RMIN 3022 Test 2..

res ipsa loquitur doctrine

"the thing speaks for itself"; applies when injury results that could not have occurred without negligence and without the object causing the injury being within the defendant's exclusive control

A florist hires an electrical contractor to install a new walk-in cooler. While at the florist's premises one of the electrical contractor's employees is injured. The electrical contractor does not carry WC insurance. The injured worker is: A) Entitled to WC benefits under the florist's policy since the worker is a statutory employee. B) Not entitled to WC benefits because the electrical contractor is an independent contractor. C) Entitled to WC benefits under the florist's policy because the worker is a temporary employee of teh florist. D) Not entitled to WC benefits because the florist did not direct the work.

A

A general contractor hires a subcontractor that does not carry the required WC insurance coverage in the state where the work is being performed. If an employee of the subcontractor becomes injured on the job, which one of the following assumptions is correct? A) The injured worker can be deemed a statutory employee of the general contractor and can be eligible for WC benefits from the general contractor. B) The injured worker can bring a tort action against both the general contractor and subcontractor, but the subcontractor will not be able to assert any of its common-law defenses C) Exclusive remedy doctrine holds that the injured worker may only obtain recovery from his/her direct employer, in this case, the subcontractor D) The contractor can only be held responsible for the injured employee's WC benefits if the worker is considered an independent contractor

A

A health club EE is injured while cleaning a locker room at the club and is unable to work for 3 weeks. The EE is expected to make a full recovery and be able to return to work. Which one of the following disability benefits is the EE eligible for? A) Temporary total B) Temporary partial C) Permanent total D) Permanent partial

A

A manufacturer enters into an arrangement with an employment leasing firm to provide clerical help at the manufacturer's facility. The manufacturer is concerned with providing WC coverage for the clerical workers. Which one of the following actions should the manufacturer take to avoid gaps or duplicate coverage in WC? A) The manufacturer should be added to the employee leasing company's WC coverage through an Alternate Employer Endorsement. B) The manufacturer should provide coverage through a Voluntary Compensation and Employers Liability Coverage Endorsement. C) The employee leasing company should be added to the manufacturer's WC coverage through a Leased Employer Endorsement. D) The employee leasing company should provide coverage through a Voluntary Compensation and Employers Liability Coverage Endorsement.

A

A manufacturer prescribes the use of safety goggles for all plan employees. It receives a WC claim from an EE who suffered an eye injury after a piece of metal broke loose on the assembly line and struck him in the right eye. The EE has been working on the assembling line for 15 years and has received multiple warnings for not wearing his safety goggles. Is this claim deemed compensable in most states? A) No, the EE willfully did not wear the protective equipment prescribed B) No, the injury is considered non-accidental C) Yes, the injury is occupational in nature D) Yes, WC is the sole remedy for occupational injuries

A

A mechanic is employed by an instate railroad company. The ER has a WC policy. Which endorsement must be attached to the WC policy in the event that the mechanic is injured while working on the railroad and decides to sue the railroad for negligence? A) Federal ER's Liability Act endorsement B) Defense Base Act endorsement C) Outer Continental Shelf Lands Act D) Non-appropriated Funds Instrumentalities Act

A

A primary difference between the Federal Employees Compensation Act (FECA) and the Federal Employers Liability Act (FELA) is that: A) FELA permits eligible EE's to sue their ER's for negligence B) FECA applies only to EE's of intrastate railroads C) FELA applies only to members of the U.S. military D) FECA permits eligible EE's to sue their ER's for negligence

A

A professional liability claimant recovers an amount of money specified by contract as the reasonable estimation of anticipated damages in the event of a contract breach. The claimant has recovered which one of the following types of contract damages? A) Liquidated. B) Punitive. C) Consequential. D) Nominal.

A

A sailor was injured on a vessel while en-route from California to Hong Kong. The sailor's employer has a WC&EL policy endorsed with the Maritime Coverage Endorsement. Will the WC&EL policy provide coverage for this loss? A) No, the Maritime Coverage Endorsement requires that bodily injury must occur within the territorial limits of, or in the operation of a vessel sailing between the ports of the continental US, Alaska, Hawaii, or Canada. B) Yes, the Maritime Coverage Endorsement provides coverage for bodily injury sustained by the master or member of the crew of a vessel originating in the continental US C) Yes, the Maritime Coverage Endorsement would provide coverage if the injury occurred less than 500 nautical miles from land and the employee was actively engaged in the navigation of the vessel. D) No, the Maritime Coverage Endorsement only applies to employers who have minor or incidental exposures rather than shipowners.

A

A salesperson for a NJ manufacturer resides in PENN. The Salesperson's territory includes PENN as well as DE, MD, and Washington DC. Since the manufacturer's office is in NJ, NJ is the only state listed on the declarations page for the WC policy. While driving back from MD after a business meeting, the salesman gets into a car accident while crossing the Delaware and suffers a back injury. From which one of the following state's statutes can the injured worker seek WC benefits? A) PENN, NJ or DE B) NJ only C) NJ or PENN D) NJ or DE

A

A web designer programs a client's web site with a feature that allows all females to use the site for free without the client's knowledge. The customer notices a loss of revenue and then finds the special feature. The Insurance Policy that would be most appropriate to consider claims against the web designer is the: A) Professional liability policy. B) Commercial general liability (CGL) policy. C) Liability umbrella policy. D) Employment practices liability policy.

A

A woman gets her hair colored at a beauty salon. She is walking to the front desk to pay for her services when she trips over a magazine rack that was moved while the assistant was sweeping the waiting area. She suffers a sprained ankle requiring a trip to the hospital. As the day progresses, her scalp also begins to itch and burn and she realizes clumps of her hair are now falling out. She goes back to the hospital where it is determined to be a reaction to a chemical burn from the hair coloring treatment. She immediately contacts her hairdresser. The salon's CGL policy will most likely: A) Provide coverage for the injury to her ankle, but exclude the injury to her scalp due to it being a professional liability exposure. B) Cover both her ankle injury as well as the scalp injury because both arose out of the operations at the salon's premises. C) Cover her scalp injury but exclude the injury to her ankle because the fracture is not caused by the salon's negligence. D) Cover both her ankle injury as well as the scalp injury because they both meet the CGL's definition of BI.

A

A woman is injured in an auto accident and suffers a right-leg fracture. She is given pain medication in the emergency room (E.R.) and is very drowsy while the doctor puts a cast on her leg. An hour later, she is instructed to get up and start walking. She is given crutches and begins to stand up with the aid of her un-casted leg. The moment she attempts to stand, she collapses to the floor in pain causing her to suffer a concussion. It is discovered that the E.R. doctor put the past on the wrong leg, which caused her fall. The professional liability claim against the physician would be based on: A) Tort action. B) Breach of contract. C) Tort action and breach of contract. D) Violation of statutes.

A

ABC Corporation is insured under a standard unendorsed WC policy for only the state of FL. 3 months before the present policy began, ABC opened a sales office in GA due to business volume growing in that state. ABC failed to report the new location and new state at policy inception. The manager of the GA office fell and was injured and missed work for 3 weeks after the inception of the ABC policy. The manager made claim for GA benefits. Which one of the following is true regarding ABC's coverage for GA benefits? A) Coverage for this claim would not be covered by ABC's insurance. B) Coverage would be provided for FL benefits to the manager under ABC's insurance. C) Coverage would be extended under the All States coverage on the policy. D) Coverage would be extended under the extraterritorial provision of the state law.

A

ABC Insurance Company provided CGL insurance for XYZ Grocery Chain with aggregate annual limits of $2,000,000. XYZ was sured for $5,000,000 by a plaintiff that alleged that she was injured on XYZ's premises when XYZ employees failed to clean up some spilled milk in the dairy aisle. Against the advice of his senior claims manage, the VP of claims at ABC vowed to continue to contest the claim, even after a reasonable settlement offer of $300,000 was made by the plaintiff's attorney. At the conclusion of the trial, a jury awarded the plaintiff $4,500,000. ABC was found to have acted in bad faith in the course of rejecting the $300,000 settlement offer and was ultimately required to pay the full amount of the $4,500,000 judgement. Of the $4,500,000 ABC was eventually required to pay, how much of it would be classified as "extra-contractural damages"? A) $2,500,000 B) $3,000,000 C) $4,200,000 D) $4,500,000

A

ABC Manufacturing is a very large corporation in the state of California. It has been very diligent in controlling its WC claims and minimizing the # of on-the-job injuries. Even with these efforts, its cost of WC insurance continues to rise. Which one of the following would be a suggestion that you might take that would help ABC control its insurance costs? A) Post collateral with the state insurance dept. and begin a self-insurance program B) Begin to purchase WC from the state fund in California C) Obtain its WC insurance coverage from an assigned risk plan D) Purchase insurance from a private insurer/insurance in the voluntary market in the state

A

ABC Plumbing entered into a contract with Bill to install a commercial grade septic system on his property. The installation of the septic system was time sensitive because the rest of Bill's construction project could not go forward until the septic system was in place. The contract required that the work be done within 30 days of contract signing, or ABC would have to pay a penalty of $1,000 per day. Which one of the following categories of damages does the $1,000 per day penalty specified in the contract fall into? A) Liquidated damages B) Nominal damages C) Punitive damages D) Consequential damages

A

Adam works for MHCP, a large health care company. As part of his job, he regularly drives to other MHCP locations. While at these other locations, he stays in a local hotel and eats meals at local restaurants. On his most recent trip, the hotel where he was staying suffered a bad fire. During the fire, Adam was injured and spent 3 days in a hospital. Which one of the following is true regarding WC coverage for Adam in this situation? A) The positional risk doctrine would apply and there would be coverage B) Because Adam picked the hotel, he would be deemed to have assumed the risk and no coverage would apply C) Adam would be considered a statutory EE, and, therefore, coverage would apply D) Because he was not at work, no coverage would apply

A

All of the following circumstances of employment would provide a basis for an injured EE to choose the statute that applies to a particular incident, EXCEPT: A) Place of birth B) Place of injury C) Place of hire D) Place of employment

A

Although professional liability policies for financial and legal professionals contain many of the same provisions of those for other professionals, there are important differences. Which one of the following would be covered under the professional liability policies for financial and legal professionals that contain the broadest definition of professional services? A) Claims arising from any professional services performed for others for a fee B) Claims for BI and PD arising out of actions of the insured C) Loss resulting from investment performance arising out of the insured's actions D) Loss due to gaining profit to which the insured is not legally entitled and must be returned

A

An EE is accidentally injured in the course of employment. The EE was hired in state of WI but was injured while temporarily working on a job in IA. IA is not listed in the policy declarations. The EE would be able to obtain WI WC benefits under the: A) Extraterritorial provision B) Reciprocal agreement C) Place of hire agreement D) Place of injury agreement

A

An EE who lives in Pennsylvania agrees to work for an ER domiciled in New Jersey, but the EE is injured while working in New York. All 3 states are listed in the policy declarations. The state whose laws will apply is this care are: A) Injured EE's choice among the applicable state laws B) Pennsylvania's laws C) New Jersey's laws D) New York's laws

A

An ER requests an EE to stop at a bakery on their way to work in the morning to pick up pastries for an early staff meeting. While waiting in line at the bakery, another customer spills their hot cup of coffee on the EE and the EE is badly burned. Is the burn a compensable injury under most WC statutes? A) Yes, because the EE was conducting a work-related function. B) Yes, because the injury was sudden and accidental. C) No, because the injury did not happen on the ER's premises. D) No, because the injury occurred while commuting to work.

A

An architect retires after a long career designing hotels. 6 months after his retirement and the expiration of his professional liability policy, the architect receives a letter from an attorney advising that his client is suing the architect. The suit indicates the client suffered an injury allegedly caused by the poor design & placement of a glass wall in the lobby of a hotel for which the architect had drawn the plans. The professional liability policy will: A) Provide coverage for the loss under an automatic provision that extends tail coverage to the architect. B) Not provide coverage since the architect is retired and no longer has a current policy. C) Not provide coverage due to a BI exclusion for policies of architects and engineers. D) Provide coverage only if the accident occurred under the observation provision.

A

Damages recoverable for breach of contract can be grouped into various categories. Recovery of the monetary loss actually sustained by a party, due to a breach of contract, would be considered which one of the following type damages? A) Compensatory damages B) Consequential damages C) Liquidated damages D) Nominal damages

A

During surgery, a patient is injured by a hospital employee working at the direction of the operating surgeon. In addition to the hospital and the hospital employee, the surgeon could be held liable under the legal theory known as: A) The borrowed servant. B) The discovery rule. C) Tort reform. D) Informed consent.

A

EC has employed Mike to work in State A. EC works solely in State A and only has State A listed in its WC policy. EC obtains a single small job in the adjoining state B and Mike is injured in state B while working there. What part of the statute or policy will allow Mike to receive State A benefits even though he is injured in state B? A) The extraterritorial provision B) The voluntary compensation endorsement C) The alternate employer endorsement The other states insurance provision

A

Experience rating plans are more common in WC insurance than in many other types of insurance because: A) The higher claim frequency in WC insurance yields loss experience that is more statistically meaningful. B) Experience rating plans do not encourage risk control measures aimed at loss exposures covered by other types of insurance. C) It requires insureds with identical operations to pay the same rate. D) Experience rating plans depend entirely on the insured's own loss experience.

A

For an injury to be compensable and qualify for WC benefits, it must arise out of and in the course of employment. Which one of the following injuries would qualify for WC benefits? A) Sue was injured while sitting at her desk when a personal vehicle ran through the front of the building B) Sue was at lunch at a diner one mile from her workplace when she tripped and fell injuring her leg C) Sue was injured when she broke a tooth in the EE lunch room while eating an apple D) Sue was driving to work as a secretary and was injured in an accident one block from her EE's office

A

Friendship County Hospital has had several unfortunate incidents occur during the last 30 days. Which of the following incidents would be most likely to be covered by Friendship's professional liability insurance? A) Dr. Cameron, a private practitioner who has staff privileges at Friendship, mishandled a simple operation. A lawsuit filed by the injured patient alleged Cameron was unlicensed, and that Friendship should never have let him use the hospital facilities. B) Dr. Bill, who is employed at the hospital as an emergency room physician, was injured when an oxygen tank exploded and had to miss 4 weeks of work. C) Nurse Tom was arrested for selling narcotics that he stole from the hospital pharmacy, and an audit shows that the hospital cannot account for $58,000 worth of drugs. D) John, a patient, decided to sue the hospital because he felt that it over-charged him for his recent appendectomy.

