4 - B Commercial General Liability_Revised

Jerome was shopping at ABC Imports when a light fixture fell from the ceiling and hit him on the head. Jerome's injuries resulted in an extended hospital stay, so he sued ABC Imports and was awarded $400,000. Assuming ABC Imports carries a CGL with a General Aggregate of $750,000 and a Per Occurrence limit of $250,000, how much will ABC Imports have to pay out-of-pocket? A. $150,000 B. $400,000 C. $250,000 D. $0

A. $150,000

Jerome was shopping at ABC Imports when a light fixture fell from the ceiling and hit him on the head. Jerome's injuries resulted in an extended hospital stay, so he sued ABC Imports and was awarded $400,000. Assuming ABC Imports carries a CGL with a General Aggregate of $750,000 and a Per Occurrence limit of $250,000, what will the new General Aggregate Limit be after this claim is paid? A. $500,000 B. $750,000 C. $250,000 D. $350,000

A. $500,000

Coverage B - Personal and Advertising Injury in a CGL policy will cover all of the following, EXCEPT: A. A professional advertising firm knowingly publishes untrue statements about a company. B. A shop owner accuses an innocent person of shoplifting. C. A landlord uses improper means to repossess an apartment from a tenant. D. A children's clothing manufacturer uses the image of a popular cartoon character in its advertisements without permission.

A. A professional advertising firm knowingly publishes untrue statements about a company.

ABC Homebuilders hires Frank's Roofing to work on several units in its new subdivision. While roofing one of the homes, a worker drops a bag of nails onto a neighbor's AC unit. Some nails fall inside, destroying the unit. Who is ultimately responsible for the damage done to the air conditioning unit? A. ABC Homebuilders B. ABC Homebuilders & Frank's Roofing are each 50% responsible C. The owner of the AC unit D. Frank's Roofing

A. ABC Homebuilders

A Commercial General Liability policy could protect a business in all of the following situations, EXCEPT: A. An employee moving a pallet of plasma televisions accidentally hits the brakes. The pallet falls, destroying the stack of televisions. B. A consumer purchases an appliance from XYZ Company. When the consumer plugs in the appliance, it catches on fire and burns down the consumer's kitchen. C. An employee gets in a fight with a customer and tackles the customer to the floor, causing serious back injuries to the customer. D. A woman is browsing through an antique store when a shelf collapses on top of her, causing her serious injuries.

A. An employee moving a pallet of plasma televisions accidentally hits the brakes. The pallet falls, destroying the stack of televisions.

Which of the following is TRUE of the Policy Territory condition of a Commercial General Liability policy? A. CGL policies cover most occurrences only if they happen in the US, Puerto Rico, and Canada. B. CGL policies only cover product liability claims where the damage occurred in the US, Puerto Rico, and Canada. C. CGL policies will cover occurrences anywhere in the world, as long as the company's headquarters is based in the US, Puerto Rico, or Canada. D. CGL policies cover product liability claims anywhere in the world, regardless of where the product was made.

A. CGL policies cover most occurrences only if they happen in the US, Puerto Rico, and Canada

All of the following are coverages in a Commercial General Liability policy, EXCEPT: A. Coverage C- Prohibited Substances Liability. B. Coverage A- Bodily Injury and Property Damage Liability. C. Damage to Premises Rented to You. D. Coverage B- Personal and Advertising Injury Liability.

A. Coverage C- Prohibited Substances Liability.

When Sally slips and falls at XYZ Furniture, she injures her back and incurs $145,000 in covered medical expenses. Assuming XYZ Furniture carries a CGL policy with a General Aggregate of $400,000, and a Per Occurrence limit of $100,000, what will the new limits be after paying this claim? A. General Aggregate: $300,000; Per Occurrence: $100,000 B. General Aggregate: $400,000; Per Occurrence: $100,000 C. General Aggregate: $255,000; Per Occurrence: $0 D. General Aggregate: $300,000; Per Occurrence: $0

A. General Aggregate: $300,000; Per Occurrence: $100,000 (The general aggregate is reduced by the amount of the settlement payout ($400,000 - $100,000 = $300,000). The per occurrence limit remains the same for each next occurrence, ($100,000) as long as there is enough in the aggregate to cover each claim.)

