chapter 9 questions
Which statement is false regarding Supplementary Payments under the Commercial General Liability policy? A Payments made under this section reduce the limits of the policy B Coverage only applies to Coverages A and B C Claim related expenses are included D The cost of bail bonds is included up to $250
A
All of the following are true of the Occurrence Form, except: A The length of the retroactive date will depend upon the insurer B For coverage to apply, the injury or damage must occur during the policy period C Supplementary payments are automatically included D As long as the injury or damage occurred during the policy period, the claim date is immaterial
A The Occurrence Form does not have a retroactive date.
What is the date after which an occurrence can take place and be covered under the claims-made form? A The Retroactive Date B The Countersignature Date C The Expiration Date D The Effective Date
A The Retroactive Date is the date that defines the period of coverage under a claims-made form. Claims resulting from occurrences prior to the policy's stated retroactive date are excluded.
Which of the following would not be excluded under Coverage A of the CGL? A Operation of mobile equipment B Product recall C Discrimination D Damage to insured's work
A The operation of mobile equipment is covered, though the transportation of this equipment to or from a job site is specifically excluded.
Which of the following would be an insured under the CGL policy? A Spouse of a partner B Trustee's spouse C Spouse of volunteer worker D Spouse of an LLC member
A The spouse of an individual or partner is also an insured. Spouses of shareholders, LLC members, employees, volunteers, trustees, directors, and officers are not insured under the policy.
Volunteer Worker
A person who is not an employee of the insured but who donates his/her work and acts at the direction of the insured. A volunteer worker is not paid a fee, salary, or other compensation by the insured for work performed for the insured.
ABC Industries contracts with municipal governments to build bridges, viaducts, and similar engineering projects. If workers from ABC Industries cause damage to a taxicab while pouring the foundation for a new overpass, which kind of liability exposure would this be an example of? A Contingent liability B Premises and operations C Completed operations D Products
B An insured business conducts its operations both at its own premises and elsewhere. If a business, or anyone acting on its behalf, causes bodily injury or property damage, the business may be considered legally liable for such injury or damage. CGL coverage is provided for the insured's legal liability for bodily injury or property damage arising out of the insured's premises or the insured's operations.
Which of the following is true regarding Completed Operations coverage? A Bodily injury arising from negligent or faulty work of the insured is not covered if it occurs after the work is completed and turned over to its owner B The coverage will pay for bodily injury and/or property damage caused by negligent or faulty work by the insured, but not for the cost of replacing the work that caused the loss C Coverage applies only during the period that the insured has custody and control of the work deemed faulty or inadequately performed D If faulty work causes damage to other property of the claimant, then coverage extends to include the faulty work
B Completed Operations coverage pays for bodily injury and/or property damage resulting from negligent or faulty work. Completed Operations Coverage does not pay for the work that was faultily performed.
What type of insurance indemnifies the legal liability of an insured for the actions of the insured's subcontractors? A Completed Operations Insurance B Contingent Liability Insurance C Contractors Liability Insurance D Contractual Liability Insurance
B Contingent liability arises when a business is held legally liable for the actions, or failures to act, of other parties, such as sub-contractors or independent contractors.
Which statement is false regarding the completed operations exposure? A The exposure must occur away from the insured's premises B Coverage includes replacement of the work that caused the loss C It includes risks of defective installation, construction or repair D It begins after the insured's operations are completed and the insured leaves the job site Nice try!
B Coverage will pay for bodily injury and property damage caused by negligent or faulty workmanship by an insured, but will not pay for the cost to replace the work that caused the loss.
Which of the following is NOT an exclusion in the CGL policy? A.Impaired Products B.Host Liquor Liability for those with incidental exposure C.Insured's Work D.Insured's Product
B Host Liquor Liability is provided for those who only have incidental exposure. For example, if the insured is an insurance agency and is hosting its annual Christmas party, the exclusion won't apply. However, if the insured is a restaurant that serves alcohol and is hosting its annual Christmas party, the exclusion WILL apply.
