Commercial Lines
Two partners in a business insured with commercial crime coverage are found to have acted in collusion to embezzle $12,500 for each of them. What total amount will the commercial crime coverage pay for the loss?
$0
What is the limit on the cost of bail bonds required because of a covered accident that will be paid as a supplementary payment under the business auto coverage form?
$2,000 - CORRECT ANSWER
A commercial insured borrowed a friend's $3,000 tuxedo to wear at a business function.
$2,500 - CORRECT ANSWER
A commercial client suffers a $100,000 fire loss to a building insured under the building and personal property coverage form. However, only 20% of the building has been used to conduct the insured's business for the last 90 days. As a result, what will the insurer pay for this loss under the vacancy addition?
$85,000 - CORRECT ANSWER
A client with commercial auto insurance under the business auto coverage form spends $1,200 to rent an auto for a period of time after a covered auto is stolen. The stolen auto is covered for theft. How much of the insured's rental care expense will be paid by the insurer?
$900 - CORRECT ANSWER
Under the earthquake endorsement available with the commercial property coverage part, an occurrence of an earthquake is defined as the major earth movement and all aftershocks and tremors that occur with what period of time?
168 hours - CORRECT ANSWER
A client insured under a building and personal property coverage form decides to sure the insurer in regard to a loss that occurred in 2018. By what year must the suit be brought under the legal action against the insurer condition?
2020
A client terminated an individual's employment on August 1. How long is the terminated individual considered an employee under the client's commercial crime coverage?
30 days
coinsurance percentage
80%
An insured who has included the business income coverage form in her commercial property coverage part is prevented from opening her store at a strip mall because firefighters have closed off the entire area to fight a fire at the other end of the mall. this occurs at 8:30 a.m. on Monday. The fire is extinguished before any damage occurs to the insured's store, but the firefighters keep the area closed while the safety of the entire strip mall is evaluated. Assuming the mall remains closed by order of the fire department, at what time does the insured's coverage begin to pay for the loss of business income?
8:30 am Thursday
Which of the following types of advertising injury is included under a commercial general liability policy's Coverage B - Personal Advertising Injury Liability?
A competitor interprets an insured's advertisement as damaging and sues the insured - CORRECT ANSWER
All of the following examples involve a violation of a legal duty/standard of care under the principle of negligence EXCEPT
A customer breaks her elbow when she slips on the wet floor of the produce department in the grocery store
All of the following examples involve a violation of a legal duty/standard of care under the principle of negligence EXCEPT
A hunter who is crossing a farmer's field and is struck by lightning - CORRECT ANSWER
For which of the following is coverage EXCLUDED under Coverage B - Personal and Advertising Liability in a commercial general liability policy?
Advertising injury arising out of the publication of material that was first published after the policy period began
To which of the following businesses would the alcohol exclusion under Coverage A - Bodily Injury and property damage liability of the commercial general liability policy NOT apply?
An equipment manufacturer serving alcohol at its sales convention - CORRECT ANSWER
Which of the following coverages is NOT available for inclusion in an ISO commercial package policy?
Aviation insurance
Which of the following clients insured under a commercial general liability coverage policy has committed an offense that meets the definition of advertising injury?
Businessperson Z places an ad that claims a competitor's merchandise is faulty - CORRECT ANSWER
Which of the following is the most correct statement regarding coverage symbols 1,2,3,4,5,6,9, and 19?
Coverage automatically applies to newly acquired vehicles if they are of the type designated by the symbol
The each occurrence limit for bodily injury and property damage resulting from the insured premisses the most the insurer will pay for the sum of
Damages under Coverage A and medical expenses under Coverage C - CORRECT ANSWER
Employee X was struck on the head with a baseball bat, and while her was unconscious, someone took the business's cash that he was carrying to the bank
Employees X and Y - CORRECT ANSWER
The claims-made coverage endorsement is used to
Exclude specific accidents, products, or locations from a claims-made policy - CORRECT ANSWER
In a commercial package policy, who may cancel the policy in writing and make changes to the policy with the consent of the insurer?
First named insured - CORRECT ANSWER
A commercial client conducts a business with another individual. In total, the business has $25,000 in debt. Although the client owns 50% of the business, he is liable for the entire $25,000 business debt. The commercial client is a
General partner - CORRECT ANSWER
An insured who lost a lawsuit was required to pay punitive damages by the court. This insured was likely found guilty of what type of negligence?
