Intro to P&C: Assignment Nine - Commercial Liability Insurance

True

(T/F) Medical payments coverage pays regardless of whether the insured is legally liable. Therefore, it is not technically liability insurance, even though it is commonly included in liability insurance policies.

Liability

A ____ loss exposure entails the possibility of one party becoming legally liable for injury or harm to another party.

Umbrella Liability

A commercial ____ ____ policy provides limits of insurance that apply in addition to the limits of the insured's primary liability policies, including CGL, commercial auto, employers liability, and possibly other liability policies.

Hold-harmless agreement (or indemnity agreement)

A contractual provision that obligates one of the parties to assume the legal liability of another party.

Commercial General Liability Coverage Form

A coverage form commonly used for insuring an organization's premises and operations liability loss exposures and products and completed operations liability loss exposures.

Business Auto Coverage Form

A coverage form, filed by ISO, that covers liability arising out of the ownership, maintenance, or use of autos and physical damage to autos owned, leased, or hired by the named insured.

Slander

A defamatory statement expressed by speech.

Libel

A defamatory statement expressed in writing.

Products liability exposure

A manufacturer's or seller's exposure to liability for harm suffered by a buyer, user, or bystander as a result of a defective product.

Workers compensation statute

A statute that obligates employers, regardless of fault, to pay specified medical, disability, rehabilitation, and death benefits for their employees' job-related injuries and diseases.

Statute

A written law passed by a legislative body at either the federal or state level.

A. Coverage A—Bodily Injury and Property Damage Liability of ABC's commercial general liability (CGL) policy

ABC Company (ABC) manufactures welding torches and sells them to contractors. One of the torches used by a contractor malfunctions and causes a fire that destroys a building under construction. Which one of the following would cover ABC against a subsequent products liability claim for the fire loss? A. Coverage A—Bodily Injury and Property Damage Liability of ABC's commercial general liability (CGL) policy B. ABC's employers liability insurance C. Coverage B—Personal and Advertising Injury Liability of ABC's commercial general liability (CGL) policy D. ABC's premises liability insurance

C. Tool repair costs

All of the following are payable under workers compensation, EXCEPT: A. Lost wages B. Medical costs C. Tool repair costs D. Disability income

D. Coverage B - Personal and Advertising Injury Liability of the Commercial General Liability (CGL) Coverage Form

An architect makes false statements about one of his competitors, who sues him for slander. Which one of the following would cover the architect for a loss arising out of this situation? A. Coverage A - Bodily Injury and Property Damage Liability of the Commercial General Liability (CGL) Coverage Form. B. Employers liability insurance C. Operations liability insurance D. Coverage B - Personal and Advertising Injury Liability of the Commercial General Liability (CGL) Coverage Form

D. Premises liability loss exposure.

An icy parking lot that has not been tended to by the owner is an example of a(n) A. Completed operations liability loss exposure. B. Operations liability loss exposure. C. Products liability loss exposure. D. Premises liability loss exposure.

Loss Exposures

Commercial liability ____ ____ can arise from a business's premises, operations, products, completed work, automobiles, and employees; they can vary substantially based on factors such as a business's type of operations, location, products or services provided, and number of employees.

C. Products and completed operations liability.

Coverage A-Bodily Injury and Property Damage Liability of a Commercial General Liability (CGL) Coverage Form insures two general categories of loss exposures. One is premises and operations liability and the other is A. Medical payments. B. Personal injury liability. C. Products and completed operations liability. D. Advertising liability.

A

Coverage ____ insures two general categories of loss exposures: - Premises and operations liability - Products and completed operations liability

Drop-down coverage

Coverage provided by many umbrella liability policies for (1) claims not covered at all by the underlying policies and (2) claims that are not covered by an underlying policy only because the underlying policy's aggregate limits have been depleted.

A. Monetary award to the injured party for loss or injury.

For liability loss exposures, damages are a: A. Monetary award to the injured party for loss or injury. B. Financial consequence to the insured based on loss of reputation. C. Type of tort. D. Basis for legal liability.

Damages

If a court finds that a person or an organization making a liability claim has sustained some definite injury or harm, it may require the legally liable party to pay ____ to the injured party. The accused party might also incur costs to defend itself in court and suffer other consequences, such as loss of reputation, that have financial ramifications.

C

In Coverage ____ of the CGL, the insurer agrees to pay medical expenses for bodily injury caused by an accident occurring on the insured's premises. The insurer also agrees to pay medical expenses for bodily injury caused by an accident that occurs away from the insured's premises (for example, at a job site where the insured is working) if the accident results from the named insured's operations.

A

In Coverage ____ of the CGL, the insurer agrees to pay those sums that the insured becomes legally obligated to pay as damages because of bodily injury or property damage to which the insurance applies. The insurer also agrees to defend the insured against claims or suits seeking damages covered under the policy.