A

In a WC assigned risk plan, the amount of WC business assigned to each licensed insurer is in proportion to the: A) Issuer's share of the voluntary WC market B) Insurer's financial rating C) Insurer's policyholder surplus at the previous year end D) Amount of WC reinsurance purchased

A

In order to obtain WC insurance in an assigned risk plan, an employer (ER) must: A) Demonstrate that it is unable to obtain such coverage in the voluntary market B) Be a member of a self-insured group that has become insolvent C) Implement stringent risk control measures D) Agree to post a surety bond

A

Insurers routinely endorse their CGL policies to exclude professional liability. Which one of the following businesses would be most likely to have professional liability excluded from its CGL policy? A) Medical office B) Flower shop C) Grocery store D) Gas station

A

Many states have funds from which ER's may purchase WC insurance. Such funds may be either: A) Competitive or monopolistic B) Regulated or unregulated C) Competitive or regulated D) Monopolistic or unregulated

A

Professional liability claims against financial and legal professionals and the firms to which they belong can be based on: A) Statutes B) BI C) Psychological injury D) Property damage

A

Professional liability insurance is written on forms developed by individual insurers and as as result may differ considerably. Although they may differ, the policies all provide for: A) Coverage for rendering or failing to render professional services. B) Coverage for the same professional acts and consequences. C) Insurance for the same professional persons and organizations. D) The same coverage territories and policy exclusions.

A

Some of the highest-risk professional liability classifications fall within the field of: A) Healthcare B) Automotive repair C) Retail D) Education

A

The Dept. of the Navy contracts with a US-based engineering firm to build roadways and bridges in Latin America. If any of the engineering firm's employees are injuring during the course of their work for the firm while in Latin America, the employee may claim WC benefits defined by the: A) Defense Base Act (DBA) B) Non-appropriated Fund Instrumentalities Act C) War Hazards Compensation Act D) Federal Employees' Compensation Act

A

The Voluntary Compensation and Employers Liability Coverage endorsement to the WC&EL policy amends the WC&EL policy to: A) Provide coverage for employees who would otherwise be exempt from the state's workers compensation statute B) Voluntarily waive the insurer's right of recovery from anyone liable for a covered injury C) Provide home-state coverage for employees that work outside of the U.S. for longer than the time period specified in the statute D) Extend employers liability coverage to those employers required to provide benefits under the Jones Act

A

The WC&EL Insurance Policy coverage applies differently to employees outside the US. John has been assigned to work in Germany for an unspecified time period but is expected to be there for at least 2 years. Which one of the following is a true statement regarding the coverage for John under the EC&EL? A) A Foreign voluntary endorsement would provide coverage equal to federal compensation benefits. B) The extraterritorial provisions of the statute of the state that John was hired out of would extend coverage. C) John would have to purchase WC coverage from the German government. D) No coverage is available to John but he can sue his employer due to his occupational injury.

A

The War Hazards Compensation Act (WHCA) supplements Defense Base Act (DBA) coverage by having the U.S. gov't: A) Reimburse DBA insurance carriers for losses caused by war-risk hazards B) Compensate insureds directly for losses caused by war-risk hazards C) Exclude coverage for losses caused by war-risk hazards D) Directly administer claims for losses caused by war-risk hazards

A

The claims representative for an insurance carrier failed to properly investigate an employee dishonesty claim and denied the claim without merit. The insured can file a professional liability claim against the insurer on the basis of: A) Bad faith B) Sarbanes-Oxley C) Statutory liability D) Extracontratural damages

A

The main reason that insurance companies commonly exclude professional liability exposures from the CGL is because: A) The skills needed to underwrite exposures and adjust claims arising from professional liability are different from those required for general liability. B) Professional exposures for most insureds are so insignificant that insureds prefer to retain the exposures. C) ISO requires that all CGL policies have a professional liability exclusion. D) They are able to collect more premium by quoting separate policies.

A

To qualify as a self-insurer for WC< an employer (ER) must: A) Post a surety bond or other collateral to guarantee the security of benefit payments B) Be part of a monopolistic state fund C) Join a self-insured group, pool, or trust D) Be able to prove they cannot obtain insurance in the voluntary market

A

Tom often runs errands for his boss at XYZ Company, using the boss' car. On one of these errands, Tom is involved in a serious auto accident. He spends a couple of weeks in the hospital, misses 4 weeks of work, and must undergo physical therapy. Does XYZ's WC&EL Insurance Policy cover Tom's injuries, lost income, and rehabilitation expenses? A) Yes, the WC policy would pay all of Tom's expenses, because his injuries arose out of his employment at XYZ company. B) No, the WC policy would not cover Tom's lost income, because he was not injured at the company facility. C) Yes, the WC policy would pay all of Tom's expenses, but only if he sues his employer. D) No, the WC policy would not apply at all - only the boss' personal auto policy would apply.

A

Tort suits against ER's are still permitted in some instances even when WC benefits may be available. Which one of the following is an example of one of these instances? A) An ER causing an intentional injury B) An EE that falls from more than 50 feet C) An ER that provides automobiles to employees D) An EE that sustains 3rd degree burns

A

Types of damages recoverable under professional liability coverage for breach of contract include: A) Liquidated damages. B) Tort damages. C) Statutory damages. D) Intangible general damages.

A

When an employee lives in one state, but is hurt on the job in another state. Which one of the following options is open to him or her when selecting which state's WC benefits to accept? A) Choosing the benefits from the state that offers the most advantageous compensation B) Choosing benefits from only his/her home state C) Choosing benefits from only the state where the injury occurred D) Choosing a proportionate amount of benefits from each state

A

Which of the following loss exposures would be most likely to be covered by legal professionals liability insurance? A) Liability for financial harm B) Property damage (PD) liability C) Bodily injury (BI) liability D) Liability for punitive damages

A

Which one of the following explains why the same "WC&EL Insurance Policy" is able to be used in all states even though the provisions of the various state laws and the employee benefits have many differences? A) Policy coverage provision refers to "the WC Law of the States listed" B) Even though there are differences, the basic laws and benefits are similar in amount and duration C) All states have accepted the provisions put forth by the National Council on Compensation Insurance (NCCI) D) Although a state-run program, the federal government provides for uniformity between the various states

A

Which one of the following is a factor in determining whether a worker is an independent contractor or EE according to IRS standards? A) Degree of control B) # of hours worked C) Level of wages D) Location

A

Which one of the following is a method to avoid bad-faith and punitive damages awards due to claim handling? A) Evaluate claims thoroughly and promptly, and, where appropriate, attempt settlement quickly B) Represent policy terms and coverage only upon questioning C) Carefully outline the main reason why a claim is being rejected D) Respond to all correspondence from claimants and their attorneys at convenience

A

Which one of the following is a reason an insured might reimburse its WC and EL insurer? A) An illegally employed individual suffered an occupational injury B) An insurer must spend additional costs to investigate a claim C) An employee injury occurs in a state with higher mandatory workers compensation limits D) Court laws are assessed against the insured in a lawsuit

A

Which one of the following is the most common basis for an insurer to determine WC premium? A) Payroll of employees B) Policy limits C) Previous year claims D) Number of employees

A

Which one of the following plans determines the insured's WC premium for a policy period based on the insured's actual loss experience during that same policy period? A) Retrospective rating plan B) Assigned risk plan C) Experience rating plan D) Merit rating plan

A

Which one of the following provides the best example of a risk-control technique for financial and legal professionals? A) Retain and consult an attorney regularly concerning client relationships B) Charge a discounted rate for fees to obtain more customers C) Retain an attorney only once it is apparent that litigation will occur D) Keep duplicate copies of all communication records on-site

A

Which one of the following statements about defense coverage in the typical professional liability insurance policy is most accurate? A) Although professional liability policies differ, most policies pay for defense as long as they fall within the limits of the policy. B) Although defense costs are usually covered under the standard CGL policy, they are typically excluded in professional liability policies. C) Defense costs of up to $15,000 are payable under the standard professional liability policy as long as it is endorsed and an additional premium is paid for the coverage. D) The most common provision for paying defense costs in professional liability policies is to pay them in addition to the policy limits, similar to how they are treated in the standard CGL policy.

A

Which one of the following statements concerning the legal foundation for the professional liability (PL) exposure of architects and engineers is most accurate? A) Claims against architects and engineers are more likely to hinge on the interpretation of contracts than on the application of common law principles. B) When comparing their PL exposures, it is generally agreed that architects have relatively less BI and PD loss exposures than lawyers. C) Unlike the standard contracts used by most other professionals, standard contracts for the architect and engineer professional tend to prohibit the use of binding arbitration as a means of dispute resolution. D) PL claims against engineers require privity between the parties, although PL claims against architects can be brought by unrelated third parties.

A

Which one of the following tests requires that, at the time of injury, the claimant must have been on navigable waters or on adjoining areas? A) Situs B) Status C) Census D) Stratus

A

While WC benefits are considered an exclusive remedy, there are legal grounds others than WC law that can give rise to a claim for an employee injury. Based on this exposure, most employers also carry which one of the following coverages? A) Employers liability B) General liability C) Employee practices D) Employee benefits liability

A

While WC statutes and regulations vary by state regarding the elements required for an injury to be compensable, normally the injury elements must meet three criteria. The injury must be: A) Accidental, arising from employment, and in the course of employment B) Accidental, arising from actions of another employee C) Intentional, arising from negligence, and outside the risks of employment D) Intentional, arising from the actions of another employee, and in the course of employment

A

XYZ Company's home office is in state A. Emily is XYZ's only employee in state B, which requires WC insurance from companies that employ more than 10 people in that state. In order to provide benefits for Emily for on-the-job injuries, which one of the following endorsements should XYZ add to its WC&EL Insurance Policy? A) Voluntary Compensation and Employers Liability Coverage Endorsement B) Foreign Voluntary Compensation Coverage Endorsement C) Alternate Employer Endorsement D) Waiver of Our Right to Recover From Others Endorsement

A

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A civilian employee of a government contractor is injured by shrapnel at a US military installation in a war zone. The worker was off duty at the time of the injury. The injured worker's compensation claim would be covered under the: A) Defense Base Act B) War Hazards Compensation Act C) Federal Employers' Liability Act D) Federal Employees' Compensation Act

B

A client accuses a professional of not performing the services for which they were hired. The client can bring a professional liability action against the professional based upon: A) Contract of adhesion. B) Breach of contract. C) Misrepresentation. D) Tort action.

B

A factory fire caused by an employer's negligence results in the death of one employee. The employee was the sole parent and caregiver of a disabled young adult. The young adult sues the employer for loss of services. Which one of the manufacturer's policies would respond to this suit? A) CGL policy would respond as this is a 3rd party claim. B) WC&EL policy would respond as loss of services is considered under EL insurance. C) Commercial property policy would respond as the building fire caused the death of the employee. D) Employment practices policy would respond to lawsuits brought by employees or their relatives.

B

A group of ER's in the same industry that join together and guarantee payment of WC benefits to the EE's of each of the companies, without the involvement of an insurance company, is known as: A) State fund B) Self-insured group C) Assign risk D) Voluntary market

B

A physician is visiting Guatemala after a major disaster to administer aid. A patient with a large laceration requiring stitches develops an infection that is believed to be due to unsterilized equipment. The patient intends to file suit under the physician. In order for the loss to covered under a typical professional liability policy, the: A) Patient must file suit in Guatemala where the loss occurred. B) Patient must file suit in the US or Canada. C) Loss would have to occur in the US or Canada. D) Policy must list Guatemala under the coverage territory.

B

A security guard is employed at a pier where shipping containers are loaded and unloaded from barges. There is also a small marina for pleasure craft at the pier. The security guard trips over equipment left on a dock alongside a pleasure craft and is injured. The pier only has insurance coverage that provides benefits under the Longshore and Harbor Workers' Compensation Act (LHWCA). Is the guard's injury covered under LHWCA? A) The injury is covered by LHWCA because the guard is not a government employee. B) The injury is covered by LHWCA because the guard is not covered under a state's workers compensation law. C) The injury is not covered by LHWCA because the pleasure craft marina is not a maritime location. D) The injury is not covered by LHWCA because the guard is not a maritime employee.

B

A spouse of an air-force EE works at an on-base day care center serving the base's families. Working with children and constantly lifting them throughout the day causes the spouse to suffer a lumbar strain. Which one of the following statutes would provide coverage for the injury? A) The Defense Base Act B) The Non-appropriated Funds Instrumentalities Act C) The Federal Employees' Liability Act D) The War Compensation Hazard Act

B

Although participating in a self-insured group for WC insurance may help an ER save money on insurance premiums, there are several potential disadvantages to such an arrangement. Which one of the following best describes those disadvantages? A) The potential savings may or may not materialize; such groups are not covered by state guaranty funds; and all members of the group are responsible for the expenses of the other members. B) All members of the group are responsible for the group's shortages; all members of the group are responsible for the entire shortage (not just their share); and such groups are not covered by state guaranty funds. C) All members of the group are responsible for the entire shortage (not just their share); premiums paid to such a group are not tax-deductible; and all members of the group must cover the injuries of EE's of other members of the group. D) All members pay the same premium, regardless of size; the premiums paid are not tax-deductible; and such groups are not covered by state guaranty funds.

B

An EE is holding a box cutter while talking and gesticulating wildly and inadvertently cuts another EE. The injured EE sues the ER to recover medical expenses. Under common-law, prior to the enactment of WC statutes, the ER can avoid responsibility for the injury by using which one of the following defenses? A) Assumption-of-risk B) Fellow-servant rule C) Contributory negligence D) Exclusive remedy

B

An EE of a tire manufacturing facility is injured during the course of his work. After applying for WC benefits, the request is denied by the company, which cites insufficient funds to pay the claim. The EE may be able to file suit against the ER because: A) EE was injured unintentionally B) ER failed to maintain a qualifying WC insurance plan C) EE's positions did not qualify for WC benefits D) ER intentionally delayed the claim, increasing costs

B

An employee who resides in Oklahoma and works for a company domiciled in Texas is injured while temporarily working at a job site in Arkansas. The provision in WC statutes that would allow the injured worker to collect benefits in accordance with the Texas WC statute is know as the: A) Reciprocal agreement provision B) Extraterritorial provision C) Home state policy provision D) Instra-state benefits provision

B

An engineer and an architect have a joint firm. While the architect is out of town, the engineer drafts architectural plans for a client's log cabin. The finished building is ultimately deemed structurally unsound due to flaws in the design. Which one of the following allegations will the firm most likely confront? A) Breach of contract B) Practicing beyond the scope of the license C) Conflict of interest D) Negligent supervision of construction

B

An insured's EE will be working on a special project outside of the U.S. for 5 days. While outside the U.S., the EE becomes ill with malaria. Under an endorsed WC and ER's Liability Insurance (WC & EL) policy the EE would: A) Be covered for contracting an endemic disease while temporarily working outside the U.S. B) Not be covered for contracting an endemic disease while temporarily working outside the U.S. C) Be covered for transportation costs home while temporarily working outside the U.S. D) Not be covered for any work done outside the U.S.