Product liability would cover: A A vending machine that injured a customer's hand B A restaurant customer who contracts food poisoning C Product recall D Contractual liability
B Product liability applies to bodily injury the product causes away from the insured's premises. A customer contracting food poisoning is a perfect example of product liability.
The Condition that states that the insurance applies separately to each insured is called __________________. A. Legal Action B. Severability C. Other Insurance D. Insured's Right
B Several suits against several insureds do not increase the insurance for that occurrence or policy period.
Each of the following provides buy back coverage for the insured, except: A.Pollution liability coverage for designated sites B.Modified pollution extension endorsement C.Pollution extension endorsement D.Limited pollution liability coverage
B The CGL policy excludes bodily injury or property damage arising from discharge, dispersal, seepage, migration, and release or escape of pollutants, and these three coverages are bought back for coverage on an individual account basis.
Under the CGL policy, the earned premium used in a premium audit to compute the final premium is determined at what point in time? A At the beginning of the policy period B At the end of the policy period C At the time the premium deposit is made D Monthly
B The earned premium is based on an audit at the end of the policy period. An additional premium is required if the earned premium is greater than the premium deposit.
Which of the following is not included in the definition of an insured contract? A.Contract for lease of premises B.Tenant agreement C.Sidetrack agreement D.Easement agreement
B The insured contract describes the liability assumed by the insured and also includes an obligation to indemnify a municipality, an elevator maintenance agreement, and an agreement in which an insured assumes tort liability.
Which of the following is not one of the liability exposures of the CGL? A Completed operations B Advertising injury C Products D Premises and operations
B The primary exposures covered by the CGL are premises and operations liability, product liability, completed operations liability, and contingent liability.
Which of the following is not a peril covered by personal injury? a. Wrongful eviction b. Breach of contract c. Malicious prosecution d. Libel
B Libel, slander, misappropriation of advertising ideas or style of business, infringement of copyright, title, or slogan in the insured's advertisement, and violation of privacy are also personal injury perils.
What is the term for tangible property, that cannot be used because it is defective, inadequate, deficient, or dangerous? A Fungible property B Assumed property C Impaired property D Abandoned property
C Impaired property is tangible property, other than an insured's product or work, which cannot be used because it is thought or known to be defective, inadequate, deficient, or dangerous.
Reasonable medical expenses incurred and reported within how many years following an accident are covered under Medical Payments coverage of the CGL? A. 2 B. 3 C. 5 D. 1
D The time to incur and report medical expenses is limited to 1 year under this policy.
Insured Contract
Insured individuals and organizations often enter into legal contracts and, many times, the insured assumes liability in those contracts. An insured contract is such a contract that is insured by the policy. In other words, if the insured assumes liability under an insured contract, that liability is transferred to the insurance company according to the terms of the insurance policy.
The insurer will pay for medical expenses due to bodily injury caused by an accident on the insured's premises or due to the insured's operations regardless of fault.
Medical Payments
Pollution Extension Endorsement
This endorsement deletes the Pollution Exclusion for bodily injury and property damage liability, but continues to exclude clean up costs.
Limited Pollution Liability Coverage Form (Designated Sites)
This form is identical to the Pollution Liability Coverage Form; except that it does not include clean up.
Elevator maintenance agreement
Use the acronym LEASE + to remember the 6 types of insured contracts.
The Personal and Advertising Injury Limit
is the most the insurer will pay under Coverage B for the sum of all damages because of all personal and advertising injury sustained by any one person or organization.
Which of the following is considered an insured's product? A.Goods sold by the insured at a trade show B.Remodeled building C.Goods shipped to a retailer to be sold D.Merchandise held by the insured as inventory
A A covered product is one manufactured and sold by the insured and transferred to the possession of a buyer.