Gross negligence - CORRECT ANSWER
Which of the following does commercial umbrella liability coverage have in common with personal umbrella liability coverage?
How coverage coordinates with the underlying policy
An agent has a commercial client who is a stockholder in a business. Last year, the commercial client's share of the business profits directly increased her personal income by $12,000. The client has an ownership interest in what type of business?
Limited partnership
Which of the following causes of loss is EXCLUDED under the commercial property coverage part's special causes of loss form?
Mechanical breakdown
An agent's new commercial client is an independent contractor who hauls goods by truck over long distances. Which commercial auto coverage form would the agent recommend for this client?
Motor carrier coverage form - CORRECT ANSWER
A boater's negligence caused an accident that resulted in the loss of another individual's legs. The injured individual sues the boater for $30,000 in medical expenses, $500,000 for lost future income, $1 million for pain and suffering, and an addition $5 million so that the case will serve as an example to other boaters to be careful operating their boats. The total amount of the compensatory damages being requested in this case is
NOT - $530,000
The driver of car X is suing the driver of car Y for $10,000. The driver of car X is found to be 25% liable for the accident that cause the damages. Under the principle of contributory negligence, the driver of car X will be able to recover what amount?
NOT - $7,500 NOT - $2,500 $0 - CORRECT ANSWER NOT - $10,000
Under a commercial umbrella policy, coverage for advertising injury cause by an offense arising out of the insured's business would be EXCLUDED for which of the following businesses?
NOT - A drug manufacturer NOT - A worldwide courier service
Factors that can reduce liability include all of the following EXCEPT
NOT - Comparative negligence NOT - Intervening cause Offer and acceptance - CORRECT ANSWER NOT - Assumption of risk
An insured has a commercial umbrella policy that provides $10 million in liability coverage. The insured becomes responsible for paying a$5 million liability judgment. The insured's commercial umbrella policy full covers the claim, and pays $4,900,000 toward the amount of the judgment after the insured pays $100,000. The $100,000 the insured was required to pay is referred to as the
NOT - High dollar claim penalty
Which of the following exclusions is NOT contained in all of the commercial crime coverage forms?
NOT - Indirect losses Theft by the insured - CORRECT ANSWER
An insured under a commercial package policy receives notice from the insurer that the policy will be cancelled due to a material change in the risk presented by the insured. If the insured received the notice on June 1, what is the earliest dat the the cancellation can be made effective?
NOT - June 10
The broad nuclear energy liability exclusion endorsement does NOT exclude coverage for which of the following?
NOT - Medical payments NOT - Property damage
An advertising firm uses a fleet of passenger vehicles in its business. The firm owns the vehicles provided to the president, Vice President, and chief financial officer., and it leases four other cars for the salespeople. The firm also owns a van with the name of the firm on the side, which is used by employees to go back and forth between vendors. The firm wants to insure only the vehicles its owns. Which symbol would provide the coverage desired by this client?
NOT - Symbol 1 Symbol 2 - CORRECT ANSWER
Under the common policy conditions of a policy, all of the following are true about changes in a policy EXCEPT
NOT - The insurance will make changes in the policy only at the request of the first named insured
On October 18, 2015, a visitor to a toy manufacturer broke his finger during a tour of the factory floor. The visitor incurred costs for emergency room treatment, X-rays, and follow-up physician services. By what date must these charges be incurred and reported to the insurer in order to be covered by Coverage C- Medical Payments?
October 18, 2016 - CORRECT ANSWER
All of the following are specialized types of coverage which are generally insured on a specific policy other than a commercial general liability policy EXCEPT
Products and completed operations liability
A commercial client with a monoline policy wants to purchase another commercial coverage. The agent recommends that the client purchase the two coverages under a package policy rather than as two separate monoline policies. Which of the following is the client most likely to experience if he accepts the agent's recommendation?
Reduced likelihood of conflicts due to overlapping coverage - CORRECT ANSWER
A commercial insured must pay $500 to rent another vehicle while a covered auto is in the shop for repairs following a covered accident. Which of the following provides coverage for this expense?