In the CGL coverage for Damage to Premises Rented by You, how is the coverage for fire damage different than for other perils? A. In the case of fire, only the rented premises are covered, not personal property. B. Fire damage is excluded. C. Fire damage is only covered if the policyholder has met the coinsurance requirement. D. In the case of fire, coverage is only provided on an ACV basis. All other perils are covered on an RC basis.

A. In the case of fire, only the rented premises are covered, not personal property.

Pat posts a scathing review of a rival business in the local paper. A week later he gets a phone call from the rival company's lawyer saying he will see him in court. According to Pat's CGL, this claim would be considered _____ and may be covered under Coverage B - Personal and Advertising Injury. A. Libel B. Wrongful Entry C. Malicious Prosecution D. Slander

A. Libel

James runs a window washing business and services a lot of the city's large skyscrapers. While out on a job, James accidentally knocks the wash bucket off his scaffold from seven stories up. It lands on a parked car, injuring no one, but causing $12,000 in damage to the vehicle. What type of coverage in James' Commercial General Liability policy would a claim for this damage fall under? A. Operations Liability B. Product Liability C. Premises Liability D. Falling Objects Coverage

A. Operations Liability

When shelving falls on two of Phil's customers at his store, his CGL covers their medical expenses under Medical Payments coverage. Which of the following will tell Phil the most his policy will pay to each injured party? A. Per Occurrence Sub-Limits B. General Aggregate C. Conditions section D. Products—Completed Operations Aggregate

A. Per Occurrence Sub-Limits

Lance slips and falls in the icy parking lot of XYZ Consulting. Under which part of Coverage A in XYZ Consulting's CGL policy would this claim be covered? A. Premises Liability B. Product Liability C. Parking Liability D. Operational Liability

A. Premises Liability

What is the primary difference between the Pollution Liability Coverage-Broad Form and the Pollution Liability Limited Coverage Form? A. The Broad Form pays for pollution clean-up costs, while the Limited Form does not. B. The Broad Form applies only to independent contractors, while the Limited Form applies to the hiring business. C. The Broad Form is cheaper than the Limited Coverage Form. D. The Broad Form covers bodily injury and property damage, while the Limited Form only covers bodily injury.

A. The Broad Form pays for pollution clean-up costs, while the Limited Form does not.

Acme Construction is in charge of building a new subdivision in the city, and hires Jim's Masonry to lay the foundations. As part of the deal, Jim's Masonry is required to purchase Owners & Contractors Protective Liability to protect Acme Construction in the event Jim makes a mistake that results in a liability claim. Who will end up paying the premiums for this additional policy? A.Jim's Masonry B.Acme Construction C.The city, or local municipality D.Jim's Masonry and Acme Construction split the cost

A.Jim's Masonry (The independent contractor (Jim's Masonry) purchases the policy and pays the required premiums.)

Basic Tail Coverage

Adds extra 60 days to report incidents; adds extra 60 days for claims to be made on non-reported incidents (mini tail), adds extra 5 for claims to be made on reported incidents (midi tail), applies automatically for no extra cost, starts when policy period ends, does not reset policy limits, will not cover any claim that is covered by other insurance

Jerome was shopping at ABC Imports when a light fixture fell from the ceiling and hit him on the head. Jerome's injuries resulted in an extended hospital stay, so he sued ABC Imports and was awarded $400,000. Assuming ABC Imports carries a CGL with a General Aggregate of $750,000 and a Per Occurrence limit of $250,000, what will the new Per Occurrence Limit be after this claim is paid? A. $150,000. B. $250,000 C. $0 D. $100,000

