RMI 4224 Exam 2

Per the ISO eligibility rules, which of the following types of buildings would be eligible for coverage under a businessowners policy (BOP)? A) A 30,000 square foot insurance agency. B) A six-story, 120,000 square foot office building C) A seven-story 75,000 square foot office building. D) A 200,000 square foot bakery with annual sales in excess of $6,000,000.

A) A 30,000 square foot insurance agency.

Which of the following statements is/are true? I. One reason workers compensation disability benefits do not pay 100% of a worker's lost wages is to discourage malingering. II. All jurisdictions have a waiting period that delays the start of disability income benefits. The waiting period typically various from 3 to 7 days and functions like a coinsurance clause in a commercial coverage form. A) I only B) II only C) I & II D) Neither I nor II

A) I only

Which of the following statements about the claims-made CGL coverage form's retroactive date is/are true? I. The retroactive date limits coverage for losses that occur before the beginning of the policy period. II. Losses that occur prior to the retroactive date and discovered during the policy period are covered under the claims-made CGL coverage form. A) I only. B) II only. C) Both I & II. D) Neither I nor II.

A) I only.

Which of the following statements concerning workers compensation statutes is/are correct? I. There are typically no deductible or coinsurance payments for medical benefits. II. Injuries to customers injured on the insured's premises are covered. A) I only. B) II only. C) Both I & II. D) Neither I nor II.

A) I only.

Which of the following statements is/are correct? I. The Named Perils Endorsement (BP 10 09) to the Businessowners Coverage Form provides the same causes of loss coverage as the Causes of Loss - Basic Form, plus limited off-premises transit coverage. II. This named perils coverage form is frequently used by businesses because it provides broad coverage at an economical price. A) I only. B) II only. C) Both I & II. D) Neither I nor II.

A) I only.

Which is the most common method employers use to provide workers compensation benefits for their covered workers? A) Purchase of private insurance. B) Purchase of insurance from a state fund. C) Purchase of insurance from a monopolistic state fund. D) Self-insurance.

A) Purchase of private insurance.

What is the legal concept that limits the amount of time a plaintiff has to initiate a lawsuit for negligence against a person the plaintiff contends caused the plaintiff's injuries/damages? A) Statute of limitations. B) Statute of perpetuities. C) Statute of liberty. D) Statute of frauds.

A) Statute of limitations.

The combination of the following three symbols: Symbol 2 - Owned Autos Only Symbol 8 - Hired Autos Only Symbol 9 - Nonowned Autos Only Is the equivalent of which one of the following symbols under the Business Auto Coverage Form? A) Symbol 1 - Any Auto B) Symbol 3 - Owned Private Passenger Autos C) Symbol 4 - Owned Autos Other Than Private Passenger Autos Only D) Symbol 5 - Owned Autos Subject to No-Fault

A) Symbol 1 - Any Auto

Which of the following statement(s) concerning GCL limits and submits is/are true (select all that apply)? A) The CGL has annual caps on the amounts that can be paid in addition to caps for each accident/occurrence. B) The CGL has 2 aggregate limits, The General Aggregate Limit and the Products-Completed Operations Aggregate Limit. C) Coverage A, Coverage B, and Coverage C payments are components of the General Aggregate Limit. D) Payments made for Damage to Premises Rented to You do not reduce the General Aggregate Limit.

A,B,&C

Which of the following can be a named insured for the CGL Coverage Form (select all that apply)? A) An individual B) A Joint Venture C) A Limited Liability Corporation D) The spouse of an individual named insured

All apply

The CGL generally excludes coverage for the use of aircraft, autos, or watercraft. Which of the following are circumstances under which the CGL will provide liability coverage to an insured for the use of aircraft, autos, or watercraft (select all that apply)? A) Use of a non-owned 28 foot motorized watercraft to take a business client fishing. B) A watercraft while ashore on premises owned by the named insured. C) An employee of a restaurant you own hits a parked and unoccupied car while valet parking a customer's car. D) Liability assumed under any type of contract for the ownership, maintenance or use of aircraft or watercraft.