Rental reimbursement coverage endorsement - CORRECT ANSWER
The coverage symbol that applies most comprehensively to all autos used in a business is
Symbol 1
The driver of car A is injured when her car is struck from behind by car B. A police officer arrives on the scene and determines that the accident was caused by the driver of car B. Subsequently, a claim is filed against the insurance company that insures the driver of car B. In this case, who is the third party to the claim?
The driver of car A - CORRECT ANSWER
The only commercial inland marine policy in the domestic shipments category that is a filed form is
The mail coverage form
A business owner wants liability coverage for hiring someone to do a specific job. The coverage this business owner needs is available under which of the following?
The owners and contractor protective coverage form - CORRECT ANSWER
The premium audit of a commercial general liability policy provides that
The premium paid to initiate coverage is an estimated amount. The insurer determines the actual premium by audits of the insured's records. - CORRECT ANSWER
Under commercial crime coverage forms, which of the following meets the definition of money?
Travelers checks
What distinguishes umbrella coverage from following form excess coverage?
Umbrella coverage requires an insured to have an underlying liability policy, but this is not required under following form excess coverage - CORRECT ANSWER
William is a duly licensed agent under the state laws. He sells an insurance policy issued by XYZ insurance company to client Zeb. Who is the first party under this insurance contract?
Zeb
In the terminology of commercial inland marine coverage, which of the following is an instrumentally of transportation or communication?
cell phone tower
A client insured under the building and personal property coverage form incurs a loss of electronic data that costs $3,000 to restore. How much will the insurer pay toward the loss?
$2,500
A computer virus causes an insured to lose electronic data that costs $9,000 to restore. The insured has $100,000 of commercial property insurance under the building and personal property coverage form. Assuming the loss is covered under the form's electronic data additional coverage, how much will the policy pay for this loss?
$2,500
A windstorm tears off the outside sign that was attached to a commercial insured's building and destroys it. It will cost $2,700 to replace the sign. The insured has $200,000 of commercial property insurance under the business and personal property coverage form. How much will the insured's policy pay toward replacement of the sign?
$2,500 - CORRECT ANSWER
Up to what amount per day in earnings lost in order to participate in the defense of a suit will the insurer pay to the insured as a supplementary payment under the business auto coverage form?
$250 - CORRECT ANSWER
A fire at an insured's business premises causes $200,000 of damage to covered property. In addition, the insured is responsible for a fire department service charge of up to $2,000. Up to what amount will the insured's commercial property insurance pay for the fire department service charge?
$1,000
An insured with $500,000 of commericial general liability coverage purchases a commercial umbrella policy that provides $2,000,000 of liability coverage.
$1,500,000
A commercial insured that manufactures sound systems send $15,000 worth of merchandise to a trade show. Fire sweeps through the exhibition hall and destroys all of the insured's merchandise there. What amount will the insured's commercial property insurance policy pay for this loss under the coverage extension for personal property not at the insured location?
$10,000
An explosion at an insured's warehouse results in $192,000 of damage covered property. Additionally, a pollutant release must be cleaned from the ground of the insured's premises at a cost of $15,000. The insured has $200,000 of commercial property insurance under the building and personal property coverage form. What is the total amount that the insured's policy will pay for this loss related to cleanup and the pollutants?
$10,000
The overhead scaffolding holding thousands of pounds of sound and lighting equipment for an outdoor concert collapses during the show, injuring many spectators.
$10,000,000
An insured's limit of insurance under a commercial general liability policy is $100,000. The insured is successfully sued, and the injured party is awarded $98,000 by the court. In addition, $3,000 in supplementary costs were incurred by the insurer. What is the total amount that the insurer will pay for this claim?
$101,000 - CORRECT ANSWER
An insured who struck a pedestrian while driving a car insured under the liability coverage provided by the business auto coverage form is required by a court to pay $90,000 in damages to the injured pedestrian. In addition, the insured must pay court costs of $8,000. The insurer incurred expenses of $12,000 to defend the suit. The limit of insurance one the insured's liability coverage is $100,000. What is the total amount the insurer will pay on behalf of the insured on this claim?
$110,000 - CORRECT ANSWER
Which of the following is EXCLUDED from the definition of mobile equipment under the business auto coverage form?
