AD BANKER AL P&C CH 12 Misc. Commercial Policies

To cover all employees on one Fidelity Bond, you would use a(n): A. Blanket bond B. Individual bond C. Schedule bond D. Surety bond

A. A Blanket bond would be used to cover all employees on a blanket basis and is written on a per occurrence basis. One bond covers all. There are two types: Commercial Blanket bond and Blanket Position bond.

Which of the following are considered to be covered property under an Equipment Breakdown Protection Coverage Form? A. Both answers B. Neither answer C. Property that the insured owns D. Property that is in the insured's care, custody or control and for which the insured is legally liable

A. Covered Property includes property that the insured owns or property that is in the insured's care, custody, or control, and for which the insured is legally liable.

The Ocean Marine policy is written as a: A. Package policy B. Manuscripted policy C. Filed policy D. Standard policy

B. A Manuscripted policy is considered to be 'Not Filed'. Not filed simply means not filed with the Department of Insurance. These are considered 'Write your Own' policies, company specific, custom built.

Which of the following perils is not insured under a professional liability insurance policy? A. Government investigation B. Cyber risks C. Discrimination D. Fraud

C. Other covered perils include conflict of interest, malpractice, neglect, errors and omissions, and breach of contract.

Which of the following bonds is not a type of Fidelity Bond? A. Individual B. Name Schedule C. Blanket D. Labor

D. A Court Bond is a Surety Bond required by the court to enforce certain behavior.

All of the following underlying coverages must be purchased in order to qualify for the Umbrella and Excess Liability policy, EXCEPT: A. CGL B. Employer's Liability C. Liquor Liability D. Workers' Compensation

D. Commercial Auto Liability is also a required underlying coverage to qualify for the Umbrella policy.

The Farm Liability Insurance policy covers each of the following, except: A. Coverage H - Bodily Injury and Property Damage B. Coverage I - Personal and Advertising Injury C. Coverage J - Medical Payments D. Coverage K - Non-farming Liability

D. There is no Coverage K.

An insurance agent who needs insurance for his or her professional liability exposure should purchase: A. An Errors and Omissions policy B. A Businessowners policy with a fiduciary liability endorsement C. A Voluntary Workers' Compensation policy with a professional liability extension of coverage added D. A Commercial Umbrella policy

A. Errors and Omissions insurance provides coverage against claims of negligent acts when performing duties for another that are associated with an individuals profession such as, Agents, Brokers, etc. E & O Insurance is not provided under a BOP, Workers' Compensation or Commercial Umbrella.

Under Ocean Marine Coverage, breach of each of the following implied warranties will void the contract, except: A. Express B. Legality C. Seaworthiness D. No deviation in voyage

A. Express warranties are those that are written into the policy contract.

The Equipment Breakdown Protection Coverage Form does not provide which of the following types of coverage? A. Earth movement damage B. Property damage C. Spoilage damage D. Errors and omissions

A. The types of coverage also include expediting expenses, business income and extra expense, newly acquired premises, ordinance or law, errors and omissions, and brands and labels.

Equipment Breakdown coverage losses are settled on what basis? A. Machine Value B. Replacement Cost C. ACV D. Market Value

B. Everything is paid at Replacement Cost (R/C) in the Equipment Breakdown (Boiler and Machinery) coverage form, unless the ACV Endorsement is attached to change the valuation to ACV.

In Commercial Ocean Marine Insurance, what is another name for liability coverage? A. Collision or Running Down Clause B. Protection and Indemnity C. Ocean marine casualty D. Marine keepers liability

B. In an Ocean Marine policy another name for Liability Coverage is called: 'Protection and Indemnity' coverage. There is no such terms as Marine keepers or Ocean marine casualty. Collision or running down clause is a property term.

Which of the following would NOT be covered by Equipment Breakdown coverage? A. Steam boilers B. Computers, data and media equipment C. Bathroom fixtures D. Refrigeration equipment

C. Bathroom fixtures like toilets, sinks, etc. would be covered under property coverage, not equipment breakdown. Steam boilers, air conditioners and other refrigeration equipment, and data and media equipment like computers would all be covered.

