Property & Casualty Practice Exam: Commercial Lines
Under the common policy conditions, who is authorized to make changes to a commercial insurance policy? A) Any insured name on the policy B) The first named insured (with insurers' consent) C) The insurance company D) The producer
B
What type of crime form covers losses that occur during the policy period, regardless of when the loss is discovered? A) Commercial crime form B) Loss sustained form C) Discovery form D) Robbery and safe burglary form
B
Which commercial property form contains most of the exclusions that apply to a commercial property policy? A) Common policy conditions B) Causes of loss forms C) Commercial property conditions D) Common policy declarations
B
Which of the following is a common policy condition for a commercial package policy? A) Pro-rata clause B) Inspections and surveys C) Duty to defend D) Causes of loss
B
Which of the following lines of insurance would cover the loss of net income a business incurs due to a fire? A) Commercial property insurance B) Business income insurance C) Commercial general liability insurance D) Fire and allied lines insurance
B
Coverages A and/or B of the commercial general liability (CGL) contract contains coverage for: A) Advertising injury B) Professional liability C) Workers compensation D) Losses arising from the ownership, maintenance, or use of automobiles
A
Determine the actual cash value in the following situation: Original price of office equipment when purchased (8 years ago) --$9,000; Depreciated amount at time of fire-- $5,000; Current replacement cost-- $12,000. A) $7k B) $5k C) $6k D) $4k
A
If an employee embezzles $10,000 from an insurance company, which type of insurance would the employer need to be covered for this type of loss? A) Crime insurance B) Allied lines insurance C) Business income insurance D) General liability insurance
A
Under a special cause of loss form, if a landslide is caused by an unnatural flow of water due to improper grading, the loss is: A) Excluded under the concurrent causation exclusion B) Covered; there are no exclusions for this type of loss C) Excluded under the governmental action exclusion D) Excluded under the utility service exclusion
A
Under the commercial building and personal property coverage extensions, property off-premises is covered while the property is located: A) At the trade show or a fair B) In a building the named insured has leased for five years C) In a delivery truck D) At a salespersons home
A
What is revenue minus expense? A) Net income B) Gross C) Net loss D) Net profit
A
What is the purpose of the inspections and surveys condition of the commercial package policy? A) To determine the rate to be charged B) To determine if the premises comply with ADA requirements C) To ascertain if the premises has maintained the required building codes D) To specify if the premises comply with OSHA requirements
A
When an employer has a choice to purchase Workers compensation insurance from a state fund or private carrier, the state fund would be called: A) A competitive state fund B) A residual fund C) A private fund D) A Monopolistic fund
A
Which of the following risks are eligible for a business owners policy? A) A three-story, 12 dwelling unit building B) A restaurant C) An auto repair shop D) An amusement park
A
Which of the following types of policies pays for bodily injury or property damage which occurs, or is discovered, during the policy period? A) Claims made commercial liability policy B) Auto liability policy C) Pollution liability policy D) Occurrence general liability policy
A
Which type of a crime policy will pay for a loss, which is found during the policy period, even if the loss occurred prior to the effective date of the policy? A) Discovery form B) claims made form C) Occurrence form D) loss sustained form
A
Why would an insured need an Inland Marine policy if she is shipping stock on her own trucks? A) Stock is only covered if it is in the building, or within 100ft of the building premises B) Inland Marine policy is not needed, stock is covered anywhere within the coverage territory C) Stock is only covered if it is being shipped through an insured delivery service D) Stock is never covered under a business personal property form
A
Yacht policies typically provide for: A) Hull, protection and indemnity B) physical damage, liability and contingent medical payments C) hull and collision D) Property, liability, and contingent medical payments
A
A bulldozer an insured is using to level a property for a customer overturns, causing fuel to leak and pollute the ground. Where would this pollution loss be covered? A) Professional liability B) Commercial general liability C) Auto liability D) Inland Marine
B
Commercial Building and Personal Property coverage form covers three kinds of property - one of which has "... your business personal property." In this clause, "Your" refers to: A) Any party who has an insurable interest in the property located at the insured address B) Only the named insured(s) shown in the declarations C) The named insured and others whose property is in the care, custody or control of the insured D) Only the first named insured shown in the declarations
B
