Schriefer Exam 3

Per the ISO eligibility rules, which of the following types of buildings would be eligible for coverage under a businessowners policy (BOP)? A. A 30,000 square foot insurance agency. B. A six-story, 120,000 square foot office building C.A seven-story 75,000 square foot office building. D. A 200,000 square foot bakery with annual sales in excess of $6,000,000.

A. A 30,000 square foot insurance agency. Eligibility: may not exceed 35,000 sq ft or $6M in annual sales

The Guru of Good Times Brewing Company has an umbrella policy with a limit of $1 million and a self-insured retention (SIR) of $10,000. It also carries a business auto policy with a limit of $500,000. How much will each of these policies pay if a Guru employee as an at-fault auto accident (while in the course and scope of their employment) in Mexico City, Mexico that results in $750,000 of payable damages? A. BACF: $0; CLUP $740,000 B. BACF: $0; CLUP $750,000 C. BACF: $490,000; CLUP $260,000 D. BACF: $500,000; CLUP $250,000

A. BACF: $0; CLUP $740,000

Which of the following statements concerning Builders Risk insurance coverage is/are true? I. Builders Risk coverage is an example of non-filed inland marine coverage. II. Soft costs coverage is a coverage extension included within the Builders Risk Coverage Form. A. I only B. II only C. Both I & II D. Neither I nor II

A. I only

Which of the following statements concerning the definition of "covered property" for the Equipment Breakdown Protection Coverage Form is/are correct? I. Covered property includes property owned by the named insured. II. Covered property includes property in the named insured's care, custody, or control whether or not the named insured is legally liable for the damage to this type or property. A.I only. B. II only. C. Both I & II. D. Neither I nor II.

A. I only

Which of the following statements is/are correct? I. Buildings to which improvements are being made are excluded from coverage under an Installation Floater. II. Electronic Data Processing (EDP) policies are a non-controlled line of insurance; consequently, insurance companies rely on standardized coverage forms to provide coverage and are required to file rates and policy forms. A. I only B. II only C. Both I & II D. Neither I nor II

A. I only

Which of the following statements is/are correct? I. The Named Perils Endorsement (BP 10 09) to the Businessowners Coverage Form provides the same causes of loss coverage as the Causes of Loss - Basic Form, plus limited off-premises transit coverage. II. This named perils coverage form is frequently used by businesses because it provides broad coverage at an economical price. A. I only. B. II only. C. Both I & II. D. Neither I nor II.

A. I only. not frequently used because it is expensive

All of the following are excluded from coverage under the Full Mortality Coverage Form EXCEPT: A. Irreversible "Wobbler Syndrome" B. Lack of proper care of the horse C. Any use of horse other than specified in the policy declarations D. The intentional killing or slaughter of the horse even if under government request

A. Irreversible "Wobbler Syndrome"

All of the following statements concerning property damage coverage available under the ISO Equipment Breakdown Protection Coverage Form are true EXCEPT: A. The definition of "covered property" is narrower than the definition of "covered equipment." B. "Covered property" includes property owned by the NI. C. There is no coinsurance provision for this coverage. D. Other property damaged by the "breakdown" of "covered equipment" is covered.

A. The definition of "covered property" is narrower than the definition of "covered equipment."

All of the following are reasons a business might need a Commercial Liability Umbrella Policy (CLUP) EXCEPT: A. The general public has grown more conservative over time and are less claims conscious. B. Negligence laws have evolved to modify or eliminate some traditional tort lawsuit defenses. C. Jurors today are more comfortable awarding large sums of money than previously. D. Commercial general liability insurance policies are written with relatively small maximum liability limits.

A. The general public has grown more conservative over time and are less claims conscious.

All of the following statements concerning excess and umbrella policies are true EXCEPT: A. One way an umbrella policy provides broader liability coverage than an underlying policy is via a broader definition of the coverage territory. B. A Follow Form Excess Policy written over just one underlying policy is commonly referred to as a multi-line excess policy. C. A Stand Alone Excess Policy contains its own insuring agreement, exclusions, and conditions separate from the underlying policy. D. A true Umbrella Policy always provides broader coverage than found in the underlying policies and becomes primary when aggregates are exhausted.

B. A Follow Form Excess Policy written over just one underlying policy is commonly referred to as a multi-line excess policy.