Which of the following is not a contingent liability exposure? A Premises liability exposure B Contractual liability exposure C Owners and Contractors Protective liability exposure D Liability exposure of insured's sub-contractors
A Contingent liability exposures exist when the insured is held liable for the actions or failure of actions of others.
An insured's CGL has a Products and Completed Operations Aggregate Limit of $100,000 with a $20,000 limit per occurrence. Following claims for two separate occurrences in the amounts of $35,000 and $25,000, how much of the aggregate remains for all other claims in the policy period? A $60,000 B $65,000 C $100,000 D $20,000
A Only $20,000 is paid by the insurer on each of the two claims because the per occurrence limit is $20,000. This reduces the remaining Aggregate to $60,000 ($100,000 - $40,000 = $60,000).
Which statement is correct regarding the Supplemental Extended Reporting Period? A The premium is a one-time charge and fully earned at issuance B It covers claims that take place after the policy term, during the Supplemental Extended Reporting Period C Cancellation by the insurer requires 90 days notice of cancellation D The charge for the Supplemental Extended Reporting Period shall not exceed the premium of the expiring policy
A Premium for this optional coverage is a one-time charge and is fully earned at issuance.
Which of the following would not reduce the general aggregate limit under a CGL? A The insurer pays a claimant injured by a product made by the insured B A small fire in the insured's office causes damage to the leased premises C A customer is injured on premises and the insured calls an ambulance to take the injured party to the hospital for treatment D The insured misappropriates the advertising slogan of a competitor
A Products claims are subject to the products-completed operations aggregate limit, and not to the general aggregate limit.
Which of the following is covered by Medical Payments under the CGL? A Bodily injury to an insured's customer while shopping on the insured's business premises B Bodily injury to a person on a part of the premises that the insured owns or rents and that the person normally occupies C Bodily injury to an insured that is injured while playing tennis D Bodily injury to a person hired to do work for the insured
A The insurer will pay for medical expenses caused by an accident on the insured's premises or because of the insured's operations.
Which of the following is false about the CGL policy form? A The limits of the policy stated in the Declarations are the maximum amounts payable for the life of the policy B The per occurrence limit is the most the company will pay for damages under Coverage A and Coverage C, arising out of any one occurrence C The general aggregate limit is the most the company will pay for all damages under Coverage A, Coverage B, and medical payments under Coverage C, except for products and completed operations claims D Section III of the Commercial General Liability Coverage Forms describes the limits of insurance
A The limits stated in the policy apply separately to each claim (and/or aggregate) within a policy period.
All of the following are true about extended reporting periods, except: A The supplemental tail requires an annual premium B Under the supplemental tail, the insured must request coverage within 60 days after the end of the policy term C The basic extended reporting period does not increase the policy limits D The basic extended reporting period allows a claim to be reported after the policy period for a specified number of days
A The supplemental extended reporting period has a one-time premium.
What is the difference between the Commercial General Liability Occurrence and Claims-Made forms? A The coverage trigger point B The deductible C The types of occurrences they cover D The policy period
A The trigger is the event that brings coverage into play. It may be an occurrence either of bodily injury or property damage; or, in a form with a claims-made trigger, the formal making of a claim.
Your Product
Any goods or products (other than real property) that are manufactured, sold, handled, distributed, or disposed of by the named insured, others trading under the named insured's name, or a person or organization whose business the named insured has acquired.
An insured who goes to client's offices and homes for appointments would need coverage for which liability exposure? A Products B Premises and Operations C Completed Operations D Contingent Liability
B Premises and operations exposure includes the insured's legal liability for bodily injury or property damage arising out of his/her business premises or operations (away from the premises).
Advertising Injury Coverage includes all of the following, except: A Violation of copyright, title or slogan B Wrongful entry C Misappropriation of advertising ideas or style of doing business D Infringement of copyright
B Advertising injury arises out of slander, libel, copyright infringement, or misappropriation of advertising ideas. Wrongful entry is an example of Personal Injury.
