Section 13 quiz questions

Like auto liability insurance, aircraft liability coverage is usually not subject to which one of the following? Select one: A. An aggregate limit B. A small deductible C. Excess limits or policy sub-limits D. A coinsurance clause

A. An aggregate limit

To meet the needs of firms with foreign loss exposures, some insurers offer a variety of specialized coverages, including all of the following, EXCEPT: Select one: A. Foreign pollution liability B. Foreign supplemental and excess auto C. Foreign property and business income D. Foreign crime

A. Foreign pollution liability

Fiduciary liability insurance provides coverage for negligence involved in which one of the following? Select one: A. Investment decisions in retirement plans. B. Management of the corporation. C. Termination of employees. D. Violations of licensee duties.

A. Investment decisions in retirement plans.

Insurers in a particular nation selling insurance in that same nation are known as admitted insurers. These admitted insurers provide which one of the following? Select one: A. Excess coverage B. Admitted coverage C. Domestic coverage D. Blanket coverage

B. Admitted coverage

An umbrella liability policy differs from an ordinary excess liability policy in that an umbrella liability policy almost always provides which one of the following? Select one: A. An occurrence trigger. B. Excess coverage over several primary policies. C. Nonconcurrent coverage with one or more underlying policies. D. Narrower coverage than the underlying policies.

B. Excess coverage over several primary policies.

An excess liability policy covers a liability loss that exceeds the underlying limits only if the loss is covered by the underlying insurance. What type of excess liability policy is this? Select one: A. Aggregate policy B. Following-form policy C. Self-contained policy D. Combination policy

B. Following-form policy

Which one of the following is a form of excess liability coverage? Select one: A. A coinsurance policy B. A primary policy C. A self-contained policy D. A maximum-possible-loss policy

C. A self-contained policy

Aircraft medical payments coverage is similar to the medical payments coverage available in which other type of insurance policy? Select one: A. Health B. Commercial general liability C. Auto D. Disability income

C. Auto

The term "umbrella liability" is generally used to describe a type of excess insurance that is which one of the following? Select one: A. Narrower in coverage than ordinary excess liability policies B. Available only through nonadmitted (surplus lines) insurers C. Broader in coverage than ordinary excess liability policies D. Limited to commercial insurance accounts

C. Broader in coverage than ordinary excess liability policies

Aircraft physical damage insurance is also referred to as Select one: A. Aviation coverage. B. Protection and indemnity insurance. C. Hull insurance. D. Flight insurance.

C. Hull insurance.

Directors and officers liability insurance is insurance that covers a corporation's directors and officers against liability for which one of the following? Select one: A. Negligence resulting in injury to stockholders or loss of profits to the organization B. Employment practices liability C. Wrongful acts that would be covered under the policy D. False advertising or personal injury claims against the directors or officers of the corporation

C. Wrongful acts that would be covered under the policy

Ace Builders is considering purchasing a large tract of land where a local fuel oil company had its storage facility for more than 100 years. Ace knows that because of the long-time operation at the site, some environmental clean-up will be necessary. However, the amount of clean-up and its cost are unknown and cannot precisely be estimated. What is a specific policy that Ace should consider purchasing to address clean-up costs in excess of what it might estimate? Select one: A. A site-specific EIL policy B. A property transfer policy C. A CGL/EIL combination policy D. A remediation stop-loss policy

D. A remediation stop-loss policy

Which one of the following statements about umbrella liability insurance is true? Select one: A. It fills the gaps in primary insurance rather than providing additional coverage. B. It becomes void when the primary aggregate limits are exhausted. C. It is normally written as excess insurance only above a comprehensive general liability policy. D. It may contain exclusions more restrictive than those found in the primary policies.

D. It may contain exclusions more restrictive than those found in the primary policies.

An umbrella liability policy performs which one of the following basic functions? Select one: A. It eliminates the need for primary coverage. B. It covers only those claims that are not covered by the insured's primary policies. C. It is designed to eliminate restrictions in primary policies. D. It provides additional limits above the each occurrence limits of the insured's primary policies.