B & C

Which of the following is the method used by two insurance carriers sharing the payment of a loss whereby each contributes equally in the payment of the loss until the loss has been paid or their policy limits have been reached? A) Pro Rata B) Contribution by Equal Shares C) Primary/Excess D) Per Stirpes

B) Contribution by Equal Shares

Which one of the following statements is correct regarding the liability coverage under a Business Auto Coverage Form (BACF)? A) Separate coverage limits apply for bodily injury, property damage, and pollution costs. B) Coverage is excluded for any liability resulting from the handling of property after it has been moved from the covered auto to its place of final delivery by the insured. C) Supplementary payments reduce the limit of insurance under the BACF. D) The insurer is only required to defend the insured against legitimate claims or suits.

B) Coverage is excluded for any liability resulting from the handling of property after it has been moved from the covered auto to its place of final delivery by the insured.

Which of the following is a benefit paid by workers compensation? A) Property damages. B) Death benefits. C) Pain and suffering. D) Punitive damages.

B) Death benefits.

The "information page" of the Workers Compensation and Employers Liability Policy is synonymous with which of the following? A) Conditions B) Declarations C) Duties D) Insuring agreement

B) Declarations

Each of the following are examples of occupational diseases covered by workers compensation EXCEPT: A) Black lung disease B) Flu or cold C) Carpal tunnel syndrome D) Silicosis

B) Flu or cold

All of the following types of businesses are ineligible for the ISO BOP due to the severity of risk and/or special coverage situations EXCEPT: A) Auto repairers. B) Funeral homes. C) Bars, pubs and cocktail lounges. D) Financial institutions.

B) Funeral homes.

Which of the following statements is/are true? I. The most commonly utilized CGL Coverage Form provides coverage on a claims-made basis. II. The retroactive reporting date for a claims-made CGL Coverage Form can be the policy's inception date or a date earlier than the policy inception date. A) I only B) II only C) Both I & II D) Neither I nor II

B) II only

Which of the following statements concerning liquor liability coverage provided by the CGL coverage form is/are true? I. The coverage form's exclusion for liquor liability excludes all coverage, no matter the nature of the insured's business, for bodily injuries or property damage that results from an insured causing or contributing to the intoxication of any person. II. Host liquor liability coverage is provided to businesses not engaged in the manufacturing, distribution, selling, serving or furnishing alcoholic beverages. A) I only. B) II only. C) Both I & II. D) Neither I nor II.

B) II only.

Each of the following statements concerning Part Two - Employers Liability Insurance of the Workers Compensation and Employers Liability Insurance Policy are true, EXCEPT A) It provides liability protection to employers for work-related injury claims of employees not covered by workers compensation law. B) It does not include any coverage exclusions. C) It contains an "other insurance" provision. D) It provides coverage for dual capacity claims in states where such claims are permitted.

B) It does not include any coverage exclusions.

Tom and Jerry go to a bar together to watch the Super Bowl. They drink six craft beers each during the game. At the end of the game, Tom offers to drive Jerry home. Despite having both the Uber and Lyft apps on his smart phone, Jerry accepts Tom's offer of a ride home. A short time after leaving the bar, an intoxicated Tom drives off the road and hits a tree. Jerry suffers a broken right ankle and facial abrasions as a result of the passenger side airbag deploying. Jerry retains an attorney and files suit against Tom for bodily injuries sustained as a result of Tom's negligence. What is Tom's best legal defense to Jerry's bodily injury lawsuit? A) Jerry had the last clear chance to avoid getting injured B) Jerry assumed the risk of accepting a ride home from an intoxicated Tom C) A bailor-bailee relationship existed between Tom and Jerry D) Jerry violated the state's Dram Shop Act by drinking beer for several hours with Tom

B) Jerry assumed the risk of accepting a ride home from an intoxicated Tom

Each of the following is covered under the Supplementary Payments - Coverages A and B of the CGL Coverage Form EXCEPT: A) All expenses incurred by the insurer to investigate a loss and defend the insured. B) Medical payments. C) Up to $250 per day of lost income by an insured to take time off from work to attend a trial at the insurer's request. D) Pre-judgment interest awarded against an insured.

B) Medical payments.

Danny, a plumber, signs a contract with a builder to install plumbing in a new residential home. Danny injured his back while installing a bathroom vanity in the new home. Will the home builder's workers compensation policy provide coverage to Danny for his back injury? A) No, because Danny was responsible for causing his back injury. B) No, because Danny is an independent contractor. C) Yes, because Danny was injured while in the course and scope of his employment. D) Yes, because workers compensation statutes impose absolute liability on an employer for injuries sustained by an employee during the course and scope of their employment.