To which injury would CGL Medical Payments apply? A A tenant of a company's warehouse who cut himself during the manufacturing process of the company's product B A volunteer worker handing out company coupons during a sale C A company executive who was injured while playing golf in the company golf league D A child injured when he dismantled a
B All choices are exclusion under Medical Payments except for the injury of a volunteer worker.
Which of the following injuries would not be covered under CGL Medical Payments? A A retail customer slips and falls from a leaking pipe in the store's restroom B A child accidentally overdoses on cough medication he drank from his parent's medicine cabinet C A carpet installer accidentally staples a customer's hand while installing carpet D A customer is injured by a flying lug nut while a mechanic is changing her flat ti
B An overdose of a product is not covered under medical payments as it did not result on the insured's premises and was not caused by the insured's operations.
Which of the following statements regarding Supplementary Payments under the CGL is false? A The cost of bail bonds is included up to $250 B Supplementary payments will reduce the limits of the policy C Insurer claim related expenses are included D Coverage only applies to losses under Coverages A and B
B Claims payable under Supplementary Payments do not reduce the limits of the policy.
All of the following are true of medical payments under the Commercial General Liability Coverage Forms, except: A Coverage applies to expenses that are incurred and reported to the insurer within 1 year of the accident B Coverage applies to the insured's injuries C Coverage applies to injuries that occur because of the insured's operations D Coverage applies to injuries that occur on the premises that the insured owns or rents
B Medical Payments coverage is not available for any insured.
ll of the following are considered an insured under the Commercial General Liability Coverage Part to the Commercial Package Policy, except: A Anyone named in the Declarations B Members of a past partnership not shown as a Named Insured in the Declarations C Employees other than executive officers, but only for acts within the scope of their employment D Executive officers, but only with respect to their duties as the insured's officers or directors
B No person or organization is an insured that is not shown as a Named Insured in the Declarations.
Which statement is correct regarding the Supplemental Extended Reporting Period? A The charge for the Supplemental Extended Reporting Period shall not exceed the premium of the expiring policy B The premium is a one-time charge and fully earned at issuance C It covers claims that take place after the policy term, during the Supplemental Extended Reporting Period D Cancellation by the insurer requires 90 days noti
B Premium for this optional coverage is a one-time charge and is fully earned at issuance.
Which of the following is false about the CGL's two coverage forms? A The claims-made form covers losses that occur after the retroactive date and before the policy expiration date B Coverage under the occurrence form is based on when the loss is reported C Coverage is triggered when an occurrence takes place during the policy period D The retroactive date is unique to the Claims-Made form
B With the Occurrence form it doesn't matter when the loss is reported, but the date the loss occurred must be during the policy period.
hich form responds to losses that occur while the policy is in force, regardless of when the claim is made? A Premises and Operations B Claims-Made C Occurrence D Products
C An occurrence form provides coverage for losses that take place during the policy period. It doesn't matter when the loss is reported; what matters is when the loss occurred. The key in this form is the date the loss actually happened and if it happened when the policy was in effect.
Which of the following insurance forms is designed for the person who has the potential for a liability exposure caused by negligent acts of the contractor or subcontractor he hires to make repairs, construction, or alterations? A Contractual Liability Insurance B Contractors Liability Insurance C Contingent Liability Insurance D Completed Operations Insurance
C Contingent liability is liability imposed because of accidents caused by persons other than employees for whose acts an individual, partnership or corporation may be responsible. For example, an insured that hires an independent contractor can, in some cases, be held liable for his negligence.
All of the following are true of the supplemental extended reporting period, except: A The one time premium may not exceed 200% of the annual premium for the coverage part B It is an optional extended reporting period of unlimited duration C The insurer may cancel it after the premium has been paid by the insured D It must be purchased within 60 days after the end of the policy
C Once the premium has been paid, the Supplemental Extended Reporting Period Endorsement cannot be cancelled.