D. It provides additional limits above the each occurrence limits of the insured's primary policies.

Contractor Jerry provides a bid bond guaranteeing he will enter into a construction contract if his bid is accepted by business owner Sue. If Jerry's bid is accepted, but he fails to enter into a construction contract, the issuer of the bid bond would pay Sue which one of the following? Select one: A. The full amount of Jerry's bid B. Nothing, since Jerry did not enter into a construction contract C. The bond's "penalty" amount D. The difference between the amount of Jerry's bid and the next lowest bid accepted plus additional expenses incurred due to Jerry's default

D. The difference between the amount of Jerry's bid and the next lowest bid accepted plus additional expenses incurred due to Jerry's default

Many of the provisions in professional liability policies resemble those found in commercial general liability policies. However, some of the provisions differ in key ways such as the Select one: A. Inclusion of a coinsurance clause. B. Consent to litigate requirement. C. Requirement of compliance with state insurance statutes. D. Use of a claims-made trigger.

D. Use of a claims-made trigger.

Many of the provisions in professional liability policies resemble those found in commercial general liability policies. However, some of the provisions differ in key ways such as the Select one: A. Inclusion of a coinsurance clause. B. Requirement of compliance with state insurance statutes. C. Consent to litigate requirement. D. Use of a claims-made trigger.

D. Use of a claims-made trigger.

What cause of loss is included as "terrorism" under workers compensation that is not included under any other line of insurance? Select one: A. Chemical B. Nuclear C. Biological D. War

D. War

What type of bond guarantees that a construction contractor will enter into a contract? Select one: A. Bid bond B. Payment bond C. Maintenance bond D. Performance bond

A. Bid bond

Which one of the following is a characteristic of a site-specific environmental impairment liability policy? Select one: A. It provides coverage on a claims-made basis. B. It excludes coverage for bodily injury claims against the insured. C. It may be used to demonstrate an owner's proof of ability to pay claims resulting from the release of fuels from an underground storage tank. D. It typically provides coverage for acid rain, war, and nuclear liability.

A. It provides coverage on a claims-made basis.

To provide protection against seizure of assets, currency inconvertibility, and interference with contractual performance, a firm conducting operations in a foreign country would purchase Select one: A. Political risk insurance. B. War risk insurance. C. Foreign personal injury insurance. D. Foreign pollution insurance.

A. Political risk insurance.

Clarence entered into a contract bond that guarantees his insulation work will be free from defects in materials and workmanship for a specified period of five years after completion of the work. The type of bond used by Clarence is a Select one: A. Bid bond. B. Performance bond. C. License and permit bond. D. Maintenance bond.

D. Maintenance bond.

Aircraft passenger voluntary settlement coverage, also known as admitted liability coverage, pays benefits to a passenger only if the passenger released the insured from bodily injury liability and if Select one: A. The insured asks the insurer to pay them. B. The passenger is dismembered. C. The passenger incurs medical expenses. D. The passenger asks the insurer to pay them.

A. The insured asks the insurer to pay them.

Professional liability insurance is now available for more than just the technical professions. These occupations range from chemists to veterinarians, all of which entail liability for which one of the following? Select one: A. Failure to act in the manner of a "reasonable person" when performing skills related to the chosen profession B. Failure to use the degree of skill expected of a person in a particular field C. Gross and wanton negligence on the part of the professional D. Advertising injury due to failure to render professional services

B. Failure to use the degree of skill expected of a person in a particular field

Fiduciary bonds are commonly required of a person who does which one of the following? Select one: A. Wishes to appeal an adverse court decision B. Holds property in trust for the benefit of others C. Acts as treasurer for public funds D. Disputes the ownership of personal property

B. Holds property in trust for the benefit of others

Which one of the following statements concerning site-specific environmental impairment liability insurance policies is most accurate? Select one: A. Because of the potential for virtually unlimited losses, site-specific environmental impairment liability policies typically cover only bodily injury and not property damage. B. Site-specific environmental impairment liability policies typically cover only losses that arise from pollution conditions beyond the policy site listed in the declarations, but may be endorsed to cover on-site cleanup. C. Site-specific environmental impairment liability policies are typically written on an occurrence basis, but may be endorsed to provide coverage on a claims made basis. D. Defense costs are usually excluded from site-specific environmental impairment liability policies to keep the premiums lower.

B. Site-specific environmental impairment liability policies typically cover only losses that arise from pollution conditions beyond the policy site listed in the declarations, but may be endorsed to cover on-site cleanup.

