Other Coverages and Options
Who are the parties to a bond?
Principal, Obligee, Surety
When Mary decided to sue her neighbor for damages to her yard, she was told to get a bond that would guarantee she would be able to pay court costs and resulting damages if she loses the case. What kind of bond is this?
a cost bond
Which bond is required by a court before allowing one to take the assets of another to satisfy a legal obligation?
attachment bond
If an insured has an umbrella liability policy in addition to his personal auto policy, which would be considered the underlying policy?
auto policy
What type of bond guarantees that a construction contractor will enter into a contract at a set price?
bid bond
A professional who wants coverage for all liability exposures should purchase what form of liability insurance?
commercial general and professional
What type of insurance can be obtained through a surplus lines insurer?
coverage that is unavailable through authorized insurers
What are P&I exclusions?
damage to hull and machinery; commercial towing of other vessels; detention of vessel
Employment practices liability insurance (EPLI) would NOT cover claims arising from
deliberate law violation
Which of the following special liability coverages will provide protection to managers of a corporation for claims arising from a wrongful act committed by the manager while in an official capacity?
directors and officers liability
Employment practices liability insurance (EPLI) would cover claims arising from
discrimination; sexual harassment; wrongful termination
What is another name for liquor liability insurance?
dram shop insurance
Professional liability coverage protects against legal liability resulting from
errors and omissions
Professional liability coverage protects the insured against legal liability resulting from
errors and omissions
Which of the following is NOT a P&I exclusion?
excess coverage
What type of coverage do umbrella policies provide?
excess coverage over an underlying or primary policy
All of the following situations would be covered under a professional liability policy
failure of a doctor to render the quality of care that is customary in the medical filed; an accountant's errors that inflated a bid and caused a client to lose a major account; negligence of an architect who designed an unsafe building
A specialized type of insurance that guarantees the faithful performance of a trustee of employee benefit plans is called a
fiduciary liability insurance
Which bonds are required by courts whenever someone seeks a court order stating that another person must or must not do something?
injunction bonds
Which of the following statements is true regarding a personal umbrella liability policy?
it may cover certain exposures not provided under the primary layer; it may require the payment of a self-insured retention; it provides excess liability coverage over underlying personal liability
Which of the following statements is NOT true regarding a personal umbrella liability policy?
it provides errors and omissions coverage for an agency
An insurance producer fails to obtain automobile insurance for a client after agreeing to do so. The client is involved in an automobile accident after running a red light and is found to be at fault. The damage to the other vehicle totals $5,000. Which statement regarding the producer's errors and omissions liability policy is true?
it would provide coverage because the damage to the client resulted from the producer's negligence
Which of the following statements concerning ocean marine insurance is correct?
liability coverage provided by an ocean marine policy is called protection and indemnity coverage; it is used to provide protection to oceangoing vessels and cargo; hull and cargo insurance may be written either named peril or all risk
A boatowners policy does cover
liability; medical payments; damage to the boat and trailer
An individual has started a construction business and plans to specialize in remodeling and rewriting residential properties. Because the city where he is located and where he plans to operate the business has building codes, he will need to obtain a:
license and permit bond
A municipality can protect itself against the construction or repair of properties that do not conform to the building codes established by ordinance by requiring the contractors to obtain
license and permit bonds
Which of the following is NOT a contract bond?
litigation bond (a court bond)
The type of professional liability coverage a medical doctor needs is
malpractice coverage
A boatowners policy does NOT cover
nuclear hazards
Which Surety bond guarantees that bills for labor and materials will be paid by the contractor as they are due?
payment bond
Section I of a boatowners policy covers
physical damage
Which professional liability form provides coverage for liability arising out of errors or mistakes made in rendering medical services?
physicians, surgeons, and dentists malpractice
Which of the following statements is INCORRECT with regard to surplus line insurance?
policies written by a surplus lines insurer typically contain standard coverages and forms
The party to a surety or fidelity bond who promises to fulfill the obligation is the
principal
In a personal umbrella policy, the amount paid by the insured for certain losses not covered under the primary coverage is called
self-insured retention
When an employee benefit pays the premium for a fiduciary liability policy, what provision must be included in that policy?
subrogation
When an employee benefit plan pays the premium for a fiduciary liability policy, what provision must be included in that policy?
subrogation
What is the deductible of a commercial liability umbrella policy called?
the SIR (self-insured retention)
All of the following situations would be covered under a professional liability policy EXCEPT
the failure of an attorney to property defend a client due to his personal dislike of the client
In order for a Protection and Indemnity policy to cover a loss which of the following must be true?
the insured must be legally liable for the loss
Which of the following statements would be correct if an insured failed to maintain the underlying limits as required by the personal umbrella policy?
the insured would be responsible for the amount required as underlying limits in the event of a claim
An insured invites his neighbors out for a day on the water in his boat powered with a 150 hp outboard motor. While attempting to tie the boat to dock, his neighbor's hand is broken when caught between the boat and dock. What coverage would apply to the broken hand?
the insured's boatowners policy
All are true if a contractor defaults on a performance contract EXCEPT
the surety may cancel the bond so as to avoid having to pay losses and expenses
All are true if a contractor defaults on a performance contract
the surety will attempt to seek reimbursement from the contractor for any amount it pays; the obligee may hire another contractor to complete the job and have the surety repay the obligee; the principal's obligations end
Which of the following statements concerning ocean marine insurance is INCORRECT?
the underwriting of ocean marine insurance is relatively new
Which of the following statements is correct with regard to surplus line insurance?
to sell surplus lines insurance, the licensee must obtain a surplus lines broker's license; before coverage is placed with a surplus lines company, diligent effort must be made to place the risk with admitted insurers; business based with a surplus lines insurer is subject to a premium tax that must be collected by the broker
How much coverage can be available for watercraft damage in the homeowners policy?
up to $1,500
When does a business need to purchase a liquor liability policy?
when it is in business of manufacturing, distributing, serving, or furnishing alcoholic beverages
As you leave the dock in your yacht, you carelessly cut in front of another yacht, causing its crew to change course. They run into a buoy damaging their boat. What coverage takes care of the damages?
your P&I