B. $250,000

Kelly Supply purchases a claims-made CGL policy with a policy period of March 15, 2005 to March 15, 2006. The retroactive date is established as January 1, 2001. Which of the following events would trigger Kelly Supply's policy to respond? A. The policy would respond to any injury suffered during the policy period. B. A claim filed on May 10, 2005, for an injury suffered on March 1, 2004 C. A claim filed on May 10, 2005, for an injury suffered on November 15, 2000 D. An occurrence on November 2, 2005, regardless of when the claim is filed

B. A claim filed on May 10, 2005, for an injury suffered on March 1, 2004

What is the main purpose of an Owners and Contractors Protective Liability Form that can be added to a CGL policy? A. As opposed to a CGL, it provides Medical Payments coverage to the insured. B. It provides separate insurance coverage for specific jobs performed by an independent contractor. C. It increases the General Aggregate limits on a standard CGL. D. It provides Completed-Operations liability for multiple locations at one time.

B. It provides separate insurance coverage for specific jobs performed by an independent contractor.

A(n) _____ allows an insurer to specifically exclude insurance coverage from a claims-made CGL policy for a product with a spotty safety record. A. Basic Extended Reporting Period B. Laser Beam endorsement C. Insured Contract D. Contractual liability

B. Laser Beam endorsement

Jane, an interior designer, is helping her client Grace choose new curtains and furniture. While at Jane's office, Grace trips on some material and falls, breaking her arm. Which CGL coverage would help pay for Grace's resulting expenses? A. Product Liability B. Medical Payments C. Operations Liability D. Grace's homeowners insurance

B. Medical Payments

Grace purchased a recliner from XYZ Furniture. After getting it home, she decided to try out the new chair. While leaning back, the chair broke and Grace injured her neck. She sued XYZ Furniture and was awarded $300,000. Under which limit in XYZ Furniture's CGL policy would these damages be paid? A. General Liability Limit B. Products-Completed Operations Limit C. General Aggregate Limit D. Negligence Limit

B. Products-Completed Operations Limit

According to the Other Insurance provision in Commercial General Liability policies: A. claims-made forms will always pay out via contribution by equal shares. B. a claims-made form will always pay the excess after an occurrence form. C. an occurrence form will always pay the excess after a claims-made form. D. all CGL policies will cover claims on a pro rata basis.

B. a claims-made form will always pay the excess after an occurrence form.

In a Commercial General Liability policy, the basic extended reporting period is also known as a(n): A. representation. B. tail. C. premium. D. insured contract.

B. tail.

Coverage C - Medical Payments in a CGL policy will ONLY cover claims IF: A. the named insured caused the injuries through negligence. B. the expenses are reported within one year of the occurrence. C. the injured party has been hospitalized for more than 24 hours. D. the expenses are reported within one year of the policy's expiration.

B. the expenses are reported within one year of the occurrence.

ABC Homebuilders hires Frank's Roofing to work on several units in its new subdivision. While roofing one of the homes, a worker drops a bag of nails onto a neighbor's AC unit. Some nails fall inside, destroying the unit. ABC Homebuilders is ultimately responsible for the destruction of the air conditioning unit through: A. personal liability. B. vicarious liability. C. homeowner's liability. D. subcontractor liability.

B. vicarious liability.

Rise & Shine Light Bulb Co. has a claims-made & reported policy that is about to expire, but a customer just filed a liability claim against the company. If Rise & Shine wants to have insurance pay for the damages, it must do which of the following? A.) Rise & Shine must report the claim as soon as possible, even if that means it makes the report after the policy expires. B.) Rise & Shine must report the claim before its policy expires. C.) Rise & Shine is ineligible for coverage unless it has already requested a renewal of its policy in writing. D.) Rise & Shine may report the claim at any point for two years after the policy's expiration date.

B.) Rise & Shine must report the claim before its policy expires. (The claims-made and reported form requires that the insured report the claim or circumstance that could lead to a claim to the insurer before the policy expires.)