A plate glass coverage form is needed by some insureds. Which of the following statements about the coverage for the peril of glass breakage in commercial property for a "building and personal property" basic, broad and special causes of loss forms is true? A) no policy limits apply to glass breakage coverage in special form, all named perils B) There is limited glass breakage coverage in both of the broad and special forms C) There is limited glass breakage coverage in the basic form D) There is no glass breakage coverage in the broad or special forms
B
Abstracts, maps, and mortgages are covered under which of the following? A) Builders Risk policy B) Inland Marine C) Business Owners policy D) Commercial General Liability
B
All of the following are mandatory coverages of a business owners policy, EXCEPT: A) Business income coverage B) Professional liability coverage C) Building coverage D) Extra expense coverage
B
If an Inland marine policy provides coverage for any loss unless it is specifically excluded, it would be considered which of the following? A) Controlled B) Open Perils C) Uncontrolled D) Named Peril
B
One difference between a robbery peril and a burglary peril is that the burglary peril: A) May involve force or violence B) Requires taking property directly from a person C) Requires physical signs of forcible entry or exit D) May occur only when the premises are open for business
C
The broadest form of crime coverage is: A) Burglary B) Robbery C) Theft D) Safe burglary
C
The equipment dealer's coverage form covers all of the following types of property, EXCEPT: A) Dealer's new stock B) Customer's equipment in for service C) Motor Vehicles designed for highway use D) Dealer's used stock
C
The inspections and surveys condition of a Commercial Package Policy is important to the insurer for all of the following reasons, EXCEPT: A) To determine the insurability of the insureds operations B) To set proper insurance rates C) Guarantee that the insured is in compliance with safety regulations D) Make loss control recommendations
C
The medical expense coverage in a workers' compensation policy A) Has both a maximum dollar and time limit B) Does not have a dollar limit, but has a maximum limit time C) Does not have a dollar limit nor a time limit D) Does not have a time limit, but has a maximum dollar limit
C
When as state program is a company's only option available for purchasing of worker's compensation insurance, it is called: A) A guarantee fund B) A shared market fund C) A monopolistic state fund D) A competitive state fund
C
Where would and insured find insurance coverage to protect against damage to a shipment of televisions shipped on a semi- truck for the insured's business? A) Commercial general liability B) Commercial auto liability C) Inland marine D) fire and allied lines
C
Which of the following is not a type of property commonly insured under a commercial inland marine: A) neon signs B) accounts receivable from customers C) Automobiles while kept for the owner in a commercial parking garage D) Jewelry and watches
C
A business owners policy would be appropriate for which of the following types of businesses? A) Automobile collision repair shops B) Restaurants C) Carnivals D) A three story office building
D
A commercial property policy policy can provide coverage for all of the following, EXCEPT: A) Indirect losses B) Tangible losses C) Direct losses D) Intangible losses
D
All of the following are covered by protection and indemnity insurance, EXCEPT: A) Injury to persons on other ships B) Damages to piers C) Injured passengers on the ship D) The cost of reasonable measures that insured must take to prevent damage at the time of loss
D
All of the following are parties to a surety bond, EXCEPT: A) Surety B) Obligee C) Principle D) Bondsman
D
All of the following contribute to the rising cost of worker's compensation Insurance, EXCEPT: A) Fraudulent claims B) Under- reported payroll by employers C) Employers who fail to secure the payment of workers compensation as required by law D) The growing population
D
An insured purchased a commercial policy on an owned building. The policy contains a coinsurance provision. The coinsurance clause: A) Requires the insured to pay part of every loss (co-payment) B) Discourages over-insuring properties C) Applied to all losses regardless of size D) Makes carrying insurance of a percentage of the building value advisable to avoid a possible penalty
D
Inland marine policies nearly always provide _____ coverage A) Broad Peril B) standard peril C) basic peril D) Open peril
D
Ordinance or law coverage provides protection for which of the following losses? A) The cost of demolition and debris removal of undamaged property B) The residual property value of a home that must be demolished to comply with building code requirements C) The increased expense incurred for the insurer to repair or rebuild property according to building code specifications D) All of the above are covered
D
Under a builders risk form, how much insurance is required to pay any loss without penalty for A) 80% of the completed value B) 100% of the value at the time of loss C) 80% of the value at the time of the loss D) 100% of the completed value
D