When insurers offer to sell new policies or offer to renew existing policies that are reinsured under the Terrorism Risk Insurance Act (TRIA), the law requires that certain disclosures be made to the policyholder at the time the offer is made. Which one of the following is a required disclosure under TRIA? Select one: A. The amount that the insurer paid in terrorism-related losses in each of the prior three years B. The portion of the policy premium that is attributed to certified acts of terrorism C. The name and address of the official responsible for certifying a terrorist act under the provisions of TRIA D. The date that the TRIA government reinsurance program is set to expire

B. The portion of the policy premium that is attributed to certified acts of terrorism

Insurance covering an employer against liability claims alleging improper advice in the administration of a group health program is Select one: A. Fiduciary liability insurance. B. Directors and officers liability insurance. C. Employee benefits liability insurance. D. Employment practices liability insurance.

C. Employee benefits liability insurance.

Mark, a 50-year-old employee of Ajax Company (Ajax), is fired even though his annual performance reviews have indicated that his work has been outstanding. Mark believes he has been discriminated against because of his age and sues the directors of Ajax. What type of insurance policy does Ajax need to provide coverage for this type of lawsuit? Select one: A. Employee indemnification liability B. Employers liability C. Employment practices liability D. Employee benefits liability

C. Employment practices liability

Professional liability for professions such as accounting, insurance, law, and engineering is often called which one of the following? Select one: A. Negligence liability B. Malpractice liability C. Errors and omissions liability D. Fiduciary liability

C. Errors and omissions liability

A bond that guarantees that investors will be paid both the interest due on municipal bonds and the principal when the bond matures is a Select one: A. Consumer protection bond. B. Judicial bond C. Fiduciary bond. D. Credit enhancement financial guaranty bond.

D. Credit enhancement financial guaranty bond.

The coverage that an umbrella liability policy provides for claims not covered at all by the underlying policies is called Select one: A. Restrictive coverage. B. Aggregate coverage. C. Retained coverage. D. Drop-down coverage.

D. Drop-down coverage.

Except for policies covering airlines, aircraft policies cover which one of the following? Select one: A. Aircraft in a fleet, on a blanket basis B. Only the plane or planes specifically described in the policy C. Any aircraft used by the named insured D. All aircraft owned by the named insured

B. Only the plane or planes specifically described in the policy

Which one of the following statements is correct regarding the maintenance of underlying insurance condition of an umbrella liability insurance policy? Select one: A. If the underlying coverage is not maintained, the umbrella policy will drop down to pay claims that would have been covered by the required underlying policy. B. The condition obligates the insured to monitor the required underlying coverages to ensure that they remain in force. C. The condition obligates the insurer to monitor the required underlying coverages to ensure that they remain in force. D. It is necessary to have the required underlying coverage in effect only at the beginning of an umbrella policy's coverage period.

B. The condition obligates the insured to monitor the required underlying coverages to ensure that they remain in force.

ISO and NCCI have developed endorsements to help insurers comply with the provisions of the Terrorism Risk Insurance Act (TRIA). Which one of the following statements about workers compensation endorsements created to implement TRIA is most accurate? Select one: A. Because workers compensation is a mandatory coverage governed by the individual state laws, the TRIA coverage for workers compensation insurance differs by state, so the NCCI disclosure endorsement is used to identify the applicable limits on a state-by-state basis. B. Unlike the disclosure endorsements developed by ISO for other lines of business, the NCCI disclosure endorsement includes acts of war among the losses that would be covered by workers compensation insurance under TRIA. C. Although workers compensation is one of the lines covered by TRIA, the catastrophic nature of workers compensation losses are such that insurers are allowed to exclude or limit workers compensation insurance coverage for terrorist acts as long as they disclose that in a policy endorsement. D. The purpose of the workers compensation self-insurance awareness certification endorsement developed by the NCCI is to allow policyholders to voluntarily self-insure the first $100,000 of covered workers compensation claims under TRIA for a reduced premium.

B. Unlike the disclosure endorsements developed by ISO for other lines of business, the NCCI disclosure endorsement includes acts of war among the losses that would be covered by workers compensation insurance under TRIA.