B) No, because Danny is an independent contractor.

What is another name for the process described in the "Transfer of Rights of Recovery Against Others To Us" portion of the CGL Coverage Form? A) Indemnification. B) Subrogation. C) Hold-Harmless. D) Nullification.

B) Subrogation.

All of the following statements concerning BOP Endorsement BP 04 04 are true EXCEPT: A) An insured business with a BOP who doesn't own any autos and does not have a Commercial Auto Policy would benefit from purchasing the Hired Auto and Non-Owned Auto.Liability endorsement. B) The Hired Auto and Non-Owned Auto Liability endorsement is also available under a CGL coverage form. C) Coverage under the Hired Auto and Non-Owned Auto Liability endorsement can be purchased for hired auto liability and/or non-owned auto liability. D) A car rented by the named insured or an employee while on company business is an example of a "hired auto."

B) The Hired Auto and Non-Owned Auto Liability endorsement is also available under a CGL coverage form.

Which federal law provides crew members of a vessel a tort remedy against their employers when they sustain a work-related injury? A) The Smith Act of 1910. B) The Merchant Marine Act of 1920. C) The Edmond Fitzgerald Act of 1976. D) Longshore and Harbor Workers Compensation Act.

B) The Merchant Marine Act of 1920.

When an employee is required to travel to another state, and the employee sustains an injury in the other state during the course and scope of their employment, which of the following is a consideration in determining which state's workers compensation law will apply to the loss? A) The age of the employee at the time of loss. B) The state where the employee was hired. C) The employee's salary at the time of loss. D) The nature of the employee's injury.

B) The state where the employee was hired.

An employer can be held legally liable for the negligent acts of their employee while the employee is in the course and scope of their employment. This is an example of what theory of liability? A) Joint and several liability. B) Vicarious liability. C) Absolute liability. D) Strict liability.

B) Vicarious liability.

Very Good Building & Development Company (VGBDC) is covered under a business auto policy with a $250,000 limit. Donna, an employee of VGBDC, has a personal auto policy with a limit of $100,000. She was driving her own car on company business when she had an accident. The accident resulted in $250,000 of covered damages. Of this amount, VGBDC's business auto policy would pay: A) $0 B) $100,000 C) $150,000 D) $250,000

C) $150,000

Sally, who is insured under a Business Auto Coverage Form (BACF) in the state of Florida, was driving the covered auto in Georgia. Sally's BACF has property damage liability coverage of $10,000 per occurrence. Georgia requires a $25,000 of property damage liability coverage per occurrence. If Sally has an at-fault accident in Georgia which results in $40,000 in property damage, how much would be covered under Sally's BACF? A) $10,000 B) $20,000 C) $25,000 D) $40,000

C) $25,000

Which of the following statements concerning premium calculation for the Workers Compensation and Employers Liability Insurance Policy is true? A) It's costs an insurance company more to service one $100,000 premium policy than it does to service five smaller policies with premiums of $20,000 each. B) An insured's premium level has no bearing on whether they will be eligible for experience rating. C) An experience modification of less than 1 is favorable and more than 1 is unfavorable. D) Job classifications are not a factor in calculating an insured's premium.

C) An experience modification of less than 1 is favorable and more than 1 is unfavorable.

Barbara and Jennifer are both driving eastbound on Gaines Street in separate vehicles on their way to Doak Campbell Stadium to watch the FSU v. Miami game. Barbara's vehicle is directly in front of Jennifer's car. Barbara comes to complete stop at a red light; unfortunately, Jennifer wasn't maintaining a proper lookout and tapped the rear bumper of Barbara's Honda Accord with the front bumper of her Toyota Camry. Since it was a very minor accident and both drivers agreed neither vehicle was damaged as a result of this accident, Barbara and Jennifer didn't call the police and headed to the football game. Two months later, Jennifer was surprised to learn she had been sued by Barbara as a result of this very minor impact auto accident that resulted in no damage to either vehicle. Jennifer's best chance to get this case dismissed is to argue Barbara is unable to prove this required element of a negligence cause of action: A) Jennifer owed no duty of care to Barbara B) Jennifer breached no duty of care owed to Barbara C) Barbara's vehicle didn't sustain any damage as a result of Jennifer's negligence D) Jennifer's failure to maintain a proper lookout was not the proximate cause of the damage to Barbara's vehicle