B

In Coverage ____ of the CGL, the insurer agrees to pay those sums that the insured becomes legally obligated to pay as damages because of personal and advertising injury to which the insurance applies. The insurer also agrees to defend the insured against claims or suits seeking damages covered under the policy.

Personal and advertising injury

Injury that is covered by Coverage B of the CGL and includes injury resulting from numerous offenses, such as false detention, malicious prosecution, wrongful eviction, slander, libel, use of another's advertising idea, and copyright infringement.

Workers compensation and employers liability insurance

Insurance that covers (1) benefits an employer is obligated to pay under workers compensation laws and (2) employee injury claims made against the employer that are not covered by workers compensation laws.

A. Commercial general liability

Kate, a customer of Real Estate Broker (REB), was injured when she slipped and fell on a wet hallway floor in REB's office. Kate's losses resulting from the accident consisted of $5,000 in medical expenses and $30,000 in lost wages. Assuming that REB was legally liable for Kate's losses, which one of REB's coverages would be the most likely to cover REB's liability to Kate? A. Commercial general liability B. Commercial auto C. Workers compensation and employers liability D. Commercial umbrella

Damages

Money claimed by, or a monetary award to, a party who has suffered bodily injury or property damage for which another party is legally responsible.

Products & Completed Operations

The ____ & ____ ____ liability loss exposure entails the possibility that an organization will be held liable because of bodily injury or property damage arising out of products sold or distributed by the insured or arising out of operations that the insured has completed or abandoned.

Business Auto Coverage Form

The ____ ____ ____ ____ is widely used to meet the auto liability insurance needs of most organizations. These organizations may also use this form for other auto coverages, such as auto physical damage, auto medical payments, and uninsured motorists.

Premises and Operations

The ____ and ____ liability loss exposure entails the possibility that an organization will be held liable because of bodily injury or property damage caused either by an accident occurring on premises (land, buildings, or other structures) owned, leased, or rented by the organization, or caused by an accident occurring away from such premises, but only if it arises out of the organization's ongoing (as opposed to completed) operations.

A. Meal expenses

The benefits that workers compensation laws require employers to pay include all of the following, EXCEPT: A. Meal expenses B. Medical expenses C. Disability income D. Rehabilitation benefits

Tort law

The branch of civil law that deals with civil wrongs other than breaches of contract.

Tort

The central concern of ____ law is determining liability for injury or loss.

Completed operations liability exposure

The exposure to liability for bodily injury or property damage arising out of the insured's completed work.

Premises liability loss exposure

The exposure to liability for bodily injury or property damage due to the ownership, occupancy, or use of the premises.

Operations liability exposure

The exposure to liability for bodily injury or property damage resulting from the insured's ongoing business activities, as opposed to the insured's completed operations.

Negligence

The failure to exercise the degree of care that a reasonable person in a similar situation would exercise to avoid harming others.

A. Limits of insurance that apply in addition to those of the insured's primary policies.

The main purpose of umbrella liability insurance is to provide A. Limits of insurance that apply in addition to those of the insured's primary policies. B. Unlimited medical expense coverage. C. Adequate limits of insurance for workers compensation benefits. D. Disability income benefits.

Negligence

The most common tort is ____.

Workers Compensation and Employers Liability Insurance Policy (WC&EL policy)

The policy used in most states to provide workers compensation and employers liability insurance.

B. Ongoing operations.

The premises and operations liability loss exposure includes accidents that occur away from an insured's premises, but only if the accident arises out of the insured's A. Products. B. Ongoing operations. C. Premises. D. Completed operations.

Medical Payments

The purpose of ____ ____ coverage is to provide a modest amount of insurance for settling minor injury cases without requiring a determination of liability. In that sense, the coverage provides a means of making prompt settlements, satisfying potential liability claimants, and avoiding possibly larger liability claims.

False arrest

The seizure or forcible restraint of a person without legal authority.

B. Applies in excess of the primary policies.

Umbrella liability insurance is often referred to as "excess" insurance because it A. Is not needed by most insureds. B. Applies in excess of the primary policies. C. Provides unlimited coverage. D. Often provides broader coverage than the primary policies.

A. Bodily injury.

Under Coverage A of the Commercial General Liability (CGL) Coverage Form, the insurer agrees to pay those sums that the insured becomes legally obligated to pay as damages because of property damage or A. Bodily injury. B. Personal injury. C. Advertising injury. D. Medical injury.

B. Regardless of whether the insured is legally liable.

Under a Commercial General Liability (CGL) Coverage Form, medical payments coverage pays. A. Only if the insured is not legally liable. B. Regardless of whether the insured is legally liable. C. Only if the insured is legally liable. D. Regardless of whether the insured incurs any medical expenses.