An insured contract includes all of the following, except: A A side track agreement B An elevator maintenance agreement C Pollution liability D A lease of premises
C Pollution liability is not a type of insured contract.Pollution liability is not a type of insured contract.
Choose the false statement regarding the application of coverage under the Products Exposure Liability Coverage. A Coverage applies to property damage the product causes B Coverage applies to bodily injury occurring away from premises the insured owns or rents C Coverage applies to damage to the product itself D Coverage applies to bodily injury the product causes
C Products Liability Coverage as relates to Commercial General Liability Insurance covers damage or injuries caused by the product, but does not include damage to the product itself.
Which type of reporting period is provided automatically under the CGL written on a claims-made basis? A Premium Extended Reporting Period B Primary Extended Reporting Period C Basic Extended Reporting Period D Supplemental Extended Reporting Period
C The basic extended reporting period (BERP) is provided by the policy for no extra charge. It permits claims to be reported for 60 days following the termination of the policy.
Which of the following is true concerning the Premium Audit condition of the Commercial General Coverage Part to the Commercial Package Policy? A Premium Audit is the action taken by the insurer to see that the insured's rating is properly classified B Premium Audit refers to the right of the insured to contest the premium after policy issuance C Premium Audit is the comparison of the insured's premium with the average premium in the insured's rating classification D Premium audit determines what the earned premium will be at the end of the policy period Excellent!
D The insured must keep records sufficient for the insurer to compute premiums based upon sales, receipts, or payroll. After an audit, an additional premium is required if these records show that these items are greater than the estimates that developed the deposit premium.
Bodily Injury
Includes bodily injury, sickness, or disease sustained by a person, including death resulting from any of these at any time.
Easement
Liability assumed under the right to use someone's land or license agreement, except in connection with construction or demolition operations on or within 50 feet of a railroad.
Pollution Liability Coverage Form (Designated Sites)
This form provides coverage on a claims-made basis with its own limit of liability. Coverage includes a leak from a waste disposal facility located on the premises. The form provides coverage for clean up imposed by governmental direction if the cost is incurred because of environmental damage caused by a pollution incident.
Your Work
Work or operations performed by the named insured or on the named insured's behalf. Your work includes materials, parts, or equipment furnished in connection with such work or operations. Your work also includes warranties or representations made at any time with respect to the fitness, quality, durability, performance, or use of "your product" and also includes the providing of, or failure to provide, warnings or instructions.
Advertisement
A notice broadcast or published to the general public or specific market segments about the insured's goods, products, or services to attract customers or supporters.
Occurrence
An accident, including continuous or repeated exposure to substantially the same general harmful conditions.
The insurer will pay losses the insured becomes legally obligated to pay because of bodily injury or property damage provided the occurrence took place during the policy period and in the United States, any of its territories/possessions, Puerto Rico, or Canada.
Bodily Injury and Property Damage
Which of the following is not considered a type of advertising injury? A Infringement of copyright B Misappropriation of advertising ideas C Extortion D Violation of copyright
C
In commercial liability policies, the word 'tail' is synonymous with: A Supplementary payments B Endorsement C Extended reporting period D Retroactive date
C If a claims-made policy is not renewed or replaced, the claims-made form contains a provision for the extension of time during which claims must be reported. This time frame is called an extended reporting period or tail coverage.
Personal injury liability insurance does not cover which of the following? A False Arrest B Malicious prosecution C Bodily Injury D Libel and Slander
C Personal injury is a type of loss that injures a person's reputation, emotional well-being, or other non-physical attributes, as distinct from bodily harm or property damage.
A chemical manufacturer requires protection for pollution liability and clean up costs. Which of the following pollution liability coverages should the business purchase? A Limited Pollution Extension Endorsement B Pollution Extension Endorsement C Pollution Liability Coverage Form D Limited Pollution Liability Coverage Form
C The Pollution Liability Coverage Form provides coverage for both pollution liability and governmentally-mandated clean up.