When Sally slips and falls at XYZ Furniture, she injures her back and incurs $145,000 in covered medical expenses. Assuming XYZ Furniture carries a CGL policy with a General Aggregate of $400,000, and a Per Occurrence limit of $100,000, how much would XYZ Furniture have to pay out-of-pocket? A. $100,000 B. $0 C. $45,000 D. $145,000

C. $45,000

All of the following would fall under the definition of a "personal injury" in a Commercial General Liability policy, EXCEPT: A. A prominent businessman sues his competitor for slandering him in a TV commercial. B. A woman sues a company, claiming that they sued her for no reason. C. A man is justly fired and files for unemployment benefits from his previous employer. D. A woman sues her landlord for wrongful entry after being evicted from her apartment.

C. A man is justly fired and files for unemployment benefits from his previous employer.

Ark Inc. purchases a CGL policy to protect the company against lawsuits for which they might be found legally liable. Which would NOT be covered by their CGL? A. An employee of Ark Inc. assaults a retailer during a routine delivery. B. A popular product produced by Ark Inc. causes a child to choke. C. An employee drives a forklift into a wall of Ark Inc.'s owned factory, causing it to collapse. D. A woman slips on the floor at Ark Inc. headquarters and breaks both of her arms.

C. An employee drives a forklift into a wall of Ark Inc.'s owned factory, causing it to collapse.

Jimmy's Burger Barn has a pure claims-made policy that is about to expire, but a customer just filed a liability claim against the company. If Jimmy's wants to have insurance pay for the damages, it must do which of the following? A. Jimmy's Burger Barn may report the claim at any point for two years after the policy's expiration date. B. Jimmy's Burger Barn must report the claim before its policy expires. C. Jimmy's Burger Barn must report the claim as soon as possible, even if that means it makes the report after the policy expires. D. Jimmy's Burger Barn is ineligible for coverage unless it has already requested a renewal of its policy in writing.

C. Jimmy's Burger Barn must report the claim as soon as possible, even if that means it makes the report after the policy expires. (The pure claims-made form requires that the claim be made against the insured within the policy period or ERP, but the insured is only required to report the claim to the insurer as soon as possible.)

Tom needs some extra hands to help him lay a concrete foundation. He contacts XYZ Labor to hire some experienced concrete workers who can help him complete the job. Tom will pay XYZ Labor directly and let them handle payroll, taxes, etc. Once they finish with the foundation, Tom won't need their services any longer and XYZ will move on to the next client. Under Tom's CGL policy, which of the following best describes the type of worker Tom is looking for? A. Employees B. Temporary Workers C. Leased Workers D. Volunteer Workers

C. Leased Workers

Wilma works for a professional cleaning service. While cleaning a ceiling fan at a customer's home, she leans too far forward, upsets the step stool, and falls. In an effort to prevent her fall, Wilma grabs the ceiling fan, but just ends up pulling the fan down and leaving a gaping hole in the ceiling. The damage Wilma caused would fall under what coverage in her company's Commercial General Liability policy? A. Premises Liability B. Product Liability C. Operations Liability D. Completed Operations Liability

C. Operations Liability

Which type of CGL coverage would indemnify an insured party for damages resulting from a libel claim? A. Supplementary coverage B. Extra Expense coverage C. Personal and Advertising Injury coverage D. Medical Payments coverage

C. Personal and Advertising Injury coverage

James is expecting a very important client to arrive in an hour so he decides to sweep and wash the floor. James finishes the job in time and goes to look over his bid for the contract one more time. James comes back out to the lobby to find his potential client laid out on the floor, having slipped and fallen. Which type of commercial general liability coverage would indemnify James' client for his injuries? A. Insured Contacts Liability B. Operations Liability C. Premises Liability D. Product Liability