Insurance agreements that are commonly found in cyber risk insurance policies include many categories, one of which is coverage for electronic data protection. Which one of the following losses would be covered by an electronic data protection insuring agreement? Select one: A. An insured posts information on its website about a competitor that proves to be untrue, provoking a lawsuit against the insured for defamation and false advertising. B. A hacker breaks into the insured's computer system and steals trade secrets, requiring the insured to pay extortion money to the hacker to recover the information. C. A computer virus corrupts the insured's software and database, requiring the insured to purchase replacement software and restore the corrupted data. D. An employee of the insured gains unauthorized access to the insured's accounting system and diverts funds from the insured's cash accounts into the employee's private bank account.

C. A computer virus corrupts the insured's software and database, requiring the insured to purchase replacement software and restore the corrupted data.

The type of cyber insurance policy that is best for an organization that handles a lot of money and is worried about a hacker diverting funds from its accounts is Select one: A. A business interruption policy. B. A notification or remediation policy. C. A cyber crime policy. D. An electronic data protection policy.

C. A cyber crime policy.

Which one of the following statements is correct with respect to the exclusions of an umbrella liability insurance policy? Select one: A. The exclusions of an umbrella policy always match those on the underlying policies to avoid any related problems. B. There is no exclusions section of an umbrella policy, since the insuring agreement is written to avoid the need for any. C. An umbrella policy can use exclusions to broaden or narrow exclusions found in the underlying policies. D. The exclusions of an umbrella policy are written so they never invoke the drop-down feature.

C. An umbrella policy can use exclusions to broaden or narrow exclusions found in the underlying policies.

An environmental insurance policy that covers the loss exposures of a contractor performing environmental remediation services on contaminated sites is a(n) Select one: A. Site-specific environmental impairment liability policy. B. Remediation stop-loss policy. C. Contractors pollution liability policy. D. Environmental professional errors and omissions (E&O) liability policy.

C. Contractors pollution liability policy.

A company that needs coverage for theft of money and securities resulting from computer fraud should choose which one of the following insuring agreements in a cyber risk insurance policy? Select one: A. Cyber extortion B. Electronic data protection C. Cyber crime D. Network security liability

C. Cyber crime

Regarding coverage for foreign operations, which one of the following statements is true? Select one: A. Standard forms for foreign operations workers compensation exposures are available. B. Foreign voluntary workers compensation policies seldom include coverage for transportation expenses to return disabled or deceased employees to the United States. C. Each insurer in the foreign voluntary workers compensation insurance market develops its own policy wording. D. Like homeowners policies, commercial insurance policies also provide worldwide coverage.

C. Each insurer in the foreign voluntary workers compensation insurance market develops its own policy wording.

CGL coverage differs from the liability coverage afforded to physicians as it relates to the source of liability. A physician's professional liability usually arises for professional practices or failure to act in a professional manner. An example of a medical error that causes injury and can result in liability is which one of the following? Select one: A. Prescribing medication which is not covered by the patient's insurance B. Filing insurance claims more than 30 days after a medical procedure C. Failing to properly diagnose a disease D. Overstating charges or fees relating to medical procedures

C. Failing to properly diagnose a disease

In many cases, the law of a particular nation requires that coverage for properties in that nation be purchased from which one of the following? Select one: A. Foreign insurers licensed to do business in the United States B. Surplus lines brokers licensed to do business worldwide C. Insurers licensed to engage in the insurance business in that nation D. Reinsurers

C. Insurers licensed to engage in the insurance business in that nation

A multinational enterprise may purchase coverages and combine them with a difference in conditions (DIC) policy written to wrap around the admitted coverages, thereby accomplishing which one of the following? Select one: A. Reducing the need for surplus lines insurance B. Eliminating all coverage gaps C. Maintaining uniform coverage for all the insured's locations D. Reducing the likelihood of having frequent small claims

C. Maintaining uniform coverage for all the insured's locations

Although sometimes included in the definition of professional liability insurance, coverages such as directors and officers liability, employment practices liability, employee benefits liability, and fiduciary liability are now commonly referred to as Select one: A. Occupational liability insurance. B. Comprehensive employment liability insurance. C. Management liability insurance. D. Organizational liability insurance.