According to the Nationwide Definition, imports and exports are: A. Eligible for Inland Marine Policies only B. Covered on a specific Import/Export Commercial Policy C. Eligible for Ocean Marine insurance D. Eligible to be written under any part of the Commercial Package Policy

C. The Nationwide Marine Definition defines the types of risks that are marine risks and transportation risks as opposed to those that are fire risks. Import and exports are considered to be marine risks and therefore would be covered un an Ocean Marine Policy only.

All of the following are indirect loss coverages available under the Equipment Breakdown coverage form, EXCEPT: A. Expediting expenses B. Spoilage C. Business income D. Bodily Injury

D. Bodily injury is liability coverage and is not referred to as an indirect loss. Spoilage, Business income, and Expediting expenses all occur as a result of a direct loss to property, therefore are considered indirect or consequential losses.

Which IS true concerning the terms Cargo and Freight? A. Freight is the property being shipped and Cargo is the cost of the shipment B. Neither answer C. Both answers D. Cargo is the property being shipped and freight is the cost of the shipment

D. Cargo is property being shipped and Freight is the shipping cost.

Fidelity bonds may be written to cover employee theft in which of the following types? A. Industrial, Commercial, Group B. Industrial, Position, Multiple Group C. Individual, Named Scheduled, Blanket D. Individual, Fiduciary, Executor

C. Fidelity bonds may be written on the following basis: Individual, Name Scheduled, Blanket, Commercial Blanket, Scheduled Position & Blanket Position.

Individuals who are appointed by the court to manage the property of another might require what kind of bond? A. Fidelity bond B. Contract bond C. Fiduciary bond D. Judicial bond

C. Fiduciary bonds are commonly used to bond persons appointed by a court of law to manage the property of others. Example: An Executors bond is a type of Fiduciary bond that is issued to the executor of a persons will. This bond guarantees that the executor will complete the probating of the will as stipulated in the will. Fiduciary bonds fall under the category of Court/Judicial bonds, Contract bonds are performance bonds, Fidelity bonds are a type of honesty bond.

Which of the following is not an Aviation Insurance Cause of Loss? A. Ground only B. Ground including taxi C. Ground taxi only D. All risk

C. Ground taxi only is not one of the three causes of loss.

The Farm Property Coverage form can insure all of the following, EXCEPT: A. Livestock B. Vehicles C. Growing Crops D. Dwellings

C. Growing crops are not covered under a Farm policy coverage form. Crop insurance may be purchased separately. Farm coverage provides coverage for personal and business exposures to loss. Vehicles are covered under Coverage E - Scheduled Farm Personal Property. Livestock coverage is available under Farm coverage.

Inland Marine policies are frequently used to cover all of the following, EXCEPT: A. Off premises business personal property B. Off premises mobile equipment C. Structures D. Property held by a bailee

C. Inland Marine covers property off premises or the property of others. It is not used to cover buildings or structures.

Under Multi-Peril Crop Insurance, all of the following would be considered small grain crops, EXCEPT: A. Rye B. Wheat C. Grain sorghum D. Barley

C. Wheat, barley, oats, rye, and flax are all considered to be small grain crops. Bigger crops like corn, grain sorghum, and soybeans are all large grain crops.

All of the following are Basic Form Perils in a Farm policy, EXCEPT: A. Sinkhole Collapse B. Windstorm or Hail C. Riot or Civil Commotion D. Electrocution of Covered Livestock

D. Electrocution of covered livestock is considered to be a Broad Form Peril in a Farm policy. Wind, Hail, Riot, Civil Commotion, and Sinkhole are all Basic Form perils.

In Ocean Marine insurance, a general average loss is: A. A loss that is general in nature B. None of the answers listed C. A total loss arising from a sacrifice of cargo to save the ship D. A partial loss arising from a sacrifice of cargo to save remaining property

D. In Marine insurance, the term 'average' means a partial loss. A General average loss is a partial loss arising from the sacrifice of cargo to save remaining property or cargo. The loss is shared by all property owners (buyers and sellers, etc.) The other one is called Particular average, whereby only the party that has ownership of the cargo is responsible for the loss.