C. Premises Liability

Jim owns a small boutique. Jim forgot to turn off the automatic lawn sprinklers during the frigid winter weather, and when they came on last night, they created a thick layer of ice on his sidewalk. Before he could put salt on the ice, a customer came to the shop, slipped on the ice, and broke her hip. Which type of commercial general liability coverage would provide coverage in this situation? A. Completed Operations Liability B. Product Liability C. Premises Liability D. Mobile Equipment Liability

C. Premises Liability

Which of the following does NOT have a per occurrence sub-limit under the General Aggregate limit of a CGL policy? A. Medical Payments B. Damages to Premises Rented by You C. Product and Completed Operations D. Personal and Advertising Injury

C. Product and Completed Operations

In order for a statement to qualify as libel or slander, which of the following conditions must be met? A. The untruths must be printed or announced in an advertisement. B. A third party must prove a financial loss. C. The statement must be made about a third party. D. There must be intent to defraud.

C. The statement must be made about a third party.

Greg owns a construction business and has been really swamped lately. His friend Chuck is looking to become a claims adjuster, but doesn't have very much construction experience, so Chuck offers to help Greg on the weekends for free. This way Chuck gains his experience, while Greg catches up on work without the additional cost of hiring someone. According to the definitions in Greg's CGL policy, which of the following best describes Chuck? A. Leased Worker B. Part-time Worker C. Volunteer Worker D. Temporary Worker

C. Volunteer Worker

A CGL can protect businesses from claims arising out of all of the following, EXCEPT: A. personal injury. B. damage to a rented premise. C. auto accidents. D. damages caused by contractors.

C. auto accidents.

While going over his CGL policy, Bill pauses on the Declarations page. He finds the usual items: named insured, address, policy period, premiums, and the limits of insurance. But he also finds a retroactive date listed. This tells Bill his policy: A. is a policy from the 1970s. B. is an occurrence policy. C. is a claims-made policy. D. will only pay claims retroactively, meaning the policy must have expired before claims will be paid.

C. is a claims-made policy.

In a CGL policy, the Premises Liability hazard applies to claims arising from an occurrence on: A. the premises rented by the insured. B. the premises owned by the insured. C. the premises owned or rented by the insured. D. a third party's premises.

C. the premises owned or rented by the insured.

For occurrences that are reported during the supplemental extended reporting period, what is the time limit in which a claim must be made in order to be covered by a claims-made CGL policy? A.7 years B.5 years C.None D.2 years

C.) None

Which of the following is NOT subject to the General Aggregate limit in a CGL policy? A.Medical Payments B.Damages to Premises Rented by You C.Product and Completed Operations D.Personal and Advertising Injury

C.Product and Completed Operations (Product and Completed Operations has a separate aggregate limit from all other coverages that fall under the General Aggregate.)

In a CGL policy, the basic extended reporting period provides extended coverage for an "occurrence" transpiring within _____ days of the end of the policy period. A. 360 B. 30 C. 120 D. 60

D. 60

The Commercial General Liability (CGL) could classify all of the following as an "occurrence" except: A. A set of aftermarket brakes fail, leading to a serious automobile accident. B. A baseball bat cracks in half and injures a Little League player. C. A cell phone battery explodes, causing 3rd degree burns to the owner. D. A customer returns a defective bicycle.

D. A customer returns a defective bicycle.

Acme Construction is in charge of building a new subdivision in the city, and hires Jim's Masonry to lay the foundations. As part of the deal, Jim's Masonry is required to purchase Owners & Contractors Protective Liability to protect Acme Construction in the event Jim makes a mistake that results in a liability claim. Who retains ultimate control over the policy? A. Jim's Masonry B. The city C. The insurance agent D. Acme Construction

D. Acme Construction

While attending a free-sample tasting of Craig's Famous Rock Candy, Claire bites into a sample containing an actual rock and breaks a tooth. Which coverage section of Craig's CGL would cover Claire's tooth? A. Coverage B B. Coverage D C. None—there is no provision for Dental Coverage D. Coverage C