B

An unendorsed securities brokers professional liability policy will insure the firm and registered representatives for claims alleging negligence committed on the firm's behalf in which one of the following capacities? A) Selling property-casualty insurance products B) Selling life insurance products C) Brokering mortgages D) Brokering real estate

B

Before the enactment of WC statutes, ER's were protected against EE suits by common-law defenses. Under which one of the following common-law defenses were EE's unsuccessful in recovering damages from occupational injuries resulting in part from the EE's own negligence? A) Assumption-of-risk B) Contributory negligence C) Fellow-servant rule D) Statute of limitations

B

Bill, a XYZ Corporation employee, injured his back while lifting an item in the XYZ office. Bill made a claim for WC benefits from XYZ. Bill, although working at XYZ, is a leased employee from TSL (Temporary Staffing, LLC). TSL has its own WC policy with an alternate employer endorsement naming XYZ. Which one of the following is true regarding Bill's benefits? A) Bill's WC benefits would be paid under XYZ's policy. B) Bill's WC benefits would be paid under TSL's policy. C) The policies of XYZ & TSL would both participate in paying the benefits. D) The other insurance clauses of both policies would apply and coverage would be declined.

B

Compensatory damages recoverable by a party alleging a breach of contract are generally limited to: A) Pain & suffering. B) Monetary loss sustained. C) Loss of profits. D) Punitive damages.

B

Distinguishing between EE and independent contractor status for WC benefits can sometimes be difficult. Which one of the following is true regarding this difference in status? A) If an individual is an independent contractor for IRS purposes, he/she could not be entitled to WC benefits from an ER. B) An individual is an EE rather than an independent contractor when the ER controls the method, means, and the results of the assigned work. C) If an individual is contracted to an ER for a specific period of time such as one year, he/she would be considered an independent contractor. D) An individual that works for an ER on a temporary or part time basis would generally be considered an independent contractor.

B

During a business trip overseas visiting a plant, an employee contracts a rare exotic disease and must be repatriated. Which one of the following is true regarding coverage of the repatriation expense? A) Employee's repatriation expense would be covered by the WC&EL policy B) Employee's repatriation expense is covered if the employer has foreign voluntary WC coverage C) Employee's repatriation expense is covered only if the employee is injured on navigable waters D) Employee's repatriation expense is only covered in case of death

B

Elijah was injured on his previous job as a roofer. He wants to go back to work, but potential employers are hesitant to hire him, because they are concerned that they may have to pay WC benefits if Elijah aggravates the injury on the new job. What is the name of the mechanism developed by some states that would cover a portion of the benefits due to Elijah if he aggravates his old injury on the new job? A) Last chance fund B) Second injury fund C) New job fund D) New injury fund

B

EmployeeAn insured signs a contract with a partnering company that includes a requirement for the insurer to waive the right to subrogate against the company in the event of a loss. Which one of the following endorsements must be added to the WC policy in order to accommodate this requirement? A) Voluntary Compensation and EL Coverage Endorsement B) Waiver of Our Right to Recover from Others Endorsement C) Alternate Employer Endorsement D) Foreign Voluntary Compensation Endorsement

B

Employer's liability would provide coverage for which one of the following claims? A) Occupational disease B) Loss of services C) Bodily injury intentionally caused by an insured D) Employment practices violations

B

Employers of crew members of a vessel normally cover their liabilities for occupational injuries to crew members through a type of marine insurance called protection and indemnity (P&I). This coverage can be endorsed to the standard WC policy with a Maritime Coverage Endorsement. This maritime endorsement provides coverage for: A) Lodging and food (maintenance and cure) for an injured crew member B) BI by accident or disease to crew members arising out of maritime work C) Crew member injury on a vessel traveling between the U.S. and Mexico D) Longshoremen or harbor workers that are unloading the covered vessel

B

Employers who regularly send employees outside the US for short-term assignments often purchase Foreign Voluntary WC Coverage to provide: A) Extraterritorial benefits prescribed by statute in employees' state of hire. B) Coverage for endemic disease not prevalent in the employees home country. C) Accident and Health coverage not prescribed by the WC statute. D) Access to state guaranty funds which exclude coverage for employees injured outside of the US

B

Exclusions are generally very common in all insurance policies. Which one of the following is a correct statement regarding the exclusions in Part One of the standard WC&EL Insurance Policy? A) Part One exclusions only apply to federal claims. B) Part One contains no outright exclusions. C) Part One exclusions are limited by the NCCI. D) Part One exclusions apply only to types of employees.

B

For occupational injuries, federal law often provides various legal remedies for certain employee types. Which one of the following federal statutes gives certain employees the right to sue their employer when injured during employment? A) Defense Base Act (DBA) B) Jones Act C) Longshore and Harbor Workers' Compensation Act D) Federal Black Lung Act

B

In professional liability, the difference between a contract claim and a tort claim can be an important distinction. Which one of the following statements pertaining to the difference between tort claims and contract claims is most accurate? A) Injured parties can establish a professional's legal liability for damages based on either the tort basis or the contract basis, but not both. B) Tort claims and contract claims may be subject to different statutes of limitations, making one type of claim preferable to the other in some jurisdictions. C) Contract claims are usually based on the allegation that a professional performed his or her duties at an unacceptably low standard of performance. D) Tort claims against professionals usually allege that the defendant failed to do something required by contract, causing damage to the plaintiff.

B

In the context of professional liability exposures for insurers, extra-contractual damages are those damages that are awarded: A) As punitive damages B) In excess of the policy limit C) For non-economic damages D) To pay attorney's fees

B

In the wake of an incident leading to a loss, hospital risk management emphasizes the use of root-cause analysis to: A) Determine the extent to which the hospital can claim charitable immunity as a viable defense to a lawsuit. B) Evaluate systems and process to identify improvements that will decrease the likelihood of those types of incidents in the future. C) Measure its exposure to vicarious liability. D) Evaluate its health professional liability insurance policy for gaps in coverage.

B

It is important to ascertain who is covered under the policy because coverage provisions may differ from insurer to insurer. Although the breadth of coverage may differ from one professional liability policy to the next they all provide coverage for: A) D's & O's of the professional organization. B) The individual professional named in the policy. C) Employees of the professional organization. D) Stockholders of the professional organization, as long as it is organized as a limited liability corporation.

B

Many states have enacted "Second Injury Funds" as part of their WC compensation system. The purpose of a "Second Injury Fund" is to: A) Pay EE's directly and in full for their injuries B) Encourage the employment of individuals with disabilities C) Pay for any injury where two or more employers are involved D) Establish uniform benefits in all states in the U.S.

B

Most states have withdrawn from or abolished the locality rule for determining the standard of care applicable to professional liability arising from medical treatment. The present national standard of care rule: A) Presumes that all medical patients have the same availability of medical facilities. B) Implies that rural practitioners have the same training and exercise the same level of judgement. C) Removes the risk of the convenience of local care against the risks of inadequate facilities.

B

One of the primary differences between engineers and architects professional liability insurance and other professional liability coverages such as health professionals or legal professionals is that: A) The bulk of architect and engineer's PL ins. policies are written on standard forms, which makes the interpretation of the policy language and coverages relatively simpler. B) Because of subcontractors, vicarious liability is a significant loss exposures for engineering and architectural firms, but PL coverage can be extended to subcontractors if they have been named as an additional insured. C) Because there is extremely long period associated with exposure to defects in constructing buildings and bridges, virtually all architect and engineers PL policies are written on an occurrence basis so as to provide long tail coverage. D) Since so much of the liability exposure is based on the interpretation of contracts, and engineering and architectural firms have their own in-house counsels, defense costs are typically excluded from coverage under the standard professional liability insurance form.

B

Prior to the enactment of WC statutes, injured workers seeking recovery from their employers were often unsuccessful. Which one of the following obstacles did employees face when filing suit against their employers for work-related injuries? A) It was illegal for employees to sue their employers B) Co-workers were reluctant to testify against their employer C) Employees could not afford to hire experienced attorneys D) Many courts favored industrial expansion over workers' rights.

B

Prior to the enactment of the WC statutes, ER's usually denied claims for injuries to an EE who was injured on the job by another EE. Which of the following describes the defense asserted by the ER in such an instance? A) Contributory negligence defense B) Fellow-servant rule C) No negligence defense D) Assumption of risk defense

B

Services provided by architects and engineers, unlike those of many other professionals, are almost always governed by a contract between the parties. Disputes between the parties to the contact are generally resolved by: A) Local zoning boards B) Binding arbitration C) Civil litigation D) Criminal litigation

B

The Insurance Services Office (ISO) 'Commercial Lines Manual' states that various professional services exclusions should be added to the general liability policies for numerous business classifications. Which one of the following is an example of classifications requiring professional services exclusions? A) Real estate offices B) Barber shops C) Restaurants D) Automobile dealers

B

The benefits provided under WC statutes can be grouped according to which one of the following sets of categories? A) Medical, Disability, Mental, and Death B) Medical, Disability, Rehabilitation, and Death C) Medical, Disability, Mental, and Dental D) Medical, Dental, Rehabilitation, and Death

B

The rendered judgment of 'Daubert v. Merrell Dow Pharmaceuticals' has enabled lawyers to: A) Allow additional evidence into the case. B) Challenge the testimony of experts and have their testimony excluded from the case. C) Test the validity of specific evidence as presented by opposing counsel. D) Present expert testimony as necessary by the doctrine of 'res ipsa loquitur'.

B

The workers compensation endorsement that provides coverage equal to that required by the Defense Base Act is known as the: A) Voluntary Compensation and EL Coverage Endorsement B) Foreign Voluntary Workers' Compensation Coverage Endorsement C) Maritime Coverage Endorsement D) Alternate Employer Endorsement

B

When an ER purchases WC insurance from a standard insurer, that ER has obtained its insurance: A) From a state fund B) In the voluntary market C) From an assigned risk fund D) By participating in a self-insured group

B

Which of the following represents the best way for most employers to meet their obligations under a state's WC law? A) Participation in a risk retention group B) Purchase of a WC insurance policy C) Establishment of a self-insurance fund D) Paying claims out of current cash flow

B

Which one of the following best describes the 3 purposes of an experience rating plan for WC insurance? A) Such a plan helps an employer to ignore certain industrial accidents; encourages loss mitigation; and reduces WC insurance premiums in all instances. B) Such a plan encourages employers to eliminate or mitigate industrial accidents; reduces WC insurance premiums for good loss experience; and increases WC insurance premiums for poor loss experience. C) Such a plan spreads the WC insurance premiums out over a longer period of time; reduces insurance premiums in all cases; and makes the work place safer. D) Such a plan reduces insurance premiums in all cases; provides the employer with alternative methods of meeting its obligations under WC statutes; and makes the workplace safer.

B

Which one of the following endorsements can be added to a WC&EL policy to cover an employers liability for injury or death of crew members on a vessel? A) US Longshore and Harbor Workers' Compensation Act endorsement B) Maritime Coverage endorsement C) Foreign Voluntary Workers' Compensation Coverage endorsement D) Voluntary Compensation and Employers' Liability Coverage endorsement

B

Which one of the following endorsements should be added to the WC&EL Policy of an employers that uses a professional employer organization (PEO) for its staffing needs? A) Voluntary Compensation and Employers Liability Endorsement B) Alternate Employer Endorsement C) Waiver of Our Right to Recover From Others Endorsement D) Longshore and Harbor Workers Compensation Act Endorsement

B

Which one of the following statements concerning professional liability coverage under the CGL policy is most accurate? A) Professional liability losses are excluded from coverage under the CGL policy and must be purchased separately. B) Professional liability losses may end up being excluded from coverage under the CGL if they do not fit the definition of BI, PD, or personal & advertising injury. C) Professional liability coverage requires less underwriting than CGL coverage because the professional losses are limited in scope, whereas the general liability losses are not. D) Like personal and advertising injury coverage, the professional liability coverage in the CGL policy has reduced limits that are automatically set to one half of the aggregate and per occurrence limits for BI & PD.

B

Which one of the following types of WC insurance is only available to ER's who are denied coverage in a voluntary market? A) State fund B) Assigned risk plan C) Self-insurance plan D) Self-insured group

B

While unloading equipment from a large commercial fishing boat after a trip, a worker slips, falls, and breaks a foot. Which one of the following federal statutes would cover this employee for his occupational injury? A) Jones Act B) Longshore and Harbor's Workers' Compensation Act C) Outer Continental Shelf Lands Act D) Federal Employers' Compensation Act

B

A WC experience rating plan can motivate an employer to eliminate or mitigate industrial accidents. Which one of the following statements is true regarding experience rating plans? A) Experience rating plans use the prior one year of experience as the basis for the experience modification. B) Experience rating plans only apply to employers whose average premiums for prior periods exceed $100,000. C) Experience rating plans compare an insured's actual losses with the losses expected of a similar average insured. D) Experience rating plans depend entirely on the insured's loss experience rather than that of other businesses.

C

A clerical employee for a warehouse situated on a loading dock at a commercial port is injured while trying to open a jammed file drawer. The employer is covered under a WC&EL policy that contains the Longshore and Harbor Worker's Compensation Act (LWHCA) Coverage endorsement. The WC claim would: A) Not be covered by the policy because the US LWHCA excludes clerical employees. B) Be covered by the policy only if the injured worker's employer is engaged to load, unload, or repair small vessels less than 18 tons net. C) Be covered by the policy, regardless of whether the employee is eligible for benefits under the state's WC law. D) Be covered by the policy only if the employee is eligible for benefits under the state's WC law.

