bond provides payment to the obligee if the principal defaults.

Which of the following pays the cost of replacing papers and records that are important for the continuation of business? A Accounts Receivable Coverage Form B Commercial Articles Coverage Form C Valuable Papers and Records Coverage Form D Business Property Coverage Form

C Valuable Papers and Records Coverage Form Valuable papers and records coverage provides insurance for the destruction of valuable papers and records by a covered cause of loss. Examples of covered property include maps, blueprints, manuscripts, films, illustrations, abstracts, deeds, books, mortgages, etc. Money and securities are NOT covered.

All of the following are covered under the Basic Causes of Loss to the Farm Property Coverage Form, except: A Lightning loss to livestock B Flood loss to livestock C Electrocution of Livestock D Earthquake loss to livestock

Electrocution of covered livestock is not covered under the Basic Form, but is covered under the Broad and Special Forms.