C. Management liability insurance.

Drop-down coverage in an umbrella liability policy is provided for claims that are which one of the following? Select one: A. Covered by an underlying policy B. Covered by an underlying policy and claims not covered by the underlying policy due to the depletion of the underlying policy's aggregate limit C. Not covered by an underlying policy, including claims not covered due to the depletion of the underlying policy's aggregate limits D. Not covered by an underlying policy, excluding claims not covered due to the depletion of the underlying policy's aggregate limits

C. Not covered by an underlying policy, including claims not covered due to the depletion of the underlying policy's aggregate limits

Aircraft insurance differs from auto insurance in which one of the following? Select one: A. Aircraft insurance is provided with standard policies B. Aircraft insurance is offered only through state insurance pools C. Operators (pilots) are required to provide a strict medical certification D. Aircraft insurance is usually written on a blanket basis

C. Operators (pilots) are required to provide a strict medical certification

Which one of the following statements is true regarding insurance coverage for foreign operations? Select one: A. Foreign voluntary workers compensation policies do not provide coverage for endemic diseases. B. Commercial insurance policies usually provide worldwide coverage. C. Small to mid-sized businesses in the United States frequently must concern themselves with foreign exposures. D. Foreign voluntary workers compensation policies exclude coverage for transportation expense to return disabled or deceased employees to the United States.

C. Small to mid-sized businesses in the United States frequently must concern themselves with foreign exposures.

Even when the duty to select investments for an employee benefits plan has been delegated to others, such as in a mutual fund or brokerage firm, the fiduciaries may be responsible for which one of the following? Select one: A. Failure to properly endorse the commercial general liability policy B. Compliance with state insurance laws C. The errors or negligence of the investment managers D. Negligence of the organization's directors and officers

C. The errors or negligence of the investment managers

A payment bond is a contract bond guaranteeing which one of the following? Select one: A. A person appointed by a court to administer the property of others will faithfully perform his or her duties. B. The obligee will receive payment for loss or damage resulting from violation of the duties imposed on the licensee. C. The project will be free of liens. D. The work will be free from defects in materials and workmanship for a specified period after the project is completed.

C. The project will be free of liens.

What is the two-fold purpose of a Terrorism Risk Insurance Act (TRIA) aggregate limit endorsement? Select one: A. To offer broader coverage and provide a means of accounting for TRIA premiums B. To offer limited coverage and to provide a means of accounting for TRIA premiums C. To limit the insurer's exposure and to provide limited coverage for acts of terrorism at a reduced premium D. To limit the insurer's exposure and to provide a means of accounting for TRIA premiums

C. To limit the insurer's exposure and to provide limited coverage for acts of terrorism at a reduced premium

Which one of the following is a type of excess insurance that is broader than ordinary excess liability insurance? Select one: A. "Following-form" policy B. Self-contained policy C. Umbrella policy D. Excess & Surplus Lines policy

C. Umbrella policy

Fiduciary liability insurance covers which one of the following? Select one: A. Only liability claims alleging computational errors or omissions on the part of the fiduciary B. Only fiduciaries of retirement plans, investment companies, and financial institutions C. The errors and omissions of business administrators D. Fiduciaries of employee benefit plans for breach of fiduciary duties involving discretionary judgments

D. Fiduciaries of employee benefit plans for breach of fiduciary duties involving discretionary judgments

Fiduciary liability insurance covers which one of the following? Select one: A. Only liability claims alleging computational errors or omissions on the part of the fiduciary B. The errors and omissions of business administrators C. Only fiduciaries of retirement plans, investment companies, and financial institutions D. Fiduciaries of employee benefit plans for breach of fiduciary duties involving discretionary judgments

D. Fiduciaries of employee benefit plans for breach of fiduciary duties involving discretionary judgments

Professional liability insurance is usually written on Select one: A. A blanket basis. B. Standard forms. C. Forms required by the NAIC. D. Forms independently developed by individual insurers.

D. Forms independently developed by individual insurers.

Some umbrella policies combine an excess policy and an umbrella policy in one policy, using the letters "A" and "B." A and B refer to the Select one: A. Conditions. B. Exclusions. C. Duties Following a Loss. D. Insuring Agreements.

D. Insuring Agreements.

A number of endorsements have been developed by ISO to implement the provisions of Terrorism Risk Insurance Act (TRIA), including the aggregate limit TRIA endorsement. The ISO aggregate limit TRIA endorsement is used to Select one: A. Exclude coverage for acts of terrorism not covered by the federal reinsurance provisions outlined in TRIA. B. Offer lower limits of terrorism insurance at an increased premium level for those policyholders that have relatively higher exposure to terrorism acts. C. Exclude coverage for punitive damages attributable to the actions of the policyholder in the process of aiding or abetting, whether knowingly or unknowingly, the perpetration of a terrorist act. D. Limit the insurer's exposure and provide limited liability coverage for certified acts of terrorism at a reduced premium when the insured initially rejects certified acts of terrorism coverage.