Under a commercial property coverage form, all of the following properties are included in the definition of "building", EXCEPT: A) Permanently installed fixtures B) Outdoor fixtures C) Personal property used to maintain premises D) Patio
D
Which of the following is commonly found in liability policies, thus creating the need for inland marine coverage? A) a valuation clause B) Debris removal coverage C) A coinsurance clause D) Care, custody, control exclusion
D
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? A) professional liability B) Host C) commercial general liability D) liquor liability
D
A commercial property causes the loss forms do not cover any losses caused by: A) Smoke damage from industrial operations B) Lightning C) Loss by removal from premises when insured perils endanger covered property D) Explosions
A
Which property coverage form is best suited for a structure under construction? A) Reporting form B) builder risk coverage form C) Building and personal property coverage form D) Standard property policy
B
Who is responsible for damage to improvements in a leased building? A) Tenant B) Building owner C) Improvements to a leased building are not covered D) Both the tenant and the building owner
B
Why is the examination of books and records condition important in a commercial policy? A) To ensure that the insurance business is profitable B) To ensure that the proper amount of premium is charged C) To ensure that the insured is using generally accepted accounting principles D) To ensure that the insurance business is solvent
B
Coverage on an annual transit policy is usually provided on which of the following basis? A) open peril B) extended coverage C) named peril D) theft only
C
Which of the following types of insurance were designed to cover domestic shipment, means of transportation, personal property floater risks, and commercial property floater risks? A) Ocean Marine B) Auto liability C) inland marine D) business personal property
C
Which of the following types of the coverage would pay for a theft which occurred during the policy period and is found for up to one year after policy termination? A) Claims made B) Discovery C) Loss sustained D) Occurrence
C
Which of the following would bets be described as using forcible entry to steal property when a business is A) Robbery B) Theft C) Burglary D) Extortion
C
If an armored car, is carrying the insured's bank deposit is robbed, what insurance would the insured need to have? A) Employee theft B) Outside the premises- theft of money and securities B) funds transfer fraud D) Money orders and counterfeit money
B
Which of the following is covered by a building and personal property coverage form (BRP)? A) A bridge B) A Dock C) A light pole D) A Patio
C
What causes of loss are covered under the business income coverage form? A) Broad from perils only B) Those included in business income form C) All Perils D) Those shown on the declarations
D
All of the following are listed on Commercial General Liability declarations page, EXCEPT: A) Pollution liability limit B) Products & completed operations limit C) Medical expense limit D) Personal advertising injury limit
A
If an insured's employee embezzles $10,000 from the company's bank account, which of the following coverages would need to be in force for the loss to be covered? A) Employee theft B) Inside the premises- theft of money and securities C) Money orders and counterfeit paper currency D) forgery and alteration
A
Under the commercial property coverage program, which causes of loss form(s) include coverage for the peril of windstorm? A) Basic, broad, and special B) Broad and special only C) Broad only D) Special only
A
What does a release bill of lading do for a common carrier? A) Limits the carrier's liability on the shipment B) Provides insurance coverage to the customer by the shipper C) Releases the customer from all responsibility D) Releases the carrier from responsibility
A
all of the following are differences between surety bonds and insurance EXCEPT a) reserves are not established b) the principle is responsible to the guarantor in the case of loss c) 3 party contract d) the surety should not suffer a loss
A
A physician is being sued by a patient for misdiagnosing terminal cancer. What type of insurance would protect the physician against this type of mistake? A) Personal liability B) Professional liability C) Allied lines insurance D) Health insurance
B
All of the following equipment would be covered under the Equipment breakdown policy, EXCEPT: A) Computer equipment B) Aircraft C) Equipment operating under a vacuum D) Electronic equipment used in the transmission of energy
B
All of the following types of businesses would need special inland marine coverage for their stock, EXCEPT: A) furriers B) Grocers C) Jewelers D) Stamp and coin collectors
B
An insured's business auto policy specifies that the liability coverage applied to covered autos- symbol 7. This means: A) Only owned autos, other than private passenger auto are covered. B) Specifically described autos are covered. C) All owned autos, including trucks not larger than two tons are covered. D) only owned, private passenger autos are covered, with the exception of those private passenger autos driven by youthful operators.