Sidetrack Agreement
Contract between a railroad and a business the railroad may service. Under this agreement, the business holds the railroad harmless if an accident occurs while the railroad is using the sidetrack to deliver goods to the business.
Choose the false statement about the CGL policy. A Under the Commercial General Liability Coverage Part, the General Aggregate Limit will be reduced by a medical payment B Under the insuring agreement of the Commercial General Liability Coverage Part, a bodily injury claim must be caused by an occurrence and it must have taken place in covered territory C Changes to a Commercial General Liability Coverage Part may be made only by endorsement issued by the insurer D A Products and Completed Operations Liability claim will reduce the General Aggregate Limit of the Commercial General Liability Coverage Part
D Products & Completed Operations claims have their own aggregate limit and these claims do not reduce the General Aggregate.
The most the insurer will pay during the policy period for medical expenses under Coverages A, B, and C is which of the following limits of liability? A. Personal and Advertising Injury Limit B. Per Occurrence Limit C.Medical Expense Limit D. General Aggregate Limit
D The Products-Completed Operations is another limit, and all the limits pay regardless of the number of insureds, claims made, suits brought, or persons or organizations making claims or bringing suits.
Employee
Employee includes a leased worker. A leased worker is a full or part-time employee who has contracted with an employee leasing service (also known as a professional employer organization). Employee does not include a temporary worker. Temporary workers are employees of the supplying company.
Lease
Liability assumed under a lease of premises. It does not include that portion of the contract that indemnifies any person or organization for fire damage to premises rented or temporarily occupied with the owner's permission.
Provides protection for liability arising from false arrest, malicious prosecution, wrongful eviction, invasion of privacy, libel or slander, use of another's ideas in an advertisement, infringement of copyright or slogan in the insured's advertisement.
Personal and Advertising Injury
Property Damage
Physical injury to tangible property, including all loss of use of the damaged property. "Property damage" is also loss of use of tangible property that is not physically injured. (Electronic data is not tangible property.)
Impaired Property
Tangible property, other than an insured's product or work, which cannot be used because it is thought or known to be defective, inadequate, deficient, or dangerous.
Coverage Territory
The coverage territory of the CGL is the United States, its territories and possessions, Puerto Rico, and Canada. International waters and airspace are included in the coverage territory but only if injury or damage occurs in the course of travel or transportation between any places included in the coverage territory.
All of the following are insured under the CGL, excxep: a. A person participating in an athletic event b. A volunteer worker acting on behalf of the insured c. A partner d. A stockholder
a Others covered are those named in the Declarations, including employees other than executive officers or managers
In addition to these five contracts
any other contract or agreement pertaining to the insured's business under which one assumes the tort liability of another party to pay for "bodily injury" or "property damage" to a third person or organization.
Under the CGL, which of the following would exclude from coverage the legal liability associated with a product? A Breach of warranty B Negligence C Expected or intended injury D Strict liability
c Liability arising out of expected or intended injury is not covered by the CGL policy.
The Per Occurrence Limit
is the most the insurer will pay for damages under Coverage A and medical expenses under Coverage C because of bodily injury or property damage arising out of any one occurrence.
The Medical Expense Limit
is the most the insurer will pay under Coverage C for all medical expenses because of bodily injury sustained by any one person.
The Products-Completed Operations Aggregate Limit
is the most the insurer will pay, during the policy period, for losses payable under Coverage A included in the Product and Completed Operations Hazard.
General Aggregate Limit
shown is the most the insurer will pay, during the policy period, for medical expenses under Coverage C, damages under Coverage A (except damages that are included in the Product and Completed Operations Hazard), and damages under Coverage B.
An obligation
to indemnify a municipality, except in connection with work for a municipality.