D. Limit the insurer's exposure and provide limited liability coverage for certified acts of terrorism at a reduced premium when the insured initially rejects certified acts of terrorism coverage.

CGL policies differ from professional liability and management liability policies in how deductibles are applied. Most professional liability and management liability policies have which one of the following? Select one: A. No deductibles. B. Disappearing deductibles. C. State mandated deductibles based on policy premium. D. Mandatory minimum deductibles.

D. Mandatory minimum deductibles.

Officials generally required to obtain public official bonds include those whose duties involve which one of the following? Select one: A. Paying of court judgments if appeals fail. B. Exercising a privilege in connection with a business. C. Guaranteeing that work will be completed according to the contract. D. Seizing or disposing of property.

D. Seizing or disposing of property.

The Terrorism Risk Insurance Act (TRIA) requires that insurers include a "cap" endorsement on each policy that contains terrorism coverage. What three items of information must be included on a "cap" endorsement? Select one: A. A description of certified acts of terrorism; the insurer's responsibility ends when terrorism payments reach the cap; and the policyholder's coverage may be reduced by the Secretary of the Treasury's calculation of the pro-rata share of losses below the cap. B. A description of certified acts of terrorism; the insured must pay any losses that exceed the cap; and the policyholder's coverage may be reduced by the Secretary of the Treasury's calculation of the pro-rata share of losses below the cap. C. A description of acts that are not covered by the policy; the insurer's responsibility ends when terrorism payments reach the cap; and the policyholder's coverage may be reduced by the Secretary of the Treasury's calculation of the pro-rata share of losses below the cap. D. A description of certified acts of terrorism; the insurer's responsibility ends when terrorism payments reach the cap; and the policyholder's coverage may be reduced by the Secretary of Defense's calculation of the pro-rata share of losses below the cap.

A. A description of certified acts of terrorism; the insurer's responsibility ends when terrorism payments reach the cap; and the policyholder's coverage may be reduced by the Secretary of the Treasury's calculation of the pro-rata share of losses below the cap.

ISO has developed standard endorsements to help insurers comply with the provisions of the Terrorism Risk Insurance Act (TRIA). When a policyholder accepts certified acts of terrorism coverage, the ISO Commercial Lines Manual requires the insurer to attach a cap endorsement for the applicable coverages. The purpose of the cap endorsement is to Select one: A. Identify the $100 billion cap on annual aggregate insured losses that can be paid by the federal government and to outline the limitations of the insurer's obligations under the law. B. Establish the portion of premium that the insurer is attributing to terrorism coverage and to identify the coverages to which those premiums apply. C. Set the deductible on the policyholder's separate coverages that may be limited by the federal terrorism insurance program. D. Limit the amount of additional premium that the insurer can assess in the event that it pays losses for a certified act of terrorism as defined under federal law.

A. Identify the $100 billion cap on annual aggregate insured losses that can be paid by the federal government and to outline the limitations of the insurer's obligations under the law.

Which one of the following statements is true regarding aircraft liability insurance? Select one: A. Insurers may impose a sublimit on claims by passengers. B. Cargo carriers are rarely required to meet experience-hours requirements for pilots-in-command. C. Obligations under workers compensation laws are covered.Incorrect. Obligations under workers compensation laws are excluded. D. Separate limits must apply to bodily injury and property damage.

A. Insurers may impose a sublimit on claims by passengers.

Which one of the following elements would you find in the Conditions of an umbrella liability insurance policy? Select one: A. Maintenance of underlying insurance condition B. Coverage triggers condition C. Restrictions on coverages beyond what may appear on underlying policies condition D. Self-insured retention condition

A. Maintenance of underlying insurance condition

A network administrator assists a client in performing upgrades to its computer hardware. The administrator makes several errors during the process and the client loses money when its system malfunctions repeatedly for the next two weeks. The client sues the network administrator and his company for loss of business income. Which one of the following insuring agreements is necessary to cover the administrator and his company against the suit under a cyber liability insurance policy? Select one: A. Technology errors and omissions liability B. Electronic media liability C. Privacy liability D. Network security liability