B
Both the commercial general liability policy and the business auto policy have definitions of the terms "automobile" and "mobile equipment". These coverages: A) Are very different; however, this has no effect on gaps or overlaps between two policies B) Are very different; thus avoiding overlaps or gaps in coverage between two policies C) Are the same; thus avoiding overlaps or gaps in coverage between the two policies D) Are the same; showing the policy writers are not very imaginative. This has no effect on gaps or overlaps between the two policies
B
If a tenant is insured under a building and personal property coverage form, when is the property considered vacant? A) When the insured's operation is halted due to a strike B) When there is insufficient business personal property present to conduct customary operations C) When less than 31% of the total building space is rented to others or in sue by the insured D) When the structure is being renovated as the result of a fire
B
In a commercial property policy, the company providing the insurance is referred to as: A) "You" B) "We" C) A Surety D) NIRR
B
A Physician may have misdiagnosed a patient for terminal cancer. What type of insurance would protect the physician of this type of mistake? A) health insurance B) Personal Liability C) Professional liability D) Allied lines insurance
C
A commercial general liability (CGL) policy is quite broad in scope. However, there are substantial number of exclusions. Three of the four following loss exposures are excluded. Identify the loss exposure that is covered an unendorsed CGL- property damage of liability arising out of: A) The ownership of an airplane B) An employee being insured while working on the insured's premises C) An employee accidentally injures a customer while working at the customers home D) An accident while driving an owned automobile on a public highway
C
A person with a commercial policy is burning leaves. The fire gets out of control causing smoke damage to a neighboring property. The loss is covered by: A) Building and personal property form B) Pollution liability C) Commercial General Liability D) Not covered, as it is not direct loss
C
A reporting form is used for property insurance: A) When the insured premises are subject to periodic safety inspections B) To establish a guaranteed amount of insurance based upon a report of values submitted before the beginning of the policy term C) To maintain the correct limits of coverage without over or under insuring when the value or volume of the property varies during the policy term when inventory fluctuates D) To report losses and adjust insurance in force to conform
C
All of the following are listed on a commercial liability declarations page, EXCEPT: A) Medical expense B) Peronsal and advertising injury limit C) Rented to you limit D) Pollution liability limit
C
All of the following are typical exclusions in an Inland Marine Policy, EXCEPT: A) Wear and tear B) Electrical breakdown C) Earth movement D) Insects or vermin
C
All of the following causes of loss are covered by equipment breakdown insurance, EXCEPT: A) Electrical breakdown B) Steam boiler explosion C) Inherent defect D) Mechanical failure caused by centrifugal force
C
All of the following statements concerning business owners policies are true, EXCEPT: A) Insureds have the convenience of one policy that meets most of their needs at a reduced premium B) Insureds have the benefit of additional coverages that might otherwise be overlooked C) It contains simpler reading which lower handling costs for insurers D) It allows insurers to individually underwrite the smaller, low-premium policies
C
All workers' compensation policies provide: A) 24- hour on and off the job coverage for workers B) Adequate retirement benefits C) Compensation for work related injuries without regard to fault D) Major medical coverage with 20% co-payment, co-payment has an annual stop-loss of $1500
C
Commercial lines program policy- common policy conditions- do not include which of the following as a condition? A) Cancellation B) Inspections and surveys C) Perils insured D) Examination of your books and records
C
Commercial property conditions include a condition called "liberalizations." the effect of this condition is: A) To require the insurer to liberally construe the other commercial property conditions in case of disagreement between the insurer and the insured B) To protect the insured from policy cancellation once the policy has been in effect for 90 days C) To automatically apply broader coverage to the commercial property coverage part if a policy form revision would broaden coverage without an additional premium D) Allow the insurer to set property values based upon current data as long as it does not reduce the loss payment
C
Equipment Breakdown insurance covers all of the following, EXCEPT: A) Equipment powered by internal pressure B) Mechanical equipment used to produce energy C) Tools subject to regular replacement D) Communications equipment
C
Extra expense insurance covers: A) Payroll and other overhead incurred when a business is shut down after a loss B) The loss of profit a business incurs when it is shut down after a loss by a covered peril C) The extra expense that a business incurs to continue a business while damage to the premises are being restored D) Increased expense of repairing property to appreciated assets
C
If the vacancy permit endorsement is added to a building and personal property coverage form, the vacancy conditions under the basic policy is: A) Waived after the policy period B) Waived only for designated perils during the policy period C) Waived only for the designated perils during the permit period D) Waived during the permit period
C
In a commercial property, the insurance claim is denied because of the insured's actions. The mortgage holder will, in most cases: A) Not receive any compensation for the loss B) Receive a partial payment for the loss C) Still have the right to receive the full amount of the loss payments D) Receive compensation if the mortgage holder endorsement has been added and the additional premium is paid