Which Surety bond guarantees that bills for labor and materials will be paid by the contractor as they are due? A. Payment bond B. Bid bond C. Performance bond D. Lender's bond

A. A Payment Bond is also referred to as a Labor and Material Bond. It guarantees that the contractor will pay his/her bills when due. Bid bonds are used when submitting a bid on a contract to the project owner, it tells the project owner that a performance bond has been approved and will be issued upon the project owner accepting the bid, Lender's bonds are also called completion bonds providing protection for the project owner in the event the contractor borrows money to complete the project and defaults in payment.

All of the following can be covered under the Farm coverage part of the Commercial Package policy, except: A. Growing crops B. Personal liability C. Farm buildings D. Household personal property

A. Growing crops are not covered under a Farm policy coverage form. Crop insurance may be purchased separately. Farm coverage provides coverage for personal and business exposures to loss. Coverages A,B,C & D are identical to a H.O. Policy providing coverage for the household. Farm Coverage C provides coverage for household personal property. Farm Coverage G provides coverage for farm buildings. Farm Coverage I provides personal liability.

The party to a Surety bond who promises to do or not do a specific thing is the: A. Principal B. Surety C. Guarantor D. Executor

A. The principal is also known as the obligor. It is the party that promises to fulfill an obligation. The guarantor is also known as the surety, and is the party that issues the bond and guarantees to the obligee (project owner) that the obligor (contractor) will complete the job as stipulated in the bond. An executor has no affiliation with this type of bond, an executor would use a type of fiduciary bond to complete the probating of a will.

In Surety bonding, which party seeks and pays for the bond? A. Principal B. Executor C. Guarantor D. Obligee

A. There are three parties to a bond. The principal is the party who promises to do or not do a specific thing. The Guarantor or Surety is the bonding company that agrees to be responsible for the loss if the principal does not comply. The obligee is the party that benefits from the bond, the bond provides payment to the obligee if the principal defaults.

Which Ocean Marine coverage describes an 'Indirect Loss' that provides coverage for the shipper who has to pre pay shipping charges and/or import duties in the event the voyage is not completed or the goods have been damaged in route? A. General Average B. Freight Insurance C. Hull Insurance D. Cargo Insurance

B. Freight Insurance is an 'Indirect Loss Coverage' that provides coverage to the shipper who has pre-paid shipping charges. This provides a refund of pre-paid shipping charges if the voyage is not completed or the goods are damaged in route.

What type of insurance covers cargo? A. Business personal property policy B. Marine policy C. Business policy D. Personal property policy

B. Marine policies are used to insure moving property such as cargo being shipped. Examples: Inland Marine and Ocean Marine are both considered Marine policies.

Protection and Indemnity (P&I) Insurance is similar to which of the following coverages? A. Physical damage B. Liability C. Uninsured motorist D. Medical payments

B. Protection and Indemnity, or P&I, is purchased by the ship owner to protect against cargo lost due to the insured's negligence, damage to other property when not caused by collision, damage to property on board caused by collision, and injuries to seamen resulting in unworthiness of the vessel.

Which of the following losses to covered equipment would be covered under the Equipment Breakdown Protection coverage form? A. Damage caused by hail B. Damage from an explosion caused by the centrifugal force of moving parts C. Damage caused by wind D. Damage caused by nuclear hazard

B. The Equipment Breakdown Protection coverage form excludes MOST explosions; however, an exception is made for explosions caused by centrifugal force. Wind, Fire, and Nuclear Hazard are all considered exclusions.

Bonds are contracts that involve all of the following parties, EXCEPT: A. Obligee B. Director C. Surety D. Principal

B. The insurance company issuing the bond is the surety or guarantor, the party owing the duty is the principal or obligor, and the party who is paid by the surety if the principal fails to perform is the obligee.

Which of the following is covered under the Electronic Data Processing Floater? A. Laptops B. Printers C. Accounts and records D. Notebooks

B. Also covered are computers and their components and systems used exclusively in the insured's computer operation, such as air conditioning or electrical equipment; the other choices are exclusions.