C

A delivery person employed by a beverage distributor tears a disc in his back while unloading cases of beverages and transporting them inside a customer's supermarket. The WC insurer denies the resulting medical benefits and temporary disability claims as the delivery person: A) Neglected to follow the supermarket's request that their EE"s transport the beverages into the store. B) Neglected to tell the employer that the delivery as done on the way home for the day C) Failed to use the handcart required by the ER while moving the cases inside the supermarket D) Failed to notify the supermarket of the injury before leaving the supermarket's premises

C

A newly formed financial services firm has 2 principals and 30 employees. This company is most likely to demonstrate security to pay any WC claims by insuring losses through: A) A self-insurance plan B) The voluntary market C) An assigned risk plan D) A territorial fund

C

A physician disclosing required information to a patient about 5 specific topics prior to performing surgery or a treatment is obtaining: A) Locality approval B) Sovereign immunity C) Informed consent D) Physician disclosure

C

A spouse of a healthcare workers contracts AIDS as a result of negligence of the worker's employer. This would be covered under the healthcare facility's Employers Liability insurance because it is a: A) Loss of consortium claim B) Third-party-over claim C) Consequential bodily injury claim D) Dual-capacity claim

C

A victim is rushed to the hospital with a gunshot wound to the lower left leg. The physician performs emergency surgery and amputates the patient's left leg in order to save the patient's life. A suit is filed against the physician by the patient for failure to obtain informed consent. Which one of the following is the most likely outcome of the lawsuit? A) The doctor failed to find a family member to obtain informed consent resulting in medical malpractice. B) The doctor failed to obtain the informed consent of the patient resulting in medical malpractice. C) There was no medical malpractice form breach of informed consent due to emergency conditions. D) The patient is required to prove that lack of informed consent resulted in an unnecessary operation.

C

ABC Company hired XYZ Remodeling Contractors to do a complete makeover of ABC's offices, cafeteria, and EE locker rooms. When ABC hired XYZ, XYZ immediately showed its WC insurance policy to ABC. The policy was in effect at the time the contract was signed, but lapsed the day before the work started. On the 2nd day of working at ABC, Patty (an EE of XYZ) was hrut on the job. As a result of the injury, Patty incurred serious medical expenses and lost 2 weeks of wages because she couldn't work. After submitting her bills to the XYZ's WC insurer, Patty was told that the policy had lapsed and nothing was payable. At this point, the law in this particular state says that ABC must pay for Patty's injuries and lost wages. What is the term given to Patty's relationship to ABC Company in this case? A) EE B) Independent contractor C) Statutory EE D) Claimant

C

An employee is accidentally injured in the course of employment. The injured EE is unable to perform any job duties for 3 months, but is expected to return to full job duties after recovery. Which one of the following types of disability benefits is the employee eligible for? A) Temporary partial disability B) Permanent total disability C) Temporary total disability D) Permanent partial disability

C

An insuring agreement for architects and engineers insurance policies responds for damages because of liability arising out of or failing to render professional services. The term "professional services" is usually: A) Described in the contract entered into by the insured. B) Any services the insured performs to complete a contract. C) Limited to services the insured is legally qualified to perform. D) Any services required by the contract for the described work.

C

Before the enactment of WC statutes, EE's could sue their ER's for injuries arising from their jobs. Which one of the following is a reason why most of these lawsuits against employers failed? A) EE attorneys were not experienced in these type of EE lawsuits B) Insurance policies would not respond for lawsuits for EE injuries C) Injuries caused by fellow EE's was a defense against recovery D) EE's voluntarily paid benefits to injured workers avoiding lawsuits

C

Both the CGL insurance policy and the professional liability insurance policy provide coverage for BI claims, which may lead to coverage disputes when an incident occurs at a health care facility that has both types of policies. Hospitals can best avoid these types of coverage disputes by: A) Excluding BI coverage from the CGL policy by endorsement, thus avoiding duplicate coverage and premium charges. B) Using advanced loss control techniques to eliminate their exposure to BI losses altogether. C) Using the same insurer to provide both CGL insurance and professional liability insurance. D) Choosing either the CGL policy or the professional liability policy, but not both.

C

Claims alleging PD, BI, or financial loss are common against some professionals. Which 1 of the following professionals is most likely to encounter all 3 varieties of claims? A) Attorneys B) Accountants C) Architects D) Dentists

C

Company A has an experience modification factor of 0.8. This implies Company A: A) Has losses that are worse than industry average by 80%. B) Has losses that are worse than industry average by 20%. C) Has losses that are better than industry average by 20% D) Has losses that are better than industry average by 80%

C

Damages recoverable for breach of contract can be grouped into categories. Which one of the following is a type of damages recoverable in a professional liability suit for breach of contract? A) Punitive damages B) General damages C) Consequential damages D) Special damages

C

During part of a residential development, the developer hired Joe's Tree Service to remove some trees prior to the building of homes. While working, one of Joe's employees fell from one of the trees and was injured. Joe did not carry any WC coverage and the developer's WC policy had to respond for the benefits. Which one of the following identifies the type of employee the injured worker is to the developer that enables these benefits? A) Indirect employee B) Independent employee C) Statutory employee D) Temporary employee

C

Ed's Tattoo Parlor has a CGL policy from ABC Ins. Co. with an endorsement excluding professional liability. It also has a separate professional liability Ins. policy from XYZ Ins. Co. Ed's Tattoo Parlor was recently sued by an irate customer who was injured by a falling ceiling tile while receiving a tattoo. Which one of the following statements concerning the insurance coverage for the injury is most accurate? A) Prof. Liability insurance is a substitute for CGL insurance, so the prof. liability insurance would be primary. B) The personal and advert. injury coverage of the CGL would respond because body art, such as tattoos and piercings, are defined as "advertising" in the definitions section of the CGL. C) The injury from the falling tile was a routine premises liability claim and not the result of the provision of professional services, so the CGL's BI liability coverage would apply. D) The prof. liability insurance policy is an "all risks" policy that provides coverage for any loss arising out of the provision of professional services, so the damages from the falling tiles would be paid by XYZ.

C

Experience rating plans depend on statistically meaningful data to appropriately estimate losses. The experience period used as a basis for the modification of the estimated WC compensation premium for year 2011 would be: A) 2010. B) 2009 & 2010 C) 2007, 2008, & 2009. D) 2008, 2009, & 2010.

C

For some employment related injuries the WC statutes of more than one state may apply depending on the circumstances of injured workers employment. The injured worker is likely to be able to choose which state benefits he or she wishes to take advantage of. Which one of the following factors would generally be the reason to choose benefits of one state over another? A) The state where the EE lives B) The state where the ER is located C) The state with the most advantageous benefits D) The place the EE was hired from

C

Healthcare professional liability policies for physicians generally split coverage into 2 insuring agreements. The first insuring agreement covers the individual healthcare professional(s) named and the second agreement covers the professional entity. Which one of the following is true regarding the reason for the two insuring agreements? A) The split is necessary to be able to combine medical incident and professional services into one definition. B) The split is necessary as employees of the insured entity are generally not covered under the professional liability policy. C) The split is necessary if the insurer does not provide coverage for all the individuals who are part of the entity. D) The split is necessary as all individuals that are part of the entity must be named and covered in the first insuring agreement.

C

Healthcare risk management emphasizes root-cause analysis, which focuses on: A) Employee engagement B) Individual performance C) Systems and processes D) Educational requirements

C

Insurers write that write professional liability for financial and legal professional develop their own forms, and there are similarities and differences from policy to policy. Which 1 of the following policy features are most likely to exhibit material differences from one policy form to the next? A) The provision for payment of defense costs. B) The claims-made trigger. C) The exclusions section. D) The definition of professional devices.

C

Karen was injured at work and could not work in any capacity until she returned to full time after being off work for 6 weeks. In addition to her medical benefits, what type disability benefits would Karen receive? A) Temp. partial (TPD) B) Perm. total (PTD) C) Temp. total (TTD) D) Perm. partial (PPD)

C

Mike works part-time as an editor for a small newspaper. The owner of the newspaper requires Mike to be at the office on Monday, Tuesday, Thursday and Friday between the hours of 9:00 am & 1:00 pm. However, the owner has told Mike that he does not want to be "bothered" with taking taxes from Mike's pay. Mike bills the paper each week for his services and receives the full amount, with no deductions for income or Social Security taxes. When Mike is injured at the office, he incurs substantial medical bills. He tries to obtain payment from the paper, but the paper denies payment, stating that Mike is an independent contractor and, therefore, not eligible for WC payments. A court would likely rule that Mike is an employee because: A) Mike has worked there for some time B) The state requires all ER's to provide WC insurance C) The paper controlled and directed Mike's activities D) Mike was injured at the company's site

C

One federal compensation statute requires that an injured employee satisfy both the situs (location) test and the status (type of occupation) test to be eligible for compensation benefits under this federal statute. This federal compensation statute is the: A) Defense Base Act (DBA) B) War Hazards Compensation Act C) Longshore and Harbor Workers' Compensation Act D) Federal Black Lung Benefits Act

C

One of the most common forms of non-insurance risk transfer used by architects and engineers to shift professional liability to others is the use of: A) Binding arbitration B) Rigorous quality control measures C) Hold harmless agreements D) Subcontractors

C

One of the ways that professional liability lawsuits differ from other types of general liability lawsuits is that: A) The burden of proof is on the defendant rather than the plaintiff to establish that the appropriate standards of professional conduct were not breached. B) Professional liability is established based on contract law rather than tort law. C) Plaintiffs often rely on the use expert witness testimony to establish standards of professional conduct that were allegedly breached. D) Professionals are held to a lower standard of care based on state laws and regulations, which makes it harder to establish causality for damages.

C

Part Two of the WC&EL Policy is the employers liability portion of the policy. Under this portion of the policy the insurer would pay for: A) Liability assumed under a contract of the insured. B) Fines or penalties imposed for violation of law. C) Common law liability for occupational injury to employees. D) Damages arising out of employment practices.

C

Professional liability can be based on breach of contract, tort principles, or statutes and regulations. The distinguishing characteristic of tort actions against professionals is: A) That malpractice is required for a finding of fault. B) That the relationship between the parties is key. C) That testimony of expert witnesses often is needed. D) That legal precedent is generally used to determine fault.

C

Professional liability policies are designed to cover claims arising from rendering or failing to render professional services. Primary loss exposures differ for different professional groups. Which one of the following describes the primary loss exposures of professional architects? A) Bodily injury & property damage B) Property damage & financial loss C) Bodily injury, property damage, & financial loss D) Personal injury, financial loss, and property damage

C

Professional liability policies typically exclude coverage for claims that are covered under other commercial insurance policies. In a professional liability policy for financial and legal professionals, which one of the following causes of loss is typically excluded because it is covered under other commercial insurance policies? A) Breach of contract B) Professional negligence C) Bodily injury D) Errors or omissions

C

Receiving benefits under a state WC statute is often referred to as an injured EE's: A) First of only remedy B) Last or best remedy C) Exclusive or sole remedy D) First or best remedy

C

Sometimes a firm will transfer all of its EE's to a professional ER organization (PEO) and then lease them back. The PEO is responsible for: A) Maintaining a risk-free work environment B) Hiring and firing EE's C) EE benefits D) EE scheduling

C

The Federal Employees' Compensation Act provides benefits to which one of the following groups? A) All Federal employees, including the military B) All members of the military C) All federal employees except members of the military D) All members of Congress

C

The War Hazards Compensation Act differs from the Defense Base Act (DBA) in that: A) Coverage is limited to civilian employees located in the domestic US B) Congress must declare war in order for the benefits to be awarded C) Eligible employee injuries need not occur in the course of employment D) Civilian employees are not covered under any circumstances

C

Tim is an EE of XYZ Roofing, Inc. whose home location is in state "A". Tim is injured on the job for XYZ while working in State "B". Tim chooses to apply the WC law from state "B" to cover his injuries. States "A" and "B" have an agreement that allows the state "A" policy to cover Tim's injuries according to teh laws of state "B". What is the name given to such an agreement? A) Retaliatory agreement B) Stop-loss agreement C) Reciprocal agreement D) No-fault agreement

C

When a worker is injured in a state other than the state where the ER is located, WC statutes allow the injured EE to choose which state's WC benefits to accept. This provision is called the: A) Multi-state provision B) Out-of-state provision C) Extra-territorial provision D) Uninsured provision

C

Which one of the following best describes the 3 things necessary in order for a WC policyholder to receive an accurate experience rating modification factor? A) Proper working conditions; proper data entry; and proper record keeping B) Proper data entry; proper working conditions; and proper claims review C) Proper data entry; proper record keeping; and proper claims review D) Proper working conditions; proper claims review; and proper record keeping

C

Which one of the following describes one of the coverages provided by a WC & EL Insurance policy? A) Voluntary benefits to an injured employee B) Payment for damages to a visitor hurt at the employer's location C) Payment of benefits as required by a state's WC law D) Providing an alternative to major medical insurance as an employee benefit

C

Which one of the following is a required element for an injury to be deemed as having occurred in the course of employment? A) The employee must be able to substantiate the specific date and time of the injury. B) The injury must arise out of some risk reasonably incidental to the employment. C) The employee must have sustained the injury while employed. D) The injury must occur between the time the employee travels to work and when the employee arrives home from work.

C

Which one of the following statements concerning professional liability insurance coverage is most accurate? A) Most professional liability policies provide coverage for acts committed in the territorial US, although there are no restrictions on where the suit may be brought. B) Most professional liability policies limit coverage to those acts committed in the US or Canada. C) Most professional liability policies provide coverage for acts committed anywhere in the world, as long as the suit is brought in the US or Canada. D) Most professional liability policies have been amended to provide coverage for acts committed anywhere in North America, including both Canada and Mexico.

C

Why does an employer need EL insurance in addition to WC insurance and a CGL insurance policy? A) To meet statutory requirements for payments to workers injured on the job B) To provide additional amounts of coverage C) To cover claims excluded by WC and CGL policies D) To meet monetary requirements

C

A cardiac nurse is concerned that as a result of the nature of the job that this branch of nursing might become the target of lawsuits. The nurse would employ which one of the following risk management techniques to avoid risk? A) Work in communities which support health care practitioners B) Complete continuing education courses C) Incorporate a hold harmless agreement in the intake forms D) Choose not to engage in high risk fields of practice

D

A computer software company frequently employs independent contractors and seasonal college help. The company's WC policy would cover both a(n): A) Leased EE and an independent contractor B) Independent contractor and seasonal college help C) Leased EE and a statutory EE D) Statutory EE and seasonal college help

D

A contractor has its main location in Indiana and branch offices in Michigan and Illinois. All 3 states are listed on their WX & EL policy. After the effective date of the policy the contractor accepts a job in Kentucky, but does not contact his agent or insurer with this information. 21 days after the KY job begins, one of the contractor's EE's is injured at the KY job site. The injured EE files a WC claim with the contractor's insurer. Under which state's WC statute will the EE's benefits be paid? A) EE will not receive any WC benefits; the injury occurred more than 15 days after the KY job started B) EE must accept benefits under KY statutes because the injury occurred in KY C) The EE will receive benefits under the Indiana statute since the KY location isn't listed in the WC & EL policy D) EE may choose to receive benefits under Indiana or Kentucky (KY) statute

D

A crew member of a vessel is injured in the course of employment because the vessel owner failed to keep the ship's equipment in proper working order. Under the general maritime law, the crew member could seek the remedy of: A) Marine league B) Maintenance and cure C) Moragne remedy D) Warrant of seaworthiness

D

A defense attorney representing a client in a highly publicized trial for federal tax evasion was speaking to a colleague outside the courtroom and mentioned that the client was probably guilty of the charges. The attorney's comments were picked up by a local media reporter's microphone and publicized on that evening's newscast. Which one of the following best describes the legal foundation for the professional liability claim that the client would have against the attorney? A) Only tort because the client cannot sure for BI, emotional damages or pain and suffering under a breach of contract action. B) Only breach of contract for failure to maintain client-attorney confidentiality. C) Only tort for failure to perform the terms of the contract with standards of reasonable professional care. D) Both breach of contract and tort for failure to maintain client-attorney confidentiality and failure to perform the terms of the contract with standards of reasonable professional care.