A. Technology errors and omissions liability

One of the purposes of the Terrorism Risk Insurance Act (TRIA) aggregate limit endorsement is to limit the insurer's exposure. What is the other purpose of the TRIA aggregate limit endorsement? Select one: A. To provide limited coverage for acts of terrorism at a reduced premium B. To provide a means of accounting for TRIA premiums C. To provide unlimited coverage for acts of terrorism D. To provide a different means of marketing terrorism coverage

A. To provide limited coverage for acts of terrorism at a reduced premium

Passenger voluntary settlement coverage, unique to aircraft insurance, is also known as Select one: A. Protection and indemnity insurance. B. Admitted liability coverage. C. Pilots liability coverage. D. Hull insurance.

B. Admitted liability coverage.

The two most common aircraft hull coverages are all risks-ground and flight and Select one: A. Named perils-ground and flight. B. All risks-not in motion. C. Blanket coverage. D. Named perils-not in motion.

B. All risks-not in motion.

The Commercial General Liability (CGL) policy provides that the insurer may, at its discretion, settle any claim or suit. In contrast, professional liability and management liability policies typically have what is referred to as a "hammer clause." This clause is invoked when the insured does not agree to a proposed settlement. The hammer clause has the effect of doing which one of the following? Select one: A. Forcing the insurer to make a subsequent settlement offer within 60 days of the initial offer B. Compelling the insured to agree to the settlement proposed by the insurer C. Mandating settlement within 180 days of triggering the hammer clause D. Requiring the insured to submit the claim to arbitration procedures

B. Compelling the insured to agree to the settlement proposed by the insurer

A contract bond is a surety bond that can be used to guarantee the fulfillment of obligations under which one of the following? Select one: A. Licensing requirements B. Construction contracts C. Judicial agreements and contracts D. Fiduciary agreements

B. Construction contracts

Insurers are unwilling to provide professional liability insurance under the CGL because Select one: A. Professional liability exposures have no need for standard CGL coverages. B. Different underwriting and claim handling skills are required. C. Insurance regulatory statutes prohibit this combination. D. The definition of "bodily injury" is too broad under the CGL.

B. Different underwriting and claim handling skills are required.

Which one of the following statements is correct regarding aggregate umbrella liability insurance limits? Select one: A. Almost all umbrella policies contain aggregate limits that operate like the aggregate limits in the primary insurance. B. Almost no umbrella policies contain aggregate limits similar to those found on primary insurance. C. Aggregate limits work the same way for all umbrellas policies D. The aggregate limits never apply to coverages that are subject to an aggregate in the underlying policies.

A. Almost all umbrella policies contain aggregate limits that operate like the aggregate limits in the primary insurance.

A self-insured retention (SIR) in an umbrella liability policy is which one of the following? Select one: A. An amount that is deducted from claims that are payable under an umbrella liability policy and that are not covered at all by any primary policy B. An amount that is deducted from claims that are payable under an umbrella liability policy and that are covered by any primary policy C. An amount that is deducted from all umbrella liability claims D. An amount that is added to claims that are payable under an umbrella liability policy and that are not covered at all by any primary policy

A. An amount that is deducted from claims that are payable under an umbrella liability policy and that are not covered at all by any primary policy

Which one of the following situations illustrates a professional liability loss exposure? Select one: A. An insurance producer fails to properly advise a client on his or her insurance needs. B. An attorney serves on the board of a not-for-profit organization. C. A foreman fails to install safety nets in a building under construction. D. A physician fails to maintain adequate lighting in the office parking lot.

A. An insurance producer fails to properly advise a client on his or her insurance needs.

The self-insured retention in an umbrella liability policy applies under which one of the following circumstances? Select one: A. An underlying policy does not cover the claim. B. An umbrella liability policy is dropping down to pay a claim because the primary policy's aggregate limit has been exhausted. C. A claim exceeds the limits of the umbrella liability policy. D. A claim covered by the umbrella liability policy is covered by the primary policy.

A. An underlying policy does not cover the claim.

Insurers that offer professional liability and management liability policies usually have a claims-made trigger. The reason for this is which one of the following? Select one: A. Claims are sometimes not settled until long after the policy has expired. B. Claims are sometimes not settled under arbitration but require long term litigation. C. Claims are not settled until after the statute of limitations date has been reached. D. Claims are settled on an extended coverage basis.