D. Coverage C

Who is NOT covered for their legal liability under a CGL? A. Employees B. Managers C. Executives D. Customers

D. Customers

Which of the following is NOT covered by Coverage A of a Commercial General Liability policy without an endorsement? A. Bodily injury to a third party on the insured premises B. Contractual liability for insured contracts C. Damage to property of others caused by employees working outside the insured premises D. Damage caused by pollutants

D. Damage caused by pollutants

ABC Sawmill has a Commercial General Liability policy which includes a $2,000,000 General Aggregate Limit, and a $150,000 Per Occurrence Limit. A covered accident occurs, and the injured party is awarded $150,000. After this unfortunate situation, what are the limits remaining in ABC Sawmill's policy? A. Per Occurrence Limit: $0; General Aggregate Limit: $2,000,000 B. Per Occurrence Limit: $150,000; General Aggregate Limit: $2,000,000 C. Per Occurrence Limit: $0; General Aggregate Limit: $1,850,000 D. Per Occurrence Limit: $150,000; General Aggregate Limit: $1,850,000

D. Per Occurrence Limit: $150,000; General Aggregate Limit: $1,850,000

Charles made a big mistake by using copyrighted material for an advertising campaign. He now has three separate lawsuits pending from using trademarked logos and characters in his advertisements. Where in Charles' CGL will he find the limits of his coverage for Advertising Injury? A. General Aggregate B. Conditions section C. Products—Completed Operations Aggregate D. Per Occurrence Sub-Limits

D. Per Occurrence Sub-Limits

Which of these claims would NOT be covered by Personal and Advertising Injury coverage in a Commercial General Liability policy? A. False arrest B. Wrongful eviction C. Libel D. Physical impairment

D. Physical impairment

ABC Motors produces luxury cars, but lately some of their automobiles have been shipped out with faulty accelerators that stick. One such car was sold to an elderly man who was pulling into a parking space when his car engine suddenly revved to 4,000 RPMs, crashing into a parked car. The resulting damage would fall under what coverage in ABC Motors' Commercial General Liability policy? A. Completed Operations Liability B. Operations Liability C. Premises Liability D. Product Liability

D. Product Liability

Acme Kitchen loses a lawsuit brought by a claimant who suffered injuries resulting from a design flaw in a kitchen knife she purchased. When Acme Kitchen's CGL insurer pays out on the claim, the amount they pay will be subtracted from Acme Kitchen's: A. Per Occurrence aggregate limit. B. Personal Injury and Advertising aggregate limit. C. General aggregate limit. D. Products-Completed Operations aggregate limit.

D. Products-Completed Operations aggregate limit.

Josh is driving through town in the company truck when he misses his turn. He decides just to make a U-turn and double back. Unfortunately, he doesn't see the car coming up alongside of him and the two collide. Josh files a claim with the company's CGL, but the claim is denied because: A. Josh was at fault in the accident. B. a CGL does not cover U-turns. C. Josh was driving a commercial pickup truck. D. a CGL does not cover auto accidents.

D. a CGL does not cover auto accidents.

The retroactive date in the claims-made version of the CGL policy is: A. the latest date an injury can occur for coverage to apply. B. the latest date a claim can be made for coverage to apply. C. the earliest date a claim can be made for coverage to apply. D. the earliest date an injury can occur for coverage to apply.

D. the earliest date an injury can occur for coverage to apply.

Which of the following coverages is NOT subject to a Per Occurrence limit? A.Bodily Injury and Property Damage B.Damages to Premises Rented by You C.Medical Payments D.Personal and Advertising Injury

D.Personal and Advertising Injury

Supplemental Tail Coverage

Extends the window for making a claim (on a reported incident) forever (maxi tail); insured must request coverage and pay the extra premium within 60 days of the policy period; added via endorsement; starts when basic tail ends; resets policy limits; will act as secondary insurance to other insurance