Under an Ocean Marine contract, dumping cargo to save the ship is called which of the following? A. Discarding B. Piracy C. Jettison D. Barratry

C. Jettison is the term used to describe the dumping of cargo overboard to save the ship and/or the remaining cargo.

The Contractor's Equipment Floater requires that newly acquired equipment must be reported by the insured to the insurance company within: A. 90 days B. 45 days C. 60 days D. 30 days

C. Most every newly acquired item already insured in this book is required to be reported within 30 days, EXCEPT: for fine arts, which is 90 days, with one EXCEPTION: Contractors Equipment, which is 60 days.

Which of the implied warranties does an Ocean Marine policy require that the ship be safe to sail and that the ship have a competent crew? A. No Deviation in Voyage B. Inchmaree Clause C. Seaworthiness D. Legality

C. Seaworthiness is the implied warranty that states the ship must be safe to sail and that it have a competent crew.

The Controlled Inland Marine Coverage forms provide insurance for which of the following? A. Builders risk B. Transportation floater C. Signs D. Installation floater

C. Signs, accounts receivable, commercial articles floater, jewelers block coverage, valuable paper and records, and equipment dealers coverage are controlled, or filed, forms; the other choices are uncontrolled, or unfiled forms and also include contractors equipment, electronic data processing, and installation floaters.

In the Equipment Breakdown Protection coverage form, coverage for business income, spoilage damage, and utility interruption is: A. Provided as an extension of coverage, but for coverage to apply the insured must maintain 80% coinsurance and the coverage must be indicated on the declarations page B. Automatically provided if the insured maintains at least 80% coinsurance throughout the policy period and at the time of loss C. Provided if the insured has selected these coverages in the Declarations D. Not provided at all

C. The Equipment Breakdown Protection coverage form provides many additional coverages including Business Income, Spoilage Damage, Utility Interruption, etc. provided either a specified limit or the word INCLUDED is shown for that coverage in the policy's declarations page. There is no coinsurance requirement specified and these additional coverages are not automatically included.

Under the Equipment Breakdown Protection Coverage Form, the __________________ condition will apply if the covered equipment is subject to a dangerous exposure. A. Cancellation B. Period of restoration C. Suspension D. Covered property

C. The Suspension condition allows the insurance company to immediately suspend coverage against the loss.

In Fidelity bonds, the party to whom the promise is made and for whose protection the bond is written is the: A. Obligor B. Guarantor C. Obligee D. Surety

C. There are three parties to a bond. The obligee is the party in which the bond is written to protect. If the principal defaults, the bond company (surety) guarantees payment to the obligee. The principal (obligor) is the party who promises to do or not do a specific thing. The surety (guarantor) is the party who agrees to be responsible for loss that results if the principal (obligor) does not fulfill their promise.

Which peril is excluded on the Crop and Hail Insurance policy? A. Drought B. Freezing C. Wildlife D. Insects and disease

C. This policy also excludes failure to harvest a mature crop, share cropping, loss from injury to buds, blossoms, blooms, leaves, and vines unless the crop is affected.

The insured, Lefty's Bar, wants coverage for liability arising out of selling and serving alcoholic beverages. Such coverage can be provided by purchasing: A. A standard Businessowners Liability policy with no endorsements attached B. A standard Commercial General Liability coverage form with no endorsements attached C. A personal liability supplement D. A Liquor Liability coverage form

D. The Liquor Liability coverage form is specifically designed for insureds who are in the business of selling and servicing alcoholic beverages. Liquor Liability is excluded on Commercial General Liability and Businessowners Liability coverage forms, therefore a Liquor Liability endorsement is required to provide coverage. Liquor Liability is also known as Dram Shop Liability. A personal liability supplement is used in a Dwelling policy.

The Nationwide Marine Definition includes all of the following classes of property, except: A. Imports B. Personal Property Floaters C. Instrumentalities of Transportation D. Umbrella

D. The other three classes are exports, domestic shipments and property in transit, and commercial property floater.

Which of the following is not a Coverage in covered under the Farm Property Coverage form? A. Coverage E - Scheduled Farm Personal Property B. Coverage F - Unscheduled Farm Personal Property C. Coverage G - Other Farm Structures D. Coverage H - Livestock

D. Coverage H is bodily injury and property damage liability.