D

A finance exec is hired by an auto manufacturer in Michigan. Upon starting work, the exec must undergo a rigorous rotational program through the company's training program that sends him to GA for a period of 2 years. On a business trip to neighboring Alabama, the exec slips and falls in the office, breaking a leg. Under which state's WC statute can the exec seek benefits? A) Michigan only B) Georgia only C) Alabama or Georgia D) Michigan, Georgia, or Alabama

D

A physician is covered under a standard professional liability policy, D&O coverage, and a CGL policy with a professional liability exclusion. A client slips on a rug in the physician's office and fractures his leg. If the client files suit, the injury would be covered: A) Only under the D&O coverage, as the physician breached the required duty of care. B) Only under the professional liability policy due to the physical injury. C) By both the professional liability policy and CGL policy on a pro-rata basis. D) Only under the CGL policy, as the loss is related to premises liability.

D

A siding is owned by a small railroad that operates in 2 states. A railroad worker employed by the small railroad is killed when a piece of equipment falls from a train while the train is being backed into this siding. The siding is connected to a rail line that crosses a state line before connecting to a large coast-to-coast railway. Which one of the following statements is correct regarding the rights of the worker's family to bring a wrongful death suit against the employer under the Federal Employer's Liability Act (FELA)? A) The family may not being a wrongful death suit because benefits under FELA are the sole remedy fro railroad injuries B) The family may bring a wrongful death suit as long as the worker did not contribute to causing the injury C) The family may not bring a wrongful death suit since the worker assumed the risk associated with railroad employment D) The family may bring a wrongful death suit if the injury resulted from the negligence of the employer

D

A surgeon with privileges at a for-profit hospital is not an employee of the hospital. The surgeon fails to exercise the appropriate standard of care when performing a routine operation. The mistake is apparent to the patient the next day, but a medical negligence suit is not filed until 10 years later. The hospital's best liability defense is that: A) The hospital is protected from the suit by Good Samaritan laws. B) Hospitals cannot be vicariously liable for the acts of non-employee doctors. C) The hospital is immune from suit under the doctrine of charitable immunity. D) The statute of limitations has likely expired.

D

A toy manufacturer operates in Pennsylvania, New Jersey, and Delaware. While at a convention in Colorado, a salesperson is injured. The employee elects Colorado as his benefit state for WC. How would a standard WC policy address out-of-state injuries? A) Employer would be found in violation of Colorado statutes and fined accordingly B) Coverage would extend provided the employer pay certain penalties C) The employer would not be able to see remedies under this insurance policy D) Coverage would extend since the injury arose out of employment and was incidental to the insured's work

D

ABC Engineering has agreed to form a joint venture with another firm, XYZ Construction, to build a waste treatment plant for the city of Springfield. As the smaller firm in the joint venture, ABC has 20% ownership in the joint venture, while XYZ has 80%. ABC and XYZ each have separate liability insurance policies. Given this information, which of the following statements is most correct? A) Since ABC is the junior partner, XYZ's PL insurance will provide coverage for the venture. B) Since both firms participate as partners in the joint venture, the insurance coverage for both policies will apply to the joint venture, effectively expanding the available coverage. C) ABC, as a subcontractor, will be automatically added to the XYZ policy as an additional insured. D) Insurers generally exclude professional services performed by the insured as part of a joint venture, so a separate policy for the joint venture will be needed, or else each firm will need an endorsement to include coverage for the joint venture.

D

About one-half the states in the U.S. have WC provided by the specific state, often as a mutual or not-for-profit insurer. This type of insurer would be: A) Voluntary market B) Assigned risk plan C) Self-insurance plan D) State fund

D

All of the following business classifications are likely to have professional services exclusions in the CGL policies, EXCEPT: A) Tatto parlors B) Computer programming firms C) Insurance agencies D) Retail stores

D

An EE, while temporarily working outside of the state of hire, is injured. The best advantage of the extraterritorial provision in a WC policy is that it allows: A) The ER to determine which statute will apply B) The ER to pay lower rates C) The EE to receive benefits under both states statutes D) The EE protection under the statute of the home state

D

An example of a situation in which an EE who is covered by a WC statute may be able to sue an ER is when: A) The injury takes place outside of the state in which the ER is domiciled B) The injuries were intentionally caused by another EE C) The EE is permanently disabled D) The ER performs in some capacity other than as ER

D

An experience modification factor tailors manual WC rates. The experience modification factor is based on an insured's: A) Payroll & premium B) Payroll & limits of liability C) Loss history & limits of liability D) Payroll & loss history

D

An investment firm relied on the financial statements prepared by an accounting firm for their investment in a company. The financial statement misrepresented the target company's assets and liabilities. Which one of the following best describes the legal foundations for a claim against the accounting firm? A) Criminal act B) Bad faith C) Special relationship D) Third-party claim

D

ER's in the same industry seeking economical ways to insure their obligations and who jointly and severally guarantee payment of WC benefits to their EE's are meeting their state's financial security requirement through: A) Competitive fund B) Exclusive state fun C) Assigned risk group D) Self-insured pool

D

Early workers compensation (WC) statutes were elective for employers due to constitutional issues. As an incentive to participate and provide WC benefits, employers that chose not to participate: A) Were faced with high legal fees B) Faced the loss of state licensing C) Lost significant workforce D) Were denied the common-law defenses

D

Employers need employers' liability insurance because the CGL policy excludes: A) Coverage for personal items of employees B) Business interruption coverage C) Coverage for hired non-owned autos D) Liability coverage for employee's injuries

D

From the perspectives of a WC insurer, one inherent feature of an experience rating plan is that it: A) Does not require previous loss history. B) Is always cheaper than an exposure rated plan. C) Discourages risk management. D) Encourages risk control.

D

IN July of 2010, the Dodd-Frank Act was passed in response to the public's demand for improvements in financial systems and to curb abusive Wall Street practices. A significant provision of the Dodd-Frank Act was the: A) Independence of the audit committee of a public company's BOE B) Requirement of certification of corporate financials by the company CEO and CFO C) Creation of the Public Company Accounting Oversight Board D) Abolishment of the Troubled Asset Relief Program (TARP)

D

In a professional liability policy, an insurer may assume the right and duty to defend a claim. This provision allows the insurer to: A) Appoint an arbitrator. B) Pay defense costs outside of the coverage limit. C) Defer defense counsel selection to the Insured. D) Appoint defense counsel.

D

In order for an injury to be payable under a WC policy, the injury must: A) Be accidental; be caused by another employee; and be covered under the company's medical insurance B) Arise out of the employment; not be self-inflicted; and not be covered by any other insurance policy C) Be accidental; not be caused by another employee; and not be covered by any other insurance policy D) Be accidental; arise out of the employment; and be in the course of the employment

D

It's the Christmas season, and Tim has been hired by ABC Dept. Store to help with the seasonal increase in business. Tim can best be described as: A) Leased EE B) Substitute EE C) Contract EE D) Temporary EE

D

Jim is a gardener working for the Smith family. The state in which the family lives and Jim works in exempts domestic employees from WC. Smith feels an obligation to provide these type benefits to Jim in the event he is injured on the job. Which one of the following would provide the state WC benefits to Jim in the event of such an injury? A) Smith could purchase a WC&EL Insurance Policy with an Alternate Employer Endorsement. B) Jim could purchase a private WC policy that would provide the benefits. C) Smith could have his insurance company add Jim tot he policy for the appropriate coverage. D) Smith could purchase a WC policy with a Voluntary Compensation endorsement.

D

John was working for XYZ Company where he was injured on the job. John had been hired by XYZ from "Part Time Workers Company" for a short term to fill-in during a vacation period. Since John was injured while working at XYZ, what would his status be regarding WC benefits? A) Independent contractor with benefits from XYZ B) Statutory employee with benefits from XYZ C) Leased employee with benefits from Part Time D) Temporary employee with benefits from Part Time

D

Larry is an EE of XYZ Co. and works solely in State A which is the only state listed on XYZ's WC policy. XYZ obtained a small job in neighboring State B, and while Larry is working in State B he injured himself. Which one of the following would be the response from XYZ's WC insurer to Larry's claim for benefits? A) it would allow Larry to choose which state benefits he wished to claim B) it would pay State B benefits under the extraterritorial section of the policy C) it would refuse to pay any benefits to Larry as State B was not listed D) it would provide State A WC benefits to Larry

D

Many CGL insurers routinely exclude professional liability insurance coverage for insureds that have significant professional liability exposures. One of the reasons for excluding professional liability coverage is that: A) Insurers do not want to be faced with the moral hazard issues that typically plague the professional liability line of business. B) The limits of liability for professional liability insurance are too high for most insurers to comfortably handle. C) Professional liability insurance generates relatively small premiums, so the benefits of providing the coverage may not be sufficient to pay for the cost of claims. D) Professional liability loss exposures requires a more specialized set of underwriting and claims adjusting skills than do general liability loss exposures.

D

Mary is a civilian employee of a company that has a contract with the federal CIA agency and she is working in the UK under that contract. While there she fell and was injured in her office. Mary has made claim for federal compensation benefits. Which one of the following federal acts will Mary's claim fall under? A) Federal Employees' Compensation Act B) Non-appropriated Fund Instrumentalities Act C) War Hazards Compensation Act D) Defense Base Act (DBA)

D

One of the specific goals of the current WC system is: A) Allowing EE's to collect money for occupational injuries that worsen a pre-existing condition B) Reducing the amount of money paid to EE's as a result of winning lawsuits against employers C) Ensuring that EE's across the country receive similar benefits for similar occupational injuries D) Eliminating the delays and costs of litigation to the EE's and society

D

Prior to the enactment of WC statutes, an ER could assert certain defenses against a claim for an EE's on-the-job injury. Before his state enacted a WC statute, Tom was injured at the ABC factory, where he had been employed for a long time. After his injury, Tom turned his medical bills in to ABC, but ABC refused to pay for his injuries stating that Tom knew the job was dangerous when he signed on. Which one of the following defenses was being asserted by ABC? A) Contributory negligence defense B) Fellow-servant rule defense C) No negligence defense D) Assumption-of-risk defense

D

Samson Cookies had a contract with ABC Sugar Company to purchase 50 tons of refined sugar at a price of $0.60 a pound. ABC failed to make delivery on schedule, and Samson was forced to purchase the sugar on the open market for 0.65 per pound. Samson successfully sued ABC for breach of contract. Which one of the following is an example of compensatory damages that might be awarded to Samson for this breach? A) Samson estimated that the cost of lost sales might have been as high as $150,000 if Samson had not been able to find a new sugar supplier. B) Samson should be entitled to damages equal to $0.65 per pound of sugar times 100,000 pounds of sugar, which is the market price that Samson was forced to eventually pay. C) Samson suffered intangible general damages for the stress and strain of having to quickly shop around for a new sugar supplier, and the value of those damages would be determined by a jury. D) Samson's compensatory damages would include the difference between the contract price agreed upon and the market price that Samson had to actually pay.

D

Several ER's from the same industry form a self-insured group to meet their financial obligations under WC laws. The ERs experience claims in excess of the premiums and assets of the self-insured group. Due to a downtown in the economy, all but 2 of the ER's declare bankruptcy. Which one of the following statements is correct regarding how the remaining obligations of the self-insured group are met? A) The 2 solvent ER's split the obligations of the group in proportion to each ER's outstanding claims B) The 2 solvent ER's evenly split the obligations of the self-insured group C) After the groups assets are depleted, the states guaranty funds will pay the remaining obligation D) At least one of the solvent ER's must ensure all obligations of the self-insured group are met

D

Some professional liability losses would be covered under a CGL policy unless an endorsement excluding professional liability was attached to the policy. For many other professions, the loss exposures: A) Warrant just cursory underwriting treatment B) Lend themselves to coverage in business owners policies C) Are readily underwritten by normal liability underwriters D) Need specific technical underwriting skills

D

The War Hazards Compensation Act was enacted to: A) Replace the Defense Base Act and to shift to the U.S. Gov't the cost to compensate civilians injured by a war-risk hazard while working in a war zone. B) Supplement the Longshore and Harbor WC Act and to shift to the U.S. Gov't the cost to compensate civilians injured by a war-risk hazard while working in a war zone. C) Replace the Jones Act and to shift to the U.S. Gov't the cost to compensate civilians injured by a war-risk hazard while working in a war zone. D) Supplement the Defense Base Act and to shift to the U.S. Gov't the cost to compensate civilians injured by a war-risk hazard while working in a war zone.

D

The beneficiaries of a client's estate have filed suit against an attorney alleging that the estate was improperly executed. The liability claim presented is based upon the legal foundation of legal professional liability related to: A) Vicarious liability B) Extra contractural damages C) Special relationships D) Third-party claims

D

The benefits prescribed by the Defense Base Act (DBA) are similar to those defined by the: A) Federal Employers' Liability Act B) Death on the High Seas Act C) Federal Employees' Compensation Act D) Longshore and Harbor Workers' Compensation Act

D

The endorsement to the WC&EL policy that obligates the insurer to pay benefits to crew members in the same manner as the Voluntary Compensation and Employers Liability Coverage endorsement is known as the: A) Foreign Voluntary WC endorsement B) U.S. Longshore and Harbor WC. Act endorsement C) Inland Marine Coverage Endorsement D) Voluntary Compensation Maritime Coverage Endorsement

D

The initial purpose of the Defense Base Act (DBA) was to apply benefits under the US Longshore and Harbor Workers Compensation Act to which one of the following groups? A) Active-duty US military personnel B) Members of Congress while outside the US C) Military families while outside the US D) Civilians working on military bases outside the US

D

To determine whether the WC&EL Insurance Policy and related endorsements would cover a given claim, an insurance professional would first review the declarations page to: A) Determine whether the policy is subject to audit. B) Determine the address of the insured. C) Determine whether any special policy conditions might apply. D) Determine whether the incident giving rise to the claim occurred during the policy period.