All of the following types of businesses are ineligible for the ISO BOP due to the severity of risk and/or special coverage situations EXCEPT: A. Auto repairers B. Funeral homes. C. Bars, pubs and cocktail lounges. D. Financial institutions.

B. Funeral Homes Ineligible: Auto Businesses Bars Financial Institutions General Contractors Buildings occupied by manufacturers

Which type of horse is best-suited for the equestrian event of dressage? A. Appalossas B. Hanovarian C. Arabians D. Oldenburgs

B. Hanovarian

Which of the following statements is/are correct concerning insurance products for horses provided by Great American Insurance Company? I. Major medical coverage for horses is a profitable line of business. II. Major medical coverage is not available for thoroughbred or polo horses. For all other horses, major medical coverage is only available if bought in conjunction with full mortality coverage. A. I only. B. II only. C. Both I & II. D. Neither I nor II.

B. II only

The amount deducted from a claim that is not covered by an underlying policy but is covered by an umbrella policy is known as a: A. Deductible. B. Self-insured retention. C. Drop-down amount. D. Co-insurance amount.

B. Self-insured retention.

Which of the following is a condition of the ISO Equipment Breakdown Protection Coverage Form utilized as a condition of last resort by an insurer when an insured will not cooperate in remedying a dangerous situation? A. Jurisdictional Inspection. B. Suspension. C. Joint of Disputed Loss Agreement. D. Abandonment.

B. Suspension

All of the following statements concerning BOP Endorsement BP 04 04 are true EXCEPT: A. An insured business with a BOP who doesn't own any autos and does not have a Commercial Auto Policy would benefit from purchasing the Hired Auto and Non-Owned Auto.Liability endorsement. B. The Hired Auto and Non-Owned Auto Liability endorsement is also available under a CGL coverage form. C. Coverage under the Hired Auto and Non-Owned Auto Liability endorsement can be purchased for hired auto liability and/or non-owned auto liability. D. A car rented by the named insured or an employee while on company business is an example of a "hired auto."

B. The Hired Auto and Non-Owned Auto Liability endorsement is also available under a CGL coverage form.

The Guru of Good Times Brewing Company has an umbrella policy with a limit of $1 million and a self-insured retention (SIR) of $10,000. It also carries a CGL policy with a limit of $500,000. How much will Guru's umbrella insurer pay if one of Guru's employees commits a personal injury offense not covered by Guru's underlying CGL policy if Guru is held legally liable for $200,000 because of this personal injury claim? Assume Guru's umbrella policy will respond to this loss by extending liability coverage. A. $0. The underlying CGL policy will pay the entire loss. B. $160,000. There is an 80% coinsurance clause applicable to the umbrella policy. C. $190,000 D. $200,000

C. $190,000

The Guru of Good Times Brewing Company is insured under a Commercial Liability Umbrella Policy with a limit of $1 million and a self-insured retention (SIR) of $50,000. The umbrella requires Guru to maintain underlying liability limits of $500,000 for its Business Auto Policy. Guru has a claim filed against it for $750,000 because of injuries sustained by a claimant resulting from the negligence of a Guru employee who was operating the covered company auto in the course and scope of their employment. Unfortunately for Guru, they did not pay the most recent renewal premium for the Business Auto Policy, that policy cancelled, and Guru failed to obtain new business auto coverage prior to this loss. Under these circumstances, how much will Guru's umbrella policy pay? A. $0 B. $200,000 C. $250,000 D.$700,000 $750,000

C. $250,000

Joe caused an accident while driving his Dodge Charger. Dave, the driver of the other car, was awarded $900,000 by a jury for his bodily injury claim. Joe was driving a vehicle owned by his business at the time of this loss with a $250,000 per person bodily injury liability limit which satisfied the underlying limits requirement for this $1,000,000 CLUP. Joe's $1,000,000 CLUP also included a $25,000 self-insured retention (SIR). Assuming this damage award is payable under Joe's BACF, how much, if anything, will Joe's CLUP pay to satisfy the $900,000 judgment? A. $0 B. $600,000 C. $650,000 D. $900,000

C. $650,000

Which of the following types of commercial property would be considered an inland marine insurance "non-filed" class of business property? A. Costumes used in a Broadway production B. A camera in the inventory of a camera dealer C. A large crane used by a contractor D. Guitar in the inventory of a musical instrument dealer

C. A large crane used by a contractor

Which of the following best describes the type of loss covered by the Errors and Omissions insuring agreement of the ISO Equipment Breakdown Protection Coverage Form? A. The cost to label damaged merchandise as salvage B. Automatic coverage provided to newly-acquired premises. C. A loss not otherwise payable caused by an insured's unintentional error incorrectly describing an insured building's location. D. Coverage for losses resulting from the interruption of utility services to an insured location.