C) Barbara's vehicle didn't sustain any damage as a result of Jennifer's negligence

Which of the following statements concerning a typical Businessowners Coverage Form is/are correct? I. The causes of loss are contained within the Businessowners Coverage Form; this is in contrast to the B&PP Coverage Form where the Causes of Loss Form is attached to the B&PP. II. The list of property not covered under the BOP is shorter than the list of property not covered under the B&PP Coverage Form. A) I only. B) II only. C) Both I & II. D) Neither I nor II.

C) Both I & II.

Which of the following statements concerning differences between the BOP and CGL policy is/are true? I. The BOP has its own set of conditions contained within the Businessowners Coverage Form while the CGL policy utilizes common policy conditions shared with other coverage forms. II. While the CGL states it provides primary coverage (subject to a few exceptions), the BOP is excess over any other applicable coverage. A) I only B) II only C) Both I & II. D) Neither I nor II.

C) Both I & II.

Which of the following statements concerning premium computation for a Workers Compensation and Employers Liability Insurance Policy is/are true? I. The riskier a job classification, the higher the premium rate is for that job classification. II. The premium rate for a clerical office employee is lower than the premium rate for a salesperson who works/travels outside the office. A) I only. B) II only. C) Both I & II. D) Neither I nor II.

C) Both I & II.

Which of the following statements is/are correct? I. The BOP provides coverage for all buildings and structures located at the premises described in the Declarations; that is, only the premises must be described for any building located at the described premises to be covered. II. The B&PP Coverage Form only provides coverage for buildings or structures specifically described in the Declarations. A) I only. B) II only. C) Both I & II. D) Neither I nor II.

C) Both I & II.

Which of the following statements is/are true? I. Liability coverage for property damage to a customer's property in an insured's care, custody, or control is excluded by both the BACF and Auto Dealers Coverage Form. II. Garagekeepers Coverage provides coverage for an insured's liability for damage to a customer's vehicle in the insured's care, custody, or control. A) I only. B) II only. C) Both I & II. D) Neither I nor II.

C) Both I & II.

Which of the following statements concerning workers compensation statutes is correct? A) Coverage is typically provided to workers employed by the federal government. B) Medical benefits are typically subject to deductibles and coinsurance. C) Disability benefits paid vary greatly by state. D) Burial expenses are never covered.

C) Disability benefits paid vary greatly by state.

Examples of special damages include all of the following EXCEPT: A) The cost to repair a damaged car. B) Lost wages. C) Disfigurement due to permanent scarring. D) Medical bills.

C) Disfigurement due to permanent scarring.

Coverage for damage to a customer's auto being serviced by the insured while in the insured's care, custody or control is referred to as: A) Motor carrier coverage. B) Bailee's coverage. C) Garagekeepers coverage. D) Covered autos liability coverage.

C) Garagekeepers coverage.

Which of the following statement(s) is/are true concerning Hold Harmless/Indemnification Agreements? A) Defined as liability that arises by way of negligence. B) The two parties to this type of arrangement are the bailor and bailee. C) It is a common business practice for one party to contractually assume responsibility for liability of another. D) Assuming responsibility for the liability of another is a fairly low risk activity that only minimally increases exposure to loss.

C) It is a common business practice for one party to contractually assume responsibility for liability of another.

Mary was walking down Aisle 7 of her local grocery store when she tripped and fell over her own two feet. Mary sustained a fractured left elbow and incurred the following bodily injury damages as a result of this incident: Medical Bills - $5,000 Lost Wages - $2,500 Pain and Suffering: $10,000 How will the grocery store's CGL insurer likely respond to Mary's claim? A) Deny the claim as Mary's own negligence was the sole and proximate cause of her injuries. B) Pay Mary $17,500 under Coverage A. C) Pay Mary $5,000 under Coverage C. D) Pay Mary $250 under Supplementary Coverages.

C) Pay Mary $5,000 under Coverage C.