D

WC benefits are frequently referred to as an employee's exclusive or sole remedy for occupational injury. However, there are some instances in which an employee may still sue his or her employer. One such instance is when: A) Employers classify an employee as "less than full time." B) Workers choose not to accept WC benefits. C) Employers elect to decline WC coverage for an EE's injury. D) Workers are outside the scope of the relevant WC statute.

D

Which one of the following characterizes the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010? A) Established higher limits for the Troubled Asset Relief Program (TARP) which provided gov't bailouts B) Passed oversight authority to state agencies C) Increased FDIC limits to $350,000 D) Restructured financial regulation and passed authority for oversight to federal agencies

D

Which one of the following endorsements or coverage should be added to the WC&EL Insurance Policy of an employer in the US that has employees temporarily in England? A) Voluntary Compensation and Employers Liability Coverage Endorsement B) Alternate Employer Endorsement C) Out of state coverage D) Foreign voluntary compensation coverage

D

Which one of the following is required for coverage to apply under the Longshore and Harbor Workers Compensation Act (LHWCA)? A) EE must be a member of the master crew B) EE must be engaged in non-maritime activities C) ER must also have a WC policy D) Injury must occur on navigable waters or adjoining areas

D

Which one of the following must a longshore worker prove in order to collect federal benefits for on-the-job injuries? A) That he or she was employed by a common carrier at the time of the injury b) That he or she was employed by a contract carrier at the time of the injury C) That he or she was not on dry ground at the time of the injury D) That he or she was either on navigable waters or in an adjoining area at the time of the injury

D

Which one of the following professional liability exposures could be covered by an unendorsed CGL policy? A) A lawyer is sued for failing to file suit within the statute of limitations. B) An insurance agent is sued after an auto theft claim is denied because the agent failed to add the vehicle to the policy in a timely manner. C) An employer is sued for failing to add a new employee to the company's health insurance plan. D) An ophthalmologist is sued when a patient loses sight in one eye after a cataract surgery.

D

Which one of the following professional liability policies is most likely to exclude coverage for bodily injury (BI) ? A) Engineer's professional liability B) Healthcare professional's professional liability C) Architect's professional liability D) Accountant's professional liability

D

Which one of the following statements about professional liability (PL) insurance for insurance companies is most accurate? A) PL Insurance policies for US-domiciled insurers typically exclude coverage for bad faith claims settlements. B) Insurance company errors and omissions insurance generally excludes coverage for punitive damages unless required to provide it by state law. C) Purchase of this coverage by US-domiciled insurers is relatively rare, as more than 90% of insurers choose to self-insure this exposure. D) The majority of US-domiciled insurers purchase this cover, which is also known as Insurance Company Errors & Omissions Insurance.

D

Which one of the following statements concerning coverage under the typical professional liability policy is most accurate? A) The coverage in the typical professional liability policy is limited to claims involving BI & PD and excludes coverage for financial losses. B) Professional liability policies limit coverage to negligent acts, which creates an exposure that must be covered using supplemental endorsements such as the ISO Errors in Professional Judgment endorsement form. C) Because of the long-tail nature of the exposure, professional liability policies typically provide coverage on an occurrence basis rathe than a claims-made basis. D) Professional liability policies are designed to cover claims arising from rendering or failing to render professional services.

D

Which one of the following statements relating to the legal liability of healthcare professionals to use an appropriate standard of care when providing health care is most accurate? A) The appropriate standard of care is generally determined by the attending physician, based on local standards of medicine, and is not generally challengeable in a court of law. B) In the past, a national standard of care was generally applied to medical treatment decisions, but in recent decades the courts have increasingly relied on local standards, which differ significantly from one location to the next. C) The defendant, typically a doctor or hospital, is required to establish the standard of care applicable to the medical treatment provided and to refute any allegations of causality. D) Most courts require the testimony of expert witnesses to establish the appropriate standard of care for medical treatment.

D

Why would an employer need to purchase the Maritime Coverage Endorsement on a WC & EL Insurance policy? A) Because the employer has maritime employees in Mexico B) Because the employer has maritime employees in Europe C) Because the employer faces an exposure to claims from its employees under a state's Wrongful Death statutes D) Because the employer faces exposure to claims from its employees under the Jones Act

D

XYZ Corporation is located in the state of Illinois and generally works solely in Illinois. Illinois is the only state listed on XYZ's WC policy. Near the holidays, one of XYZ's customers had a problem in Indiana and John, an XYZ employee, was sent to assist. John was injured while in Indiana and made claim for disability and medical benefits under Indiana law. Which one of the following describes how XYZ's WC policy would respond? A) Indiana benefits would be paid due to the temporary nature of the work. B) Benefits would be declined since the state of Indiana was not listed on the policy. C) Employers liability coverage would apply and John would have to sure XYZ to recover. D) Illinois benefits would be offered under the extraterritorial provision of the law.

D

XYZ is a home improvement company located in Illinois that sells replacement windows and siding. XYZ employs salespeople in Illinois, Indiana, Wisconsin, and Iowa. XYZ's WC&EL Policy is written so that it covers the employees in those 4 states. Item 3c (Other States Insurance) is left blank on the declarations. At its year-end meeting, XYZ's Board of Directors decides to expand operations into Missouri. It hires a new salesperson, Emily, and she begins working in Missouri. Unfortunately, XYZ does not tell its WC&EL policy insurer about its expansion into Missouri. While driving between potential clients' addresses in Missouri, Emily is hurt in an accident and incurs substantial medical bills and lost wages. Will XYZ's WC&EL policy cover Emily's expenses? A) Yes, the policy will cover Emily's injuries - she is an XYZ employee and the company has a WC&EL policy. B) No, the policy will not cover Emily's injuries - she was not at her work location when the accident occurred. C) Yes, the policy will cover Emily's injuries if XYZ goes back and pays the premium to add Missouri to the policy. D) No, the policy will not cover Emily's injuries, because Missouri was not shown on the policy as a state where XYZ was doing business, nor did XYZ request that Missouri be added.

D

Side A-only coverage

D&O liability insurance that covers only the individual liability of the insured directors and officers

Symbol 28

Hired Autos Only

Symbol 68

Hired Autos Only

Symbol 79

Mobile Equipment Subject to Compulsory or Financial Responsibility or Other Motor Vehicle Insurance Law Only

Symbol 29

Nonowned Autos Only

Symbol 71

Nonowned Autos Only

Symbol 22

Owned Autos Only

Symbol 62

Owned Autos Only

Symbol 24

Owned Autos Other Than Private Passenger Autos Only

Symbol 66

Owned Autos Subject to Compulsory Uninsured Motorists Law

Symbol 25

Owned Autos Subject to No-Fault

Symbol 65

Owned Autos Subject to No-Fault

Symbol 26

Owned Autos Subject to a Compulsory Uninsured Motorists Law

Symbol 64

Owned Commercial Autos Only

Symbol 23

Owned Private Passenger Autos Only

Symbol 63

Owned Private Passenger Type Autos Only

WC&EL policy parts

Part One - Workers Compensation Insurance; Part Two - Employers Liability Insurance; Part Three - Other States Insurance; Part Four - Your Duties If Injury Occurs; Part Five - Premium; Part Six - Conditions

sections of the ADCF

Section I - Covered Autos Coverages; Section II - General Liability Coverages; Section III - Acts, Errors, or Omissions Liability Coverages; Section IV - Conditions; Section V - Definitions

Symbol 27

Specifically Described Autos

Symbol 67

Specifically Described Autos

Symbol 69

Trailers in Your Possession Under a Written Trailer or Equipment Interchange Agreement

Symbol 70

Your Trailers in the Possession of Anyone Else Under a Written Trailer Interchange Agreement

A business has declared bankruptcy and a corporate officer has been sued for wrongdoing in handling corporate assets. It is determined that the officer is held liable for $1,000,000. Due to the bankruptcy, the corporation's assets have been frozen. The corporation's directors and officers (D&O) policy provides coverage with a $500K each loss limit and a $2M aggregate limit. As a result of this suit, the D&O policy will pay: a) $500,000 under Coverage A with a $1,,500,000 aggregate limit remaining. b) $500,000 under Coverage B with a $1,500,000 aggregate limit remaining. c) $500,000 under Coverage A and $500,000 under Coverage B with a $1,000,000 aggregate limit remaining d) Nothing due to the bankruptcy clause which excludes coverage in this instance.

a

A claim representative is handling a claim for an auto dealership insured under the ADCF. Several new autos and autos left by customers for service were damaged when a fire started in the service building. The first step that the representative should take in determining whether coverage applies is to: a) Review the policy declarations to gain the proper context for determining the application of coverage. b) Review the insuring agreements to determine which ones could apply to the described losses. c) Review the policy conditions to determine whether they preclude coverage at the time of loss. d) Review the policy exclusions to determine whether they exclude or limit coverage for loss.

a

A company's benefit administrator, while acting on behalf of the company, invested 100% of the plan funds in speculative stock. The return on the investment was ten-fold. The duty violated by the plan fiduciary in this instance is: a) Diversification b) Prudence c) Loyalty d) Adherence

a

A dealership keeps a customer's auto overnight. The auto, while on premises, is damaged by hail. The dealership has garagekeepers coverage on a legal liability basis on an Auto Dealers Coverage Form (ADCF). The customer has a liability-only policy. The customer asks the dealership to pay for the hail damage, but the claim is denied by the insurer. The only way the dealership's policy would have paid the claim is if the dealership had purchased: a) One of the garagekeepers direct coverage options b) Broadened coverage garage endorsement c) Physical Damage coverage d) Additional persons injured coverage.

a

A female job seeker was denied employment at a local law firm as she did not fulfill a job requirement that all employees be at least 6 feet tall. An employment practices liability claim was filed against the law firm alleging discriminatory actions. The type of discrimination described in this instance is: a) Disparate impact b) Disparate treatment c) Overt discrimination d) Gender discrimination

a

A franchised auto dealer's repair shop puts new tired on a customer's truck. Shortly after leaving the shop, one of the tires falls off because bolts were not fastened properly. The truck loses control, causing an accident. Which one of the following statements is correct regarding how the dealer's unendorsed ADCF would respond to the loss? a) The claim would be paid under the General Liability Coverage section. b) The claim would be paid under the Garagekeepers Coverage section. c) The claim would be paid under the Acts, Errors, or Omissions Liability Coverage section. d) The claim would be paid under the Physical Damage section.

a

A law that affects employment practices liability loss exposures is the Worker Adjustment & Retraining Notification Act, which: a) Requires employers to provide notice 60 days in advance of covered plant closings & mass layoffs b) Prohibits discrimination against disabled persons and requires an employer to make reasonable accommodations in the workplace for disabled employees. c) Establishes minimum wage & overtime rates and regulates the employment of children. d) Prohibits discrimination against individuals age 40 or older based solely on their age.

a

A lawsuit brought by one or more shareholders in the name of the corporation is a: a) Derivative lawsuit b) Class action lawsuit c) Fiduciary lawsuit d) Retaliation lawsuit

a

A shareholder may bring a derivative suit against a director or officer for having ownership in a competing business. This is a breach of their: a) Loyalty b) Obedience c) Disclosure d) Care

a

A small non-profit homeless shelter provides its services to a local community. Several homeless occupants allege that the shelter director administers preferential treatment in the distribution of food, toiletries, and cots based upon race. This claim against the shelter would be covered under a(n): a) Employment practices liability policy with added 3rd-party discrimination coverage. b) Directors & officers policy with both Coverage A & Coverage B. c) Directors & Officer liability policy with no employment practices exclusions. d) Employment practices liability policy with a broad form definition of wrongful acts.

a

A technician working part-time for an auto dealer strains his back while lifting tires. He goes to the emergency room and sees a chiropractor 3 times. He tells the service manager he doesn't want to file a Workers Comp. claim, but would like to be paid for his missed week of work and the chiropractor bills. Which one of the following describes whether there will be coverage under the ADCF? a) There will not be coverage under the ADCF because injuries to an employee of the Insured are excluded. b) There will be coverage for the emergency room and chiropractor bills under Locations and Operations Medical Payments of the ADCF, but not for the time lost from work. c) There will be coverage for the emergency room visit only under Locations and Operations Medical Payments of the ADCF, but not for the chiropractor bills or time lost from work. d) There will be coverage for the emergency room visit, chiropractor bills, and time lost from work under Locations and Operations Medical Payments of the ADCF.

a

A used car dealership has a standard Auto Dealers Coverage Form policy with liability limits of $1,000,000 and direct primary garagekeepers coverage showing limits of $50,000 and deductibles of $500. It does not carry physical damage coverage. On the same day, a mechanic causes damage to a customer's vehicle totaling $10,000 and a hail storm causes $200,000 in damages to insured's inventory. What amount would be paid under the Insured's policy? a) $9,500 b) $40,000 c) $210,000 d) $219,500

a

ABC has a directors and officers (D&O) policy with a limit of $10 million, with a $10,000 SIR coverage A. In order to boost cash-flow, the accounting department made what turned out to be risky investments. While those investments paid off initially, they soon went bad and ABC lost a lot of cash and ended up in a worse cash-flow position than previously. Due to this bad investment and change in the cash-flow pictures, the value of ABC's stock dropped so much that the New York Stock Exchange decided to de-list. AS a result of the de-listing, the stock could no longer be traded and stockholders had nothing more than sheets of paper to show for their investment. The stockholders sued the directors for $100 million. However, a settlement was reached with the stockholders, for the limit on the D&O policy, less defense costs and deductible. With defense costs of $200,000, how much did the stockholders collect under the D&O policy? a) $9,790,000 b) $9,800,000 c) $9,990,000 d) $10,000,000

a

Acts such as sexual harassment, wrongful termination, and unlawful discrimination are referred to as: a) Wrong employment practices B) Torts c) Reasons to quit a job d) Reasons to fire an employee

a

Although a corporation's directors and officers must exercise care when making decisions about the running of the company, courts have held that they cannot be held liable for honest mistakes. This latitude allowed by courts to officers and directors is called the: a) Business judgment rule b) Nonjudgmental rule c) Due diligence rule d) Honest mistake rule

a

An Insured has an unendorsed employment practices liability (EPL) policy with a $500,000 limit of liability and a $25,000 retention. A former employee alleges injuries sustained when another employee's acquaintance entered the premises and assaulted the employee, with injuries and damage totaling $100,000. Is this a covered claim, and if so, how much will the Insurer pay? a) No, coverage does not apply. b) Yes, coverage applies. Insurer pays $75,000. c) Yes, coverage applies. Insurer pays $80,000. d) Yes, coverage applies. Insurer pays $100,000.