C. A loss not otherwise payable caused by an insured's unintentional error incorrectly describing an insured building's location.

Which of the following statements concerning Equipment Breakdown Insurance is/are true? I. The commercial property causes of loss forms typically limit or exclude coverage for property damaged/destroyed by electrical breakdown, mechanical breakdown, and steam boiler explosions. II. Most businesses have one or more types of equipment that can be covered by an Equipment Breakdown Protection Coverage Form. A. I only. B. II only. C. Both I & II. D. Neither I nor I

C. Both I & II

Which of the following statements concerning a typical Businessowners Coverage Form is/are correct? I. The causes of loss are contained within the Businessowners Coverage Form; this is in contrast to the B&PP Coverage Form where the Causes of Loss Form is attached to the B&PP. II. The list of property not covered under the BOP is shorter than the list of property not covered under the B&PP Coverage Form. A. I only. B. II only. C. Both I & II. D. Neither I nor II.

C. Both I & II.

Which of the following statements concerning drop-down coverage provided by most umbrella liability policies is/are true? I. An umbrella policy provides additional liability coverage for claims not covered by an underlying policy because the underlying coverage aggregate limits have been depleted. II. An umbrella policy can provide liability coverage for some claims for which the underlying policy does not provide any coverage. A. I only. B. II only. C. Both I & II. D. Neither I nor II.

C. Both I & II.

Which of the following statements is/are correct? I. The BOP provides coverage for all buildings and structures located at the premises described in the Declarations; that is, only the premises must be described for any building located at the described premises to be covered. II. The B&PP Coverage Form only provides coverage for buildings or structures specifically described in the Declarations. A. I only. B. II only. C. Both I & II. D. Neither I nor II.

C. Both I & II. *unlike commercial coverage forms the BOP only needs the premises on which the structures are to be describes, this provides an advantage to the insured but can cause Insurance-to-value challenges*

Which of the following statements concerning differences between the BOP and CGL policy is/are true? I. The BOP has its own set of conditions contained within the Businessowners Coverage Form while the CGL policy utilizes common policy conditions shared with other coverage forms. II. While the CGL states it provides primary coverage (subject to a few exceptions), the BOP is excess over any other applicable coverage. A. I only B. II only C. Both I & II. D. Neither I nor II.

C. Both I and II.

Which of the following is not included in the definition of "breakdown" for the Equipment Breakdown Protection Coverage Form? A. Failure of pressure or vacuum equipment. B. Mechanical failure including rupture caused by centrifugal force. C. Damage to a vacuum tube. D. Electrical failure caused by arcing.

C. Damage to a vacuum tube.

Inland marine insurance evolved from which of the following lines of insurance? A.Fire insurance B. Casualty insurance C. Marine insurance D. Auto insurance

C. Marine Insurance Inland Marine insurance was first brought to light from marine underwriters who were used to writing insurance for goods in transit and later evolved in to inland marine insurance

Which of the following statements concerning the businessowners policy (BOP) is correct? A. Manufacturing businesses are generally eligible for coverage B. It is most commonly used to insure large businesses C. The BOP is designed to provide property and liability coverage for small or less complex businesses D. Eligibility rules are based on an applicant's loss history.

C. The BOP is designed to provide property and liability coverage for small or less complex businesses Purpose of BOP: -designed to provide property & liability coverage for small or less complex businesses. -coverages in BOP are VERY similar to the B&PP, Business Income & Extra Expense and CGL.