A. Claims are sometimes not settled until long after the policy has expired.

Which one of the following statements is true of a contractors pollution liability (CPL) policy? Select one: A. It addresses the environmental insurance needs of contractors performing environmental remediation services on contaminated sites. B. It provides coverage for radioactive matter, claims arising out of the insured's products, and damage to sites owned by the insured. C. It covers property damage, cleanup costs and defense costs, but does not cover bodily injury.Incorrect. It addresses the environmental insurance needs of contractors performing environmental remediation services on contaminated sites. D. It is available with a claims-made coverage trigger only, and not an occurrence trigger.

A. It addresses the environmental insurance needs of contractors performing environmental remediation services on contaminated sites.

A commercial airplane is taxiing on the approach to the runway when it collides with a stationary object, causing damage to its wing. The plane is insured by an all risks-ground and flight aircraft hull policy. Which one of the following statements is true regarding coverage for damage to the plane's wing? Select one: A. The loss is not covered because the all risks-ground and flight policy covers losses only while the plane is in flight or not in motion. B. The loss is covered because the all risks-ground and flight policy covers losses while the plane is in motion. C. The loss is not covered because the plane was taxiing to the runway instead of being towed. D. The loss is covered because commercial use voids the physical damage exclusions.

B. The loss is covered because the all risks-ground and flight policy covers losses while the plane is in motion.

Which one of the following statements best describes the purpose of a remediation stop-loss policy? Select one: A. The purpose of remediation stop-loss insurance is to provide limited pollution coverage in connection with products liability policies for hazardous products. B. The purpose of remediation stop-loss insurance is to facilitate real estate sales where there is known pollution contamination on the property, but the total cleanup costs are unknown. C. The purpose of remediation stop-loss insurance is to protect motor carriers involved in interstate transportation from claims resulting from spills of hazardous cargoes. D. The purpose of remediation stop-loss insurance is to protect third party sites located near the insured property from the consequences of an accidental release of chemicals.

B. The purpose of remediation stop-loss insurance is to facilitate real estate sales where there is known pollution contamination on the property, but the total cleanup costs are unknown.

Which one of the following statements is correct regarding the maintenance of underlying insurance condition of an umbrella liability insurance policy if the underlying insurance is not kept in force? Select one: A. The umbrella policy would cover claims that exceed the limits of the underlying policies as if they had been kept in force, subject to a self-insured retention. B. The umbrella policy would cover claims that exceed the limits of the underlying policies as if they had been kept in force. C. The umbrella policy would drop down to cover claims that would otherwise be covered by the underlying policies. D. The umbrella policy would drop down to cover claims that would otherwise be covered by the underlying policies, subject to a self-insured retention.

B. The umbrella policy would cover claims that exceed the limits of the underlying policies as if they had been kept in force.

The human resources vice president of LZ Corporation (LZ) informed Barbara, a new employee, that she must wait sixty days to enroll in the company health insurance plan. The advice was incorrect, and Barbara was unable to obtain employer-sponsored health insurance until the next open enrollment period nine months later. Barbara sues LZ for the extra cost to purchase private health insurance for the nine-month period. Which one of the following types of insurance would cover LZ for this claim? Select one: A. Employment practices liability B. Employers liability C. Employee benefits liability D. Employee indemnification liability

C. Employee benefits liability

Darlene was appointed by a court as conservator of her aunt's estate. If Darlene is required to post a bond with the court it would most likely be a Select one: A. Financial guarantee bond. B. Payment bond. C. Fiduciary bond. D. Performance bond.

C. Fiduciary bond.

Professional liability and management liability policies can provide duty-to-defend coverage in the same manner as the typical commercial general liability policy. However, some professional liability policies provide defense costs reimbursement coverage requiring that the insurer do which one of the following? Select one: A. Pay defense costs on behalf of the insured as expenses are submitted by the insured's attorney, rather than as part of the total claim settlement amount B. Establish a minimum defense cost amount within 30 days of claim notification C. Submit to arbitration procedures regarding defense costs D. Reimburse the insured for defense expense covered by the policy

D. Reimburse the insured for defense expense covered by the policy

An excess policy that applies to a loss that exceeds the underlying policy limits only if the loss is specifically covered under the terms of the excess policy is known as a Select one: A. Following-form policy. B. Combination policy. C. Drop-down policy. D. Self-contained policy.

D. Self-contained policy.