a

An auto dealer advertises a used car for sale as being in min condition, with a price of $5,000. When a customer expresses a wish to purchase the car, the customer learns the price is actually $7,500. The customer proceeds with the purchase, and a week later the transmission fails. The customer files a lawsuit for advertising injury. Which one of the following describes whether there will be coverage for this claim under the ADCF? a) There will not be coverage for either the wrongful description of price or the transmission failure. b) There will be coverage for the wrong description of price, but not for the transmission failure. c) There will be coverage for the transmission failure. but not for the wrong description of price. d) There will be coverage for both the wrong description of price and the transmission failure.

a

An auto dealer has an auto delivered to a customer 100 miles away from the dealership. While in transit the auto sustains collision damage of $2,500. The dealer had an unendorsed ADCF policy with a $5,000 deductible for physical damage coverage. Would the damage to the auto be covered? a) No, because the auto was delivered over 50 miles from the dealer. b) Yes, because the auto was in the care, custody, and control of the dealer. c) No, because the auto was not on the dealers lot at the time of the loss. d) Yes, because autos are covered worldwide.

a

An auto dealer is concerned about coverage for the physical damage to autos before they are delivered to their lot from the distributor. The dealer regularly has autos delivered over 75 miles from the point of distribution. Which one of the following ADCF endorsements would best provide the physical damage protection the dealer is looking for? a) Dealers Driveaway Collision Coverage endorsement b) False Pretense Coverage endorsement c) Broad Form Products Coverage endorsement d) Garagekeepers Direct Coverage Option endorsement

a

An employer has a personnel policy that requires employees to be at least 6 feet tall before they can be considered for an office managerial position. This action would be cause for an employee to file a discrimination claim against the employers Employment Practices Liability policy based on: a) Disparate impact b) Overt discrimination c) Disparate treatment d) Overt harassment

a

An individual alleges a wrongful act by the director of a company. In order to classify the allegation as a claim under a directors & officers policy, which one of the following must occur? a) A written demand for monetary or non-monetary relief b) A verbal demand for monetary or non-monetary relief c) The threat of a filed lawsuit against the director d) The initiation of criminal proceedings

a

Coverage A and Coverage B of most D&O liability policies insure different entities for the same type claims. Which one of the following is an entity insured under these policies for claims brought against the entity or individual? a) The corporation itself b) Customers of the corporation c) Stockholders of the corporation d) Employees of the corporation

a

Coverage B of the insuring agreement in the directors and officers (D&O) liability policy is also called: a) Indemnification coverage b) Direct coverage c) Individual coverage d) Entity coverage

a

Employment Practices Liability policies often provide coverage for 3rd-party discrimination claims filed by: a) Customers who have been sexually harassed. b) Employees who have been discriminated against. c) Employees who were wrongfully terminated. d) Customers dissatisfied with product reliability.

a

Fred is a nurse working the first shift at Save our Souls Hospital (SOS). He is the only man and the only unmarried nurse on that shift. He also has more seniority than all but one more nurse other nurse on his shift. SOS needs to hire more nurses for the first shift and brings on 3 young women straight out of nursing school - all of whom are married with young children. A couple of months late, Bob, the SOS President realizes that he made a mistake hiring 3 nurses for the first shift. Bob needs to trim the first shift by 1 person - either by laying someone off or transferring someone to the third shift. The new young women have made it clear to Bob that they can only work the first shift. Bob wants to keep as many people employed as possible, so he decides to transfer Fred to the third shift. Fred balks at this transfer and tells Bob that he is being treated unfairly because he is the only male nurse on that shift. He sues SOS for discrimination damages. What is the term given to the type of discrimination Fred is claiming? a) Disparate treatment b) Overt discrimination c) Disparate impact d) Intentional discrimination

a

If an employer has both an employee benefits liability (EBL) coverage & fiduciary liability coverage, why is it important to check the wording in both policies' "Other Insurance" provisions? a) To be sure that the 2 policies will not create a conflict in the event of a claim covered by both policies. b) To be sure that the Insured employer is paying an adequate premium for the coverage. c) To be sure that both policies will pay the full amount of any covered claim. d) To be sure that both policies will pre-rate the payment of any covered claim.

a

Legislation has greatly expanded the basis for employment-related discrimination claims. These laws can create employment practice liability (EPL) loss exposures. Which one of the following is true regarding these exposures? a) EPL policies specifically exclude some violations created by law. b) Federal employment-related laws are broader than state laws. c) Corporate risk managers need only deal with the insurable exposures. d) Major types of employment-related claims are mutually exclusive.

a

Most directors and officers policies have a claims-made coverage trigger. Which one of the following does an extended reporting period add? a) 30 - 60 days automatic tail coverage b) 60-90 days automatic tail coverage c) 2-7 years of coverage after the automatic tail d) 6 years of coverage after the automatic tail

a

Nelson owns a car dealership that is covered under the ADCF. Garagekeepers coverage of the ADCF indicates specified causes of loss coverage with a $1,000 deductible for any one event. One evening a tornado came through Nelson's property and caused $2,700 in damage to an auto belonging to Saul, who had left his auto with Nelson for repairs. Saul's personal auto policy included comprehensive coverage with a $500 deductible. Which one of the following correctly indicates how much Nelson's ADCF insurer will pay Saul for the damage to his auto? a) $0 b) $500 c) $1,700 d) $2,200

a

Some organizations such as school boards, municipalities, and non-profit organizations carry a special type of directors and officers (D&O) liability policy. What is the name given to this type of D&O coverage? a) Occupation-specific b) Director-specific c) Officer-specific d) Insured-specific

a

The 'Commercial Lines Manual' defines "motor carrier" to include any person or organization: a) Providing transportation by auto in the furtherance of a commercial enterprise. b) Providing property transport services for others as a primary business purpose. c) That transports persons or property for other persons or organizations. d) That uses motorized vehicles in the furtherance of its business interests.

a

The Auto Dealers Coverage Form (ADCF) uses eleven numerical symbols to describe the autos that qualify as covered autos. Nine of the symbols are similar to the Business Auto Coverage Form (BACF). Which one of the following pairs of symbols is unique to the ADCF? a) 30 & 31 b) 29 & 30 c) 22 & 23 d) 21 & 22

a

The Employee Retirement Income Securities Act (ERISA): a) Was enacted in response to abuses & underfunding in many benefit plans. b) Was enacted to ensure that all workers have retirement programs. c) Addresses only retirement plans. d) Applies only to group health insurance.

a

The Employee Retirement Income Security Act (ERISA) is the federal law that governs retirement and other benefit plans. ERISA was enacted in response to: a) Abuses and underfunding in many benefit plans following several insolvencies. b) Banks investing funds in investments that resulted in numerous defaults in the market. c) Foreign countries beginning to participate in the retirement and benefit programs. d) Congress insisting on acting as the watchdog of the corporate benefit programs.

a

The Employee Retirement Income Security Act (ERISA) spells out the 4 duties of a benefit plan fiduciary. Which duty requires that the fiduciary act with a certain level of skill and diligence? a) Duty of prudence b) Duty of loyalty c) Duty of diversification d) Duty of adherence

a

The chief financial officer (CFO) of ABC Corporation was charged with administering the company's 401(k) plan for employees. Because the ABC stock value was growing at a double digit rate, the CFO invest the full 401(k) funds in ABC stock. 2 years later, the ABC stock dropped significantly due to new competition in the market. An employee group brought suit against the CFO for not properly diversifying the 401(k) investments and for not being prudent in carrying out his duties managing the 401(k). Which one of the following policies would provide coverage for the CFO for defense of this lawsuit? a) Fiduciary liability policy b) Directors and officers liability policy c) Employment practices liability policy d) Comprehensive general liability policy

a

The director of a corporation has been named in a suit brought by a stockholder of the corporation alleging a failure to correct inaccurate statements made within its prospectus. What is the classification of the suit made: a) Non-derivative suit b) Civil suit c) Derivative suit d) Class action

a

The director of a corporation has been named in a suit brought by a stockholder of the corporation alleging a failure to correct inaccurate statements within its prospectus. The stockholder filed suit in his own name. Which one of the following is the most likely classification of the suit? a) Non-derivative suit b) Civil suit c) Derivative suit d) Class action

a

The majority of cases of alleged wrongful employment practices arise from which one of the following? a) Wrongful termination b) Discrimination c) Sexual harassment d) Retaliation

a

Tim's Chevrolet dealership has an ADCF. THat policy contains garagekeepers directo coverage on an excess basis. George's car is destroyed. HOw much, if any, will Tim's insurer pay towards this loss? Disregard any policy deductible. a) Tim's policy will pay the amount of loss above what George's insurance pays, not to exceed the policy limit. b) Tim's policy will pay nothing towards this loss. c) Tim's policy will pay for all the damage to George's car. d) Tim's policy and George's policy will each pay one-half of the damages.

a

Under 'Commercial Lines Manual' (CLM) rules, the only organizations that are eligible for coverage under the Auto Dealers Coverage Form (ADCF) are: a) Franchised and non-franchised auto and trailer dealers b) Auto, truck, and trailer repair shops c) Parking garages and lots d) Operations with fleet exposures

a

What is the name given to a claim by an employee who says that he/she was fired because of the filing of a workers compensation claim? a) Retaliation claim b) Harassment claim c) Discrimination claim d) Insurance claim

a

Which one of the following best describes Side A-only coverage added as a separate coverage for directors and officers? a) Does not include entity coverage b) Provides reimbursement coverage to the corporation when the corporation indemnifies the director c) Is written only on a pure excess basis d) Can be frozen as a corporate asset by a bankruptcy court.

a

Which one of the following best describes disparate treatment? a) Unfavorable or unfair treatment of someone in comparison to other similar individuals b) Indirect discrimination against a group c) A type of employee benefit loss exposure d) A specific observable action to discriminate against a person or class of persons

a

Which one of the following coverages provided under Section II of the ADCF allows the dealer to maintain goodwill with customers without admitting liability? a) Medical payments coverage b) Bodily injury (BI) & property damage (PD) liability coverage c) Personal and advertising injury liability coverage d) Acts, errors, or omissions liability coverage

a

Which one of the following endorsements used to broaden or modify the coverage provided by the Auto Dealers Coverage Form requires the named insured to provide monthly or quarterly reports to the Insurer? a) Dealers Driveaway Collision Coverage b) False Pretense Coverage c) Broad Form Products Coverage d) Customer Complaint Legal Defense Coverage

a

Which one of the following is a distinguishing characteristic of a derivative suit? a) Damages recovered, except for the expenses of bringing the suit, go directly to the corporation. b) It is brought by one or more individuals representing the interests of an entire group of people. c) Persons outside of the corporation may initiate such lawsuits. d) Such lawsuits are made in the name of individual customers or employees.

a

Which one of the following is a major responsibility of corporate directors? a) to perpetuate a competent board through regular elections b) to manage investments and disbursements of the corporation's assets c) to create the proper annual & interim reports for shareholders d) to establish the procedures & operational goals for each department

a

Which one of the following is correct regarding auto values reported on the reporting approach for physical damage coverage under the Auto Dealers Coverage Form? a) Reports of values serve only as the basis for charging premium. b) Reports of values serve as the basis for charging premium and determining coverage limits. c) The reporting approach eliminates the requirement for full reporting of values in the non-reporting approach. d) The dealer reports values annually under the reporting approach.

a

Which one of the following is often covered under fiduciary liability policies? a) Claims arising under the Consolidated Omnibus Budget Reconciliation Act (COBRA) b)Claims for acts that occurred before the retroactive period c) Claims because of criminal and fraudulent acts d) Claims because of failure to properly fund a plan

a

Which one of the following statements about trailer interchanges is most accurate? a) Normally, each motor carrier agrees to indemnify the other for damage that occurs to the other's trailer during the exchange. b) A motor carrier's MCCF covers damage to borrowed trailers in the carrier's care, custody, or control. c) A motor carrier is under no obligation to pay for damage to a borrowed trailer under trailer interchange agreements. d) Trailer interchange coverage provides only specified causes of loss coverage for the borrowing motor carrier.

a

Which one of the following statements is correct regarding the exclusion for defective products in the bodily injury (BI) and property damage (PD) liability portion of Section II of the ADCF? a) The exclusion applies only to the defective part itself, not to damage caused to other property as a result of the defect. b) The exclusions applies to the costs related to the recall of any product from the market because of a known or suspected defect. c) The exclusion applies to any BI or PD caused by a defective product sold by the insured. d) The exclusion is comparable to the Damage to Your Work exclusion in the CGL form.

a

Which one of the following statements is true regarding the use of deductibles and coinsurance in directors and officers (D&O) liability policies? a) Substantial deductibles often apply to Coverage B, with a small or no deductible applicable to Coverage A. b) Most D&O policies include a percentage deductible that disappears after a claim has reached a certain amount. c) Because there is no "valuation" in D&O Insurance, D&O policies do not contain a coinsurance provision. d) D&O policies do not have deductibles but generally impose a substantial coinsurance penalty for underinsurance.

a

With respect to defined-contribution retirement plans, the size of employee benefits are dependent upon the plan's earnings. This can lead to class action lawsuits covered under a typical: a) Fiduciary liability policy b) Directors & Officers liability policy c) Employment practices liability policy d) Employee retirement income security policy

a

Workers who believe their employment rights have been violated can file discrimination charges with which one of the following gov't agencies? a) Equal Employment Opportunity Commission (EEOC) b) Fair Labor Standards Act (FLSA) c) Securities and Exchange Commission (SEC) d) Consolidated Omnibus Budget Reconciliation Act (COBRA)

a

Zeke has a garage that is covered by an unendorsed ADCF. He occasionally purchases autos at auction or from other dealers in neighboring counties and states that 50 miles or more from his garage. Which one of the following BEST describes how Zeke's agent should provide collision coverage for the autos during transport? a) Add the Dealers Driveaway Collision Coverage endorsement to the ADCF. b) There is no available coverage for transporting autos more than 50 miles. c) Remove the transported vehicle collision coverage exclusion from the ADCF. d) Advise Zeke to only purchase autos from auctions and dealers within 50 miles.