A snowplow
A customer fell and was injured in a clothing store on March 18. The injured customer filed a lawsuit alleging liability for negligence on May 2. Although the liability policy that covered the store owner on March 18 had expired on April 1, that policy's coverage applied. The type of liability policy covering this incident
NOT - May be either a claims made policy or an occurrence policy NOT - Must be a claims-made policy Must be an occurrence policy - CORRECT ANSWER NOT - Could be neither a claims-made nor an occurrence policy
A client reported an incident within the midi-tail extended reporting period of their expired claims-made CGL policy. The expiration date of the policy was May 1, 2018. Until what date may a claim arising from this policy period be covered by the policy's midi-tail, provided the insured reported the claim within 60 days of the coverage termination.
May 1, 2023
A commercial general liability policy covering a business partnership has $500,000 in limits. During the policy period, two of the partners are sued successfully for $400,000 each arising from the same occurrence. What is the total amount the policy will pay on these claims per occurrence?
NOT $400,000 $500,000 - CORRECT ANSWER
A commercial insured rented a trailer to store raw materials on the business premises until they are needed. The trailer was empty but still on the premises, when a tornado overturned it causing $5,500 worth of damage to the trailer. What amount will be covered by the coverage extension for detached trailers not owned by the insured?
NOT $5,500 NOT $2,500 $5,000 - CORRECT ANSWER NOT $0
An insured who is being sued under a commercial general liability policy has to pay $750 for a court bond. What amount of this cost will the insurer pay as a supplementary payment?
NOT $750 $250 - CORRECT ANSWER
A small plane crash-lands on a commercial insured's business premises, missing the building but destroying the company's fence that stands at the edge of the property by the road. The fence will cost $800 to replace. What amount will the insured's commercial property insurance policy pay for this loss under the coverage extension for outdoor property available under the business and personal property coverage form?
NOT - $0
A $3,500 fur coat is stolen from a commercial client after a break in. The client is insured under the special causes of loss form of the commercial property coverage part. What amount will the insured's policy pay for this loss?
NOT - $0 $2,500 - CORRECT ANSWER
An insured, accompanied by an employee, is driving an auto covered by the business auto coverage form to a meeting with a customer when her loses control of the car and hits a guardrail. The insured is uninjured, but the employee needs medical treatment that costs $400. In addition, the employee cannot work for 3 days, resulting in $600 of lost earnings. What is the total amount that will be paid under the insured's auto bodily liability coverage as a result of this accident?
NOT - $1,000 NOT - $400
A commercial client owns 10% of a business as a limited partner. The total value of the business is $250,000, and it has $100,000 in debts. How much of the business's debt is the commercial client personally liable for?
NOT - $10,000 NOT - $100,000 $0 $25,000
To rebuild after a fire, an insured will incur $12,000 of increased costs due to ordinance and law changes that the insured was required to comply with prior to the loss. The insured has $300,000 of commercial property insurance under the building and personal property coverage form. What amount of the increased construction cost will be paid by the insured's policy?
NOT - $10,000 NOT - $12,000 $0 - CORRECT ANSWER NOT - $15,000
The stated rate of inflation in the declarations of an insured's building and personal property coverage form is 6% for the inflation guard optional coverage. The insured has $100,000 of coverage of January 1 when the policy goes into effect. On July 1, a tornado strikes the insured's business causing $110,000 worth of damage. How much will the insured's commercial property insurance pay for this occurrence?
NOT - $110,000 NOT - $106,000 NOT - $100,000 $103,000 - CORRECT ANSWER
An insured's increased costs of construction due to building ordinances total $22,000. The insured's limit of insurance under her building and personal property coverage form is $400,000. Assuming that the increased costs of construction are covered, how much will the insured's policy pay for this part of the loss?
NOT - $20,000 NOT - $22,000 NOT - $10,000 $15,000
An insured with $100,000 of commercial property insurance under the building and personal property coverage form suffers a $50,000 loss to covered property due to a tornado. Up to what amount will the insured's policy pay for debris removal for this incident?
NOT - $25,000
Under the coverage extension for newly acquired or newly constructed business locations available under the building and personal property coverage form, what is the limit per insured location for business personal property?
NOT - $250,000 NOT - $150,000 NOT - $200,000 $100,000 - CORRECT ANSWER
A client competitor successfully sues the client for slander under a commercial general liability policy. As a result, which amount was paid under Coverage B - Personal and Advertising Injury limit and not supplementary payments?