C
Insurance which covers ship owners against vicarious liability claims, due to operations of the insured vessel, is: A) A voyage policy B) The sue and labor laws C) Protection and Indemnity insurance D) Hull insurance
C
JAE Computer Company is being sued by Stack Company for an advertising campaign stack computer feels false and misleading. JAE company would find coverage for losses which could result from this lawsuit under which category of insurance: A) Crime insurance B) Professional liability C) Commercial general liability D) Allied lines insurance
C
The commercial general liability (CGL) contract contains exclusion for liquor liability. The purpose of this exclusion is to exclude coverage for liability losses arising from: A) The illegal manufacture, sale, or possession of alcoholic beverages B) The serving of alcoholic beverages by an insured at any business function C) An insureds special loss exposure resulting from the insured being involved in the alcoholic beverage business D) An insured serving alcohol at such functions as company picnics and holiday office parties
C
Which of the following is eligible for business owners policy? A) A sports bar B) a Credit union C) a furniture store D) An auto repair shop
C
Your commercial auto policy insured needs coverage for his liability arising out of his employee using their own cars in his business. The best way to be sure your insured is covered is to: A) Instruct all employees not to use their cars in your insured's business B) Include uninsured motorist, and also hired car, coverage in your insured's commercial policy C) Include employers non-ownership liability coverage in the employer's commercial auto policy D) Require all employees have your insured named as an additional insured on their personal auto
C
Your insured has a ten year lease on his store. He has spent $50, 00 on shelving, wall-to-wall carpeting, partitions, and lighting, etc., all of which are part of the building and cannot be legally removed. He is concerned that a fire might damage these changes that he has made and wants to make sure he is protected for their value. He should might damage these changes that he has made and wants to make sure he is protected for their value. He should purchase: A) Accounts receivable coverage B) $50k on the building C) Coverage B personal property D) Coverage for legal liability
C
Diamond toy Company is being sued for death caused from a child choking on a piece from one of its transformers. Where would Diamond find coverage for the defense of this law suit? A) Life insurance B) Crime insurance C) Professional liability insurance D) commercial General Liability Insurance
D
Hull coverage in an ocean marine policy covers which of the following? A) the freight charged for the transportation of the cargo B) the ship owners liability c) cargo being transported on the ship d) the vessel itself, including engines and fuel
D
If a named insured is not the owner of the building, improvements and betterments are covered under the: A) Newly constructed property B) Agreed value C) Building D) Business personal property
D
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? A) Nothing; as long as the loss occurred during the policy period B) The loss will not be covered because it was not reported during the policy period C) Umbrella Policy D) Basic extended reporting period endorsement
D
If the vacancy permit endorsement is added to a building and personal property coverage form, the vacancy conditions under the basic policy is: A) Waived only for designated perils during the policy period B) Waived during the policy period C) Waived during the permit period D) Waived only for the designated perils during the permit period
D
The commercial property policy part "Causes of loss-broad form", includes an exclusion for "Concurrent causation." The effect of this exclusion is: A) If two or more perils happen at the same time to cause a loss, then only the damage caused by one of the perils is covered, B) If a loss occurs concurrently with the expiration date of the policy, it is not covered. C) If two or more perils happen at the same time to cause a loss, there is coverage for all of the damage if any of the perils are not excluded D) If two or more perils happen at the same time to cause a loss, there is no coverage if any of the perils are excluded
D
The liability coverage in a yacht policy is referred to as: A) Inch Maree clause B) Peronsal liability protection C) Hull coverage D) Protection and indemnity
D
The ordinance and law exclusion found in property policies, such as the commercial property coverage and the Homeowner's policy, have the following effect: A) It reduces the coverage on any loss if the loss was caused by the insured violating the ordinance or law B) The insured may not remove or modify the effect of the exclusion C) It warrants that an insured has not knowingly violated an ordinance or law D) It excludes the part of the loss resulting from the enforcement of a building ordinance or law
D
Under the business Income coverage form, extra expenses are: A) Covered without limit during the period of restoration B) Covered up to the amount they reduce the business income loss c) Covered up to the monthly limit specific in the declarations D) Excluded
D
Under the examinations of "books and records condition" condition of a commercial policy, when may an insurer examine an insured's books and records? A) At any time B) Only when authorized by the insured C) Only upon receiving a court order allowing the inspection D) At any time during the policy period and up to three years afterwards
D
Which coverage protects physicians, surgeons, and dentists for their professional activities? A) Errors and omissions coverage B) Commercial general liability C) Employers liability D) Malpractice coverage
D
Which of the following types of coverage would be needed to cover a contractor's bulldozers which are used in the contractor's business but are not held for sale? A) Annual transit policy B) Older truck cargo floater C) Installment slaes floater D) Contractor's equipment floater
D