Swanson Construction Company owns several large cranes and bulldozers it uses in its commercial construction business. Which of the following inland marine coverage forms would be most appropriate to provide coverage for this equipment? A. Builders risk policy B. Motor truck cargo carriers coverage form C. Contractors equipment coverage form D. Product withdrawal coverage form

Contractors equipment coverage form

The business income and extra expense coverage under a BOP is typically subject to which one of the following limitations? A. Specific dollar limit. B. Coinsurance. C. Monthly limit of indemnity. D. 12 consecutive months limitation.

D. 12 consecutive months limitation. No Co-insurance requirement Not subject to total $ limit (insured doesn't have to determine predetermined coverage amount) A disadvantage- Most BOP apply 12-month limit for coverage.

Which of the following statements concerning umbrella liability policies is correct? A. When a claim covered by the umbrella policy is not covered by a primary policy, the umbrella policy usually provides first-dollar coverage. B. Coverage exclusions found in most umbrella policies are usually broader than exclusions found in underlying liability policies. C. Umbrella policies never include coverage exclusions that do not exist in underlying liability policies. D. Each insurer writing umbrella liability coverage has its own requirements for the types and amounts of underlying insurance an insured is required to carry.

D. Each insurer writing umbrella liability coverage has its own requirements for the types and amounts of underlying insurance an insured is required to carry.

The "period of restoration" for Business Income and Extra Expense coverage available under the Equipment Breakdown Protection Coverage Form: A. Always begins 72 hours after the covered equipment breakdown. B. Ends immediately after the date the damaged property has been repaired or replaced. C. Ends immediately after the date the damaged property has been repaired or replaced with reasonable speed and similar quality. D. Ends five consecutive days after the date the damaged property has been repaired or replaced with reasonable speed and similar quality.

D. Ends five consecutive days after the date the damaged property has been repaired or replaced with reasonable speed and similar quality.

All of the following are types of coverage available under the ISO Equipment Breakdown Protection Coverage Form EXCEPT: A. Errors and Omissions. B. Brands and Labels. C. Utility Interruption. D. Equipment while being tested.

D. Equipment while being tested.

Equipment Breakdown Insurance provides coverage for all of the following EXCEPT: A. Damage to covered equipment. B. Damage to other property resulting from the accidental breakdown of covered equipment. C. Business income and extra expenses resulting from covered equipment breakdown. D. Explosion resulting from unconsumed fuel within a furnace.

D. Explosion resulting from unconsumed fuel within a furnace.

All of the following types of property are eligible for Commercial Inland Marine coverage, EXCEPT: A.Domestic shipments B. Tunnels C. Stamp collections D. General business liability risks

D. General business liability risks

Which of the following statements concerning equipment breakdown insurance is/are correct? I. Equipment maintenance is a key service often provided by equipment breakdown insurance companies even if this service isn't a stated condition in the coverage form. II. It covers losses caused by "covered equipment" on an "open perils" basis. A. I only B. II only C. Both I & II D.Neither I nor II.

D. Neither I nor II

Which of the following statements concerning commercial excess liability insurance is/are true? I. A self-contained excess policy covers losses that exceed the underlying limits only if the loss is covered by the underlying insurance policy. II. A following-form excess policy covers liability losses that exceed the underlying limits only if the loss is covered under the terms of the excess policy. A. I only. B. II only. C. Both I & II. D. Neither I nor II.

D. Neither I nor II.

All of the following statements concerning transportation coverage are true EXCEPT: A. Common carriers are subject to a strict liability negligence standard for the handling of property of others with a few exceptions. B. Coverage for losses resulting from faulty packing are excluded from coverage under most Motor Truck Cargo Forms. C. Under a Trip Transit Policy, coverage is limited to specific property for a a specific transit event; an individual policy must be issued for each shipment. D. Private carriers transport goods for a specific or limited number of clients under a negotiated contract.

D. Private carriers transport goods for a specific or limited number of clients under a negotiated contract.

Which of the following statements concerning the Businessowners Coverage Form Section II - Liability is correct? A. The definition of Products-Completed Operations Hazard found in the BOP is narrowed in comparison to the same definition in the CGL coverage form. B. The definition of the coverage territory for the BOP is different from that of the CGL coverage form. C. Supplemental payments under the BOP differ greatly from supplemental payments provided by the CGL coverage form. D. The Businessowners Liability Section is similar to the CGL Coverage Form in content, but differs in format.

D. The Businessowners Liability Section is similar to the CGL Coverage Form in content, but differs in format.