NOT - $4,000 in attorney's fees incurred by the insurer in defending the suit NOT - $85 in interest that accrued after the award was entered by the court, but before the insurer paid the award $25,000 in damages awarded by the court - CORRECT ANSWER NOT - $2,000 in pre-judgment interest awarded by the court
An agent has a commercial client with $1,000,000 of liability coverage on a commercial general liability policy and $5,000,000 of liability on a commercial umbrella policy. The client is successfully sued for negligence in regard to premises liability and is required to pay a judgement of $4,000,000. How much of this judgment will be paid by the client's commercial umbrella policy?
NOT - $4,000,000
A client has a commercial general liability policy with limits of $5,000,000 and a commercial umbrella policy with limits of $20,000,000. The client is required to pay damages in the amount of $23,000,000 for liability arising from bodily injuries cause by asbestos. What amount will be paid by the client's commercial umbrella policy toward these damages?
NOT - 23,000,000 NOT - $5,000,000 $0 $25,000,000
An exclusion applies to the coverage provided under Coverage A - Bodily Injury and Property Damage Liability of a commercial general liability policy for all of the following incidents EXCEPT
NOT - A brewery that provides free samples of its product as part of its tour. Employees provide beer to a man who becomes intoxicated and crashes his car on the drive home A convenience store owner injures a man who tries to rob the store - CORRECT ANSWER
Which of the following would be categorized under a commercial client's real property?
NOT - A forklift on the shop floor
Which of the following meets the definition of an insured contract under the business auto coverage form?
NOT - An obligation imposed by an ordinance requiring indemnification of a municiplality An agreement to lease retail space - CORRECT ANSWER
A truck covered by a commercial client's business auto coverage form is stolen from the insured businesses parking lot. Under which of the following physical damage coverages might this loss be covered?
NOT - Comprehensive only
A truck covered by a commercial client's business auto coverage form is stolen from the insured business's parking lot. Under which of the following physical damage coverages might this loss be covered?
NOT - Comprehensive only NOT - Specified causes of loss only
Which of the following items would NOT be considered to meet the definition of "your product" in the commercial general liability policy?
NOT - Cookware sold by a franchisee of the insured A house - CORRECT ANSWER
A commercial client participates is separate legal entity as a member. Last year, the business lost $10,000, and the commercial client's share of that loss directly reduced the commercial client's personal taxable income. The commercial client's business is organized as a
NOT - Corporation Limited liability company - CORRECT ANSWER
All of the following are coverage characteristics that Symbol 2 and Symbol 4 have in common EXCEPT
NOT - Coverage applies wherever the symbol is shown in the Declarations
A commercial client operates a dog kennel and also breeds beagles for sale. The client has commercial property coverage under the building and personal property coverage part. Which of the following property is NOT covered?
NOT - Dogs being boarded in the client's kennel A retaining wall near the business premises used to keep water from flooding that outdoor dog kennels - CORRECT ANSWER
An insured whose loss of business income has been paid since operations were suspended following an explosion is able to resume operations on April 15, but the business is not generating income at the level it had before the explosion.
NOT - May 15
An individual pays a $1,000 bribe to a zoning commissioner to have a vacant lot he owns zoned as commercial property, but the zoning commissioner fails to deliver the promised zoning. The individual sues the zoning commissioner to get his $1,000 back, claiming breach of contract. This suit will fail because the contract lacks the element of
NOT - Mutual assent NOT - Competent parties Legal purpose - CORRECT ANSWER NOT - Consideration
The specified causes of loss physical damage coverage available under the business auto coverage form covers damage to a covered auto caused by any of the following EXCEPT
NOT - Vandalism
A client with commercial property insurance under the building and personal property coverage form purchased an additional business location on June 15. How long is coverage available under the newly constructed or acquired property coverage extension end if the client does not report this acquisition to the insurer sooner?
NOT 60 days 30 days - CORRECT ANSWER
Under commercial crime coverage forms, burglary is defined as the unlawful taking of property
NOT From a locked safe or vault by a person making unauthorized entry into the safe or vault From inside the business premises - CORRECT ANSWER
Which of the following features is common to both limited partnerships and S corporations?