D. Resulting loss of use.

Under a Commercial General Liability (CGL) Coverage Form, property damage means physical injury to property and the A. Cost of repairing the property. B. Related premises liability. C. Cost of defending claims for property damage. D. Resulting loss of use.

B. A modest amount of medical expense coverage for settling minor injury cases.

Under a Commercial General Liability (CGL) Coverage Form, the purpose of Coverage C-Medical Payments is to provide A. Unlimited medical expense coverage. B. A modest amount of medical expense coverage for settling minor injury cases. C. Medical expense coverage for injury arising from products. D. Medical expense coverage for injury arising from personal injury.

D. For employee injury not covered by workers compensation statutes.

Virtually all employers purchase workers compensation and employers liability insurance to cover workers compensation benefits and liability A. To employees for advertising injury. B. To employees for property damage. C. For employee injury in which the employee subsequently dies. D. For employee injury not covered by workers compensation statutes.

D. Personal and advertising injury liability coverage

Which one of the following coverages provided by the Commercial General Liability Coverage Form applies to damages for libel? A. Premises and operations liability coverage B. Bodily injury and property damage liability coverage C. Medical payments liability coverage D. Personal and advertising injury liability coverage

C. Injuring others by recklessly driving a car

Which one of the following is a tort? A. Forgetting to pay property taxes B. Robbing a bank C. Injuring others by recklessly driving a car D. Failing to deliver goods on time as agreed under a contract

C. Workers compensation liability

Which one of the following is based solely on liability imposed by statute? A. Completed operations liability B. Automobile liability C. Workers compensation liability D. Employers liability

B. A washing machine manufacturer

Which one of the following is most likely to have a products liability loss exposure? A. A parking lot owner B. A washing machine manufacturer C. A mobile equipment operator D. A lawyer

C. It can be arranged to cover liability arising from autos the insured does not own, lease, or hire but that are used on the insured's behalf.

Which one of the following is true with regard to auto liability coverage under business auto insurance? A. It does not cover liability for injury resulting from faulty maintenance of an auto. B. It covers bodily injury and property damage regardless of whether the insured is legally liable. C. It can be arranged to cover liability arising from autos the insured does not own, lease, or hire but that are used on the insured's behalf. D. Commercial general liability (CGL) insurance and business auto insurance overlap and cover the same auto liability losses.

D. An auto owner can be held legally liable when someone borrows the auto for his or her own purposes.

Which one of the following is true with regard to automobile liability loss exposures? A. Auto liability cannot arise out of the negligent maintenance of an auto. B. An organization cannot be held liable when an employee uses an auto owned by the organization. C. Mobile equipment, such as forklifts and bulldozers, is included in the auto liability category. D. An auto owner can be held legally liable when someone borrows the auto for his or her own purposes.

D. Operations liability exposure

Which one of the following types of liability loss exposures arises from an ongoing activity in addition to the occupancy of property? A. Premises liability exposure B. Products liability exposure C. Completed operations liability exposure D. Operations liability exposure

Personal & Advertising

____ & ____ injury means injury arising out of any of several specified offenses (torts) that could be committed in the course of the insured's operations or advertising activities.

Umbrella Liability

____ ____ coverage is also referred to as "excess" coverage because it applies in excess of the primary coverages.

Completed Operations

____ ____ liability exposure relates to the potential legal liability of a contractor, repairer, or other entity for losses arising from the entity's completed work. For example, completed operations liability could result from a lawsuit filed against a decking construction contractor and alleging injury to persons who had been standing on a backyard wooden deck when it collapsed.

Automobile

____ liability consists of legal responsibility for bodily injury or property damage arising out of the ownership, maintenance, or use of automobiles (cars, trucks, trailers).

Operations

____ liability exposure arises from an ongoing activity in addition to the occupancy of property. For example, a contractor paving a road has an operations liability exposure. If a member of the public is injured as a result of negligent construction activity that occurs while the road is being paved, any resulting liability claim against the contractor is considered to have arisen from this liability exposure.

Premises

____ liability exposure arises from ownership, occupancy, or use of property (the premises). For example, an accident that could lead to a premises liability claim against an organization might involve a visitor being injured because of dangerous conditions on the premises, such as icy walkways, uneven stairs, sharp objects, unguarded machinery, insufficient security, or a fire.

Products

____ liability exposure relates to the potential legal liability of the manufacturer, distributor, or retailer to the user or consumer of a product because of injury or damage resulting from the product. The liability is based on the manufacture, distribution, or sale of an unsafe, dangerous, or defective product and the failure of the manufacturer, distributor, or retailer to meet the legal duties associated with that product.

Workers compensation and employers liability insurance

pays injured workers the benefits required by workers compensation laws and, in cases to which workers compensation laws do not apply, covers insured employers in the event of lawsuits brought by employees for occupational injuries or diseases.