A grocery store employee just finished mopping up some spilled apple juice in aisle 4 but forgot to put up a sign warning that the floor was wet. Shortly thereafter, a customer slipped on the wet floor and injured their knee. This an example of which one of the following types of commercial general liability loss? A) Personal and advertising injury liability. B) Completed operations liability. C) Premises and operations liability. D) Contractual liability.

C) Premises and operations liability.

The termination of a claims-made policy can create years of potential liability exposure for a business without corresponding insurance coverage. Which type of expended reporting period coverage provides the longest coverage for protection against occurrences not reported prior to the policy expiration date? A) Extended Reporting Periods coverage B) Basic Extended Reporting Period (BERP) coverage C) Supplemental Extended Reporting Period (SERP) coverage D) None of the above.

C) Supplemental Extended Reporting Period (SERP) coverage

Which of the following statements concerning the businessowners policy (BOP) is correct? A) Manufacturing businesses are generally eligible for coverage B) It is most commonly used to insure large businesses C) The BOP is designed to provide property and liability coverage for small or less complex businesses. D) Eligibility rules are based on an applicant's loss history.

C) The BOP is designed to provide property and liability coverage for small or less complex businesses.

All of the following statements concerning mobile equipment and the CGL are true EXCEPT: A) Coverage for mobile equipment is generally provided by the CGL. B) Liability coverage for mobile equipment under Coverage A of the CGL is only excluded under two specific circumstances. C) The CGL provides coverage for property damage liability arising out of the use of mobile equipment in a prearranged race. D) The CGL defines mobile equipment to include vehicles that travel on crawler treads.

C) The CGL provides coverage for property damage liability arising out of the use of mobile equipment in a prearranged race.

Which one of the following statements is correct regarding Section III - Physical Damage Coverage of the Business Auto Coverage Form (BACF)? A) The overturn of a business auto would be covered by Specified Causes of Loss Coverage under the policy. B) The coverage limits for temporary transportation expenses are $25 per day up to a maximum of $750 per covered loss. C) The covered vehicle overturned due to collision resulting in a shattered windshield. The only physical damage coverage carried by the insured is comprehensive coverage. The insurer will pay for the damaged windshield under the insured's comprehensive coverage. D) Substitute transportation costs are only covered if the insured auto is disabled due to a collision.

C) The covered vehicle overturned due to collision resulting in a shattered windshield. The only physical damage coverage carried by the insured is comprehensive coverage. The insurer will pay for the damaged windshield under the insured's comprehensive coverage.

Which of the following statements concerning the non-renewal condition of the CGL Coverage Form is true? A) The nonrenewal notice can be sent to any insured listed on the Declarations. B) The nonrenewal notice can be provide either orally or in writing. C) The nonrenewal notice must be sent at least 30 days prior to the policy expiration date. D) Proof of mailing the non-renewal notice is not sufficient proof of notice.

C) The nonrenewal notice must be sent at least 30 days prior to the policy expiration date.

Which of the following statements regarding states which incorporate monopolistic state funds is true? A) The compete with private insurers to sell workers compensation insurance in their state. B) Texas is an example of a state that utilizes a monopolistic state fund approach to providing workers compensation benefits. C) They do not permit any other insurers to sell workers compensation insurance in their state. D) A majority of U.S. states utilize the monopolistic state fund approach to providing insurance compensation benefits.

C) They do not permit any other insurers to sell workers compensation insurance in their state.

XYZ Company is covered under two business auto policies, each one providing primary coverage with the following limits: Policy 1 - $200,000 limit Policy 2 - $50,000 limit If XYZ Company incurs a $60,000 covered loss, how much will be covered under Policy 1 under the Other Insurance provision of the Business Auto Coverage Form? A) $12,000 B) $15,000 C) $45,000 D) $48,000

D) $48,000

The business income and extra expense coverage under a BOP is typically subject to which one of the following limitations? A) Specific dollar limit. B) Coinsurance. C) Monthly limit of indemnity. D) 12 consecutive months limitation.

D) 12 consecutive months limitation.

How many words and/or phrases are specifically defined in the CGL Coverage Form? A) 0. B) 11. C) 14. D) 22.

D) 22.

Compensatory damages include which of the following? A) Special damages. B) General damages. C) Punitive damages. D) A & B only. E) A, B & C.

D) A & B only.