NOT The owners of both types of businesses are referred to as shareholders Profits and losses generated by both types of businesses pass through directly to the owners' personal income - CORRECT ANSWER
Richard owns and operates a commercial business. He has included a business income coverage form with CPP. When Richard's business is severely damaged by fire, the business income coverage will pay for
Net income plus the continuing expenses of the business
Coverage for personal injury and advertising injury in the commercial general liability policy include all of the following EXCEPT
Publication of material that knowingly violates a person's right of privacy - CORRECT ANSWER
All of the following are conditions that must be met in order for a commercial general liability policy's medical payments coverage to apply EXCEPT
The injured party must sue the insured and the insured must be at fault
Which of the following statements is true in regard to the bankruptcy of a business insured under a commercial general liability policy?
The insurer will continue to honor its obligation to pay damages for liability and medical expenses in the event an insured business goes bankrupt - CORRECT ANSWER
A large limb breaks off a homeowner's dead tree. It lands on a neighbor's house, causing $2,500 in damage. The neighbor hires an attorney, who sends a letter to the homeowner, threatening to sue if she does not pay for the damage to the neighbor's house. In this scenario, the tortfeasor is
The owner of the dead tree
Which of the following is NOT excluded under the physical damage coverage available under the Business Auto Coverage Form?
Breakage of glass - CORRECT ANSWER
All of the following are examples of a bailee EXCEPT
A tailor to whom customers leave clothing for alertarions
Which of the following is a direct loss?
A tornado tears the roof off a building, cause $25,000 in damage to the building - CORRECT ANSWER
An insurer that issues a commercial general liability policy assumes the right and duty to defend a lawsuit that seeks covered damages under
Both Coverage A - Bodily Injury and Property Damage Liability and Coverage B - Personal and Advertising Injury Liability - CORRECT ANSWER
If certified mail is being used, the types of property that can be covered under the mail coverage form include all of the following EXCEPT
Cash
A client's claims-made commercial general liability coverage expires on September 15.
November 15 - CORRECT ANSWER
Under the off-premises utility services endorsement available with the commercial property coverage part, coverage for an interruption of service that results from damage to overhead power lines is
Obtainable by adding it by endorsement
A liability insurer anticipated that an insured who was the subject of a lawsuit would ultimately be found legally liable for damages, so it offered to pay the injured party a reduced amount of the damages being sought in return for dropping the case. Such settlement offers are said to be made
Out of court
The breach of a standard of care, in an unbroken chain of events, that causes a loss is what element of a negligent act?
Proximate cause
The mail coverage form can be used to insure property while it is being shipped by any of the following modes EXCEPT
Parcel post - CORRECT ANSWER
On March 1, an insured with $100,000 of coverage under the building and personal property coverage form has a fire that causes $90,000 of damage to covered property. In addition, the insured incurs costs of $7,500 for debris removal. If the insured's policy expires on July 15, by what date must the insured report the debris removal costs to the insurer in order for them to be covered under the debris removal additional coverage?
September 1
A commercial client has full ownership of her business and conducts business under an assumed name. Last year, the business made $50,000, and this amount was reported in the client's personal income for tax purposes. The client is a
Sole Proprietorship - CORRECT ANSWER
A commercial client has full ownership of his business and is personally liable for the entire amount of the business's $40,000 debt. This commercial client is a
Sole proprietorship
Which of the following is the only type of business that must be covered by one individual?
Sole proprietorship
The coverage symbol used to obtain coverage for mobile equipment subject to compulsory financial responsibility or other motor vehicle insurance laws is
Symbol 19
A grocery wholesaler has expanded its operations to include a new location in a state that has no fault auto insurance requirements. Which coverage symbol should this client use for vehicles it keeps at its new location?
Symbol 5
A tool manufacturer uses many different types of vehicles in its business. The insurer only wants to cover vehicles specifically owned by the insured. Which coverage should the insurer choose?
Symbol 7
The vehicles used by the employees and partners of an engineering firm are owned by the employees or partners themselves - they are not owned or hired by the business or registered to the business. But they are sometimes used in the business, and the firm wants to obtain coverage for those occasions. The symbol the firm should select in this case is
Symbol 9
Which of the following is NOT a condition that must be met in order for worldwide liability coverage of rental vehicles to apply?
The insured's responsibility to pay damages must be established on the merits based in the country in which the vehicle is rented - CORRECT ANSWER