Which of the following is/are reasons for providing a no-fault medical expenses benefit under the CGL? A) Goodwill. B) Reduction of lawsuits. C) The coverage is inexpensive to provide. D) A & B only. E) A, B & C.

D) A & B only.

All of the following are workers exempt from workers compensation laws EXCEPT: A) Domestic workers. B) Agricultural workers. C) Casual laborers. D) A factory worker.

D) A factory worker.

Tom and Jerry are next door neighbors. One night, a tornado touched down in their neighborhood causing a tree on Tom's property to fall onto the roof of Jerry's home. Jerry files suit against Tom for the damage to Jerry's home caused by Tom's fallen tree. What is Tom's best defense to the lawsuit filed by Jerry? A) Contributory negligence. B) Comparative negligence. C) Assumption of risk. D) Act of God/Nature.

D) Act of God/Nature.

Punitive damages are intended to achieve which of the following objective(s)? A) Compensate the victim for their economic and non-economic damages B) Punish the individual or organization responsible for the plaintiff's injuries C) To deter the plaintiff (and others) from engaging in similar willful misconduct in the future. D) B & C only E) A, B & C

D) B & C only

Each of the following statements concerning workers compensation statutes is true EXCEPT A) Prior to the enactment of workers compensation statutes, employees had difficulty receiving compensation for workplace injuries. B) The percentage of wage loss payable varies by U.S. states. C) Coverage is typically not provided to workers employed by the federal government. D) Disability income benefits are not subject to a deductible in the form of a waiting period.

D) Disability income benefits are not subject to a deductible in the form of a waiting period.

In the liability coverage agreement of the business auto policy, the insurer has all of the following duties, EXCEPT: A) Duty to pay covered pollution costs/expenses. B) Duty to pay covered bodily injury and property damage expenses. C) Duty to defend the insured. D) Duty to pay up to $2,500 for bail bond costs.

D) Duty to pay up to $2,500 for bail bond costs.

Which of the following statements concerning workers compensation statutes is/are true? I. Benefits for pain and suffering are typically paid if a worker sustains a life-threatening injury. II. Medical expenses incurred as the result of an injury sustained while commuting to work are covered. A) I only. B) II only. C) Both I & II. D) Neither I nor II.

D) Neither I nor II.

Which of the following statements is/are true? I. One condition of the Workers Compensation and Employers Liability Insurance Policy includes an obligation for the insurer to inspect the named insured's workplace. II. Insurer inspections of an insured's workplace are safety inspections and serve as a warranty the insured's operations are safe and compliant with all safety laws and regulations. A) I only. B) II only. C) Both I and II. D) Neither I nor II.

D) Neither I nor II.

Which one of the following statements is correct regarding conditions contained in the Business Auto Coverage Form? A) The Duties in the Event of Loss condition prevents the named insured from bringing action against the insurer if the insured has failed to comply with the policy provisions. B) The Transfer of Rights Against Others condition states that the insured must cooperate with the insurer in its investigation and defense of the loss. C) The Liberalization condition indicates that coverage will be void if the named insured commits a fraud related to the coverage. D) The Bankruptcy condition states that the bankruptcy or insolvency of the insured will not relieve the insurer of any of its obligations under the policy.

D) The Bankruptcy condition states that the bankruptcy or insolvency of the insured will not relieve the insurer of any of its obligations under the policy.

Which of the following statements concerning the Businessowners Coverage Form Section II - Liability is correct? A) The definition of Products-Completed Operations Hazard found in the BOP is narrowed in comparison to the same definition in the CGL coverage form. B) The definition of the coverage territory for the BOP is different from that of the CGL coverage form. C) Supplemental payments under the BOP differ greatly from supplemental payments provided by the CGL coverage form. D) The Businessowners Liability Section is similar to the CGL Coverage Form in content, but differs in format.

D) The Businessowners Liability Section is similar to the CGL Coverage Form in content, but differs in format.

If a worker from FL is injured in GA, which of the following factors would be considered when determining which state's workers compensation benefits will apply? A) State where the worker was hired. B) State where the worker lives. C) State where the worker primarily works. D) State where the worker was injured. E) All of the above.

E) All of the above.

Which of the following is an element of negligence that must be present in order to successfully establish negligence against an individual or organization? A) Legal duty owed. B) Breach of legal duty. C) Proximate cause. D) Damages. E) All of the above.

E) All of the above.