a

independent directors liability policy

a D&O liability policy that insures only the independent directors named in the poicy

trailer interchange agreement

a contract under which two motor carriers agree to swap trailers and to indemnify each other for any damage that occurs to the other's trailer while it is in the borrowing motor carrier's possession

franchised dealer

a dealer that is authorized by one or more auto manufacturers to sell their autos under the manfacturers' named and trademarks

permanent partial disability (PPD)

a disability caused by a work-related injury or disease that impairs the injured employee's earning capacity for life, but the employee is able to work at reduced efficiency

permanent total disability (PTD)

a disability caused by a work-related injury or disease that renders an injured employee unable to ever return to gainful employment

temporary partial disability (TPD)

a disability caused by a work-related injury or disease that temporarily limits the extent to which a worker can perform job duties; the worker is eventually able to return to full duties and hours

temporary total disability (TTD)

a disability caused by a work-related injury or disease that temporarily renders an injured worker unable to perform any job duties for a period of time

monopolistic, or exclusive, state fund

a facility, owned and operated by a state government, that provides workers compensation insurance and that does not permit any other insurers to sell workers compensation insurance in that state

experience modification factor

a factor that tailors manual rates to an insured's experience based on the insured's payroll and loss record of certain prior years

self-insured group (pool or trust)

a group of employers in the same industry that jointly and severally guarantee payment of workers compensation benefits to the employees of the group's members; a not-for-profit association or corporation is typically formed to which they pay premiums for self-insurance purposes

independent medical examiner

a healthcare provider who has agreed to evaluate an injured worker for a fee and who is not involved in the injured worker's treatment

derivative suit

a lawsuit brought by one or more shareholders in the name of the corporation alleging that the defendants' conduct was outside the permissible boundaries of sound management practice, including the business judgment rule

class action

a lawsuit in which one person or a small group of people represents the interests of an entire class of people in litigation

business judgment rule

a legal rule that provides that a director will not be personally liable for a decision involving business judgment, provided the director made an informed decision and acted in good faith

consequential damages

a payment awarded by a court to indemnify an injured party for losses that result indirectly from a wrong such as a breach of contract or a tort

outside directors liability policy

a policy covering the liability of a corporation's directors while they serve as outside directors for another corporation

extraterritorial provision

a provision of a workers compensation statute that extends protection to an employee who is injured while temporarily working in a state other than the state of hire

experience rating plan

a rating plan that increases or reduces the premium for a future period based on the insured's own loss experience for a period in the recent past

liquidated damages

a reasonable estimation of the actual damages, agreed to by contracting parties and included in the contract, to be paid in the event of a breach or for negligence

competitive fund

a state fund that sells workers compensation insurance in competition with private insurers

status test

a test that a claimant must satisfy to be covered under the U.S. LHWCA; it requires that, at the time of injury, the claimant must have been engaged in maritime employment

situs test

a test that a claimant must satisfy to be covered under the US LHWCA; requires that, at the time of injury, the claimant must have been on navigable waters or on adjoining areas such as piers, wharves, dry docks, terminals, building ways, marine railways, or other areas customarily used in loading, unloading, repairing, dismantling, or building vessels

privity of contract

a third party with no contractual relationship to the accountant could sue the accountant for professional negligence if the accountant knew that the third party would rely on the financial statements prepared by the accountant

state fund

a workers compensation insurer that is set up by the state in which it operates either as an agency of the state government or as a mutual or not-for-profit insurer

criteria for workers compensation injury

accidental; arising from employment; in the course of employment

duty of care

act in good faith and in a manner they reasonably believe to be in the corporation's best interests; discharge their responsibilities with informed judgment and a degree of care that a person in a similar position would believe to be reasonable under similar circumstances

maritime employment

activities that form an integral part of the loading and unloading of shipborne containers, such as loading, unloading, repairing, building, or dismantling vessels

risk control measures for D&O liability exposures

adhering to Sarbanes-Oxley requirements; establishing independence of the board of directors; providing opportunities for open communication among D&O; ensuring that D&O fully understand operations, laws, and corporate charter

tort claim

allegations that the performance of the contract did not meet the standards of reasonable professional care

ultra vires

an act of a corporation that exceeds its chartered powers

nominal damages

an award that indicates that, while the plaintiff has sustained some harm, the injury is not one warranting substantial monetary relief

maintenance and cure

an employee is legally obligated under maritime law to pay the costs of providing maintenance and cure for any person who is injured or who becomes ill while serving as a member of the vessel's crew

U.S. LHWCA Coverage endorsement

an endorsement that amends the WC&EL policy to cover the insured's obligations under the U.S. LHWCA

statutory employee

an independent contractor's employee who, because the independent contractor has not maintained workers compensation insurance, is considered to be an employee of the principal employing the independent contractor

rebuttable presumption

an inference drawn from certain facts tat establish a prima facie case, which may be overcome by the introduction of contrary evidence

National Council on Compensation Insurance (NCCI)

an insurance advisory organization for insurers writing workers compensation insurance

bad faith

an insurer's denial of coverage without cause

act, error or omission

any actual or alleged negligent act, error or omission committed by an insured in the course of the insured's auto dealer operations resulting from (1) an insured's failure to comply with credit or lease disclosure requirements, (2) failure to properly disclose odometer mileage, (3) insured's actions as an insurance agent; defect in title

D&O "wrongful act" definition

any error, misstatement, misleading statement, act, omission, neglect or breach of duty actually or allegedly committed or attempted by the directors and officers, individually or collectively, in their respective capacities as such, or any matter claimed against them solely by reason of their status as directors and officers

motor carrier

any person or organization providing transportation by auto in the furtherance of a commercial enterprise

navigable waters

any waters that, by themselves or by uniting with other waters, from a continuous highway over which commerce may be carried out with other states or foreign countries

Defense Base Act (DBA)

applies LHWCA benefits to civilian employees of contractors performing services outside the U.S. under almost any contract with an agency of the U.S government in support of U.S. foreign policy

Leased Autos exclusion

applies to any covered auto while it is leased or rented to others

Damage to Impaired Property or Property Not Physically Damaged exclusion

applies to damage cause by either (1) a delay or failure to perform a contract or an agreement or (2) a defect or dangerous condition in the insured's products or work

fiduciary liability loss exposures

arise mainly out of the possibility that beneficiaries of an employee benefit plan may make a claim against the plan officials for breach of their fiduciary duties

common-law defenses for employers

assumption-of-risk; contributory negligence; fellow-servant rule

Civil Rights Act of 1991

authorizes damage awards for intentional gender and racial discrimination in employment and allows a claimant the right to demand a jury trial

ADCF physical damage exclusions

autos leased or rented to others; false pretense; profits; loss at unnamed locations; driveaway collision; collision of transporting conveyance

A claim representative is handling a claim for an auto dealership insured under the ADCF. Several new autos and autos left for service by customers were damaged when a fire started in the service building. The representative has verified that the loss occurred to the named insured at an insured location during the policy period. The next step that the representative should take in determining whether coverage applies is to: a) Review the policy declarations to gain the proper context for determining the application of coverage. b) Review the insuring agreements to determine which ones could apply to the described losses. c) Review the policy conditions to determine whether they preclude coverage at the time of the loss. d) Review the policy exclusions to determine whether they exclude or limit coverage for the loss.

b

A company carries a Directors and Officers (D&O) liability policy containing a typical definition of loss and a $1M annual aggregate limit. The company suffers a covered loss result in payment of $300,000 of indemnity, $200,000 of defense costs, and a criminal fine of $25,000. After this loss, the company's remaining annual aggregate limit would be: a) $475,000 b) $500,000 c) $675,000 d) $700,000

b

A customer of a painting contractor contends the painter made an unwelcome sexual advance while working in the customer's home. This claim would be covered by the painting contractor's Employment Practices Liability policy if the: a) Definition of an employee includes employees working away from the Insured premises. b) Policy is endorsed to cover 3rd-party discrimination claims. c) Painter is an independent contractor. d) Advances were unintentional.

b

A female supervisor consistently reprimands male, but not female, employees for using the Internet for personal use. This is an example of: a) Overt discrimination b) Disparate treatment c) Disparate impact d) Adverse impact

b

A large manufacturing corporation administers a health care plan with a clause that allows terminated employees to maintain their group health benefits for 90 days under the Consolidated Omnibus Budget Reconciliation Act (COBRA). A former employee of the company has filed a claim alleging that they lost all health care benefits after being terminated. The company maintains current Directors & officers (D&O), Employment Practices Liability (EPL), and Fiduciary Liability policies. The claim would be covered: a) By the EPL policy b) Under the fiduciary liability policy c) By the D&O policy d) Under the workers compensation polciy

b

A suit has been filed by the United States of American against a publicly traded industrial corporation. The suit alleges that the corporation has violated the Clean Air Act by filing false statements regarding the level of emissions and air pollution generated by the company. The suit individually names the Chief Executive Officer (CEO) & a board of directors as co-dependents with the corporation. The type of suit that has been filed is...? a) Class action suit b) Non-derivative suit c) Derivative suit d) Antitrust suit

b

ABC Company is a small, family-owned business that has never purchased employment practices liability (EPL) insurance. Susan is a temporary worker at ABC, having been placed there by Temporary Placements Company. Susan is a member of a fundamentalist religious group that requires that she wear some unusual clothing. The people at ABC have always tolerated Susan's clothing and have never expressed any problems or concerns about it. Recently, Gerald purchased ABC and at the same time purchased an unendorsed EPL policy that covers actions by employees against the firm. Gerald comes from a very conservative background and when he discovers that Susan is not an employee of the company he tells her that, because of her unusual beliefs and clothing, she is no longer welcome at ABC. Susan sues ABC and Gerald, claiming wrongful termination and religious discrimination. Will ABC's EPL policy provide coverage for this action? a)Yes, ABC's EPL policy will provide coverage for this action, because Susan is a "de-facto employee" b) No, ABC's EPL policy will not provide coverage for this action, because it does not include independent contractors in the definition of employee. c) Yes, ABC's EPL policy will provide coverage for this action, but only after the case has been decided in court. d) No, ABC's EPL policy will not provide coverage for this action, because it excludes religious discrimination

b

ABC Corporation and its directors have been sued by a group of shareholders, alleging that mis-management of the company led to a large drop in the per-share price of the stock. ABC has a directors and officers (D&O) liability policy. After a long, drawn-out period, ABC's directors and officers Insurer has reached an agreement with the shareholders to settle their claim for a certain amount of money. However, ABC neither likes nor approves of this settlement and refuses to consent to the settlement. Because of that refusal to consent to the settlement, the insurer says that ABC must fund its own defense from this point forward. What is the name given to the clause in the policy invoked by the Insurer in this case? a) The out-of-pocket clause b) The hammer clause c) The extra expense clause d) The defense clause

b

ABC Corporation was self-insured for its employee health insurance benefits. John was the personnel director and was charged with administering the plan. John found that the female portion of the workforce made use of the health insurance coverage much more than the male portion. In an effort to reduce the expense of the health insurance program, John began to eliminate jobs within the company that were held by females. As a result, a group of female employees brought suit against John and against ABC for discrimination and wrongful termination. Which one of the following policies held by ABC would respond and defend John? a) Directors and officers liability policy b) Employment practices liability policy c) Fiduciary liability policy d) Comprehensive general liability policy

b

Alridge Auto is an auto dealership that is covered under the ADCF, which includes coverage for the auto inventory under Physical Damage Coverage written on a monthly basis. Aldridge reported $3 million in inventory as of June 30. A hailstorm on July 2 caused $80,000 in damage to several of the autos. After Aldridge made a claim, the insurer's investigation revealed that the actual inventory on June 30 was $6 million. Which one of the following correctly indicates how much the insurer would pay Aldrich for the damage to the vehicles? a) $0 b) $40,000 c) $60,000 d) $80,000

b

Although a corporation may not want to settle any derivative suits out of court, why under common law might such settlements not benefit the corporation? a) the corporation would be considered to be the wrongdoer b) No determination of wrongdoing is made c) The results are not binding on all participants d) The results are sealed and, thus, hidden from the stockholders

b

An auto dealer is insured by an ADCF with a garagekeepers direct primary coverage limit of $30,000, a $250 deductible per auto, and a $2,500 max deductible. While waiting for repair, a customer's vehicle is parked outside overnight. Vandals break into the car causing a loss of $5,000. The dealer's insurance: a) Reimburses the full amount of the loss. b) Covers the loss minus the deductible. c) Excludes da mage due to vandalism. d) Excludes damage to vehicles left outside.

b

An auto dealer recently completed repairs to a customer's vehicle. However, the repairs were improperly made and caused the owner to crash into another vehicle, causing injury to both drivers, damage to the vehicle, and damage to a street light. Which one of the following auto dealer's coverages is most likely to respond? a) Garagekeepers Liability b) Garage liability c) CGL d) Business Auto Liability

b

An auto dealer's technician repairs the brakes on a customer's auto. While the customer is driving the car home from the dealer after the repair, the brakes fail, and the auto hits a pole, causing damage to the auto's bumper. Which one of the following correctly describes coverage under the ADCF? a) There would not be coverage for either the damage to the bumper or additional repair to the brakes, b) There would be coverage for damage to the bumper only. c) There would be coverage for additional repair to the brakes only. d) There would be coverage for both damage to the bumper and additional repair to the brakes.

b

An employer requires that its employees be at least 6 feet tall. Which one of the following types of potential Employment Practices Liability claims is likely to result from this requirement? a) Disparate treatment discrimination b) Disparate impact discrimination c) Sexual harassment d) Retaliation

b

An employer who fires a worker because he/she exposed unethical or illegal practices leaves itself vulnerable to which one of the following types of employment practice claims? a) Harassment b) Retaliation c) Discrimination d) Fiduciary

b

An office-supplies distributor requires its drivers to be able to lift 100 pounds with proper form. 45 women who have denied employment during the current year file a class action lawsuit alleging that the lifting requirement is unfairly discriminatory against women. The distributor promptly reports the claim to its Employment Practices Liability (EPL) Insurer. In court, the distributor is found guilty of discrimination since the heaviest item actually distributed weighs only 20 pounds. The EPL carrier incurs $50,000 in defense costs and the court orders a $900,000 judgement against the distributor to be split among the 45 women. There is a $1 million limit of liability including defense costs; Retroactive Date is 01/01/1970; Retentions are $25,000. The EPL policy will pay: a) $50,000 for defense costs and nothing for the judgment. b) $50,000 for defense costs and $875,000 for the judgment. c) $50,000 for defense costs and $900,000 for the judgment. d) Nothing for the defense costs and $900,000 for the judgment.

b

Bubba's Cars, a non-franchised auto dealer, is insured under the ADCF, which includes garagekeepers collision and comprehensive coverages with neither of the direct coverage options. The garagekeepers collision coverage is subject to a $500 deductible. Bubba's mechanic caused $5,000 damage to customer Eve's car when he negligently ran into a tree on a test drive. Eve does not carry physical damage coverage on her car. What is the net amount that Bubba's ADCF insurer will ultimately pay for Bubba's claim for damage to Eve's car? a) $0 b) $4,000 c) $4,500 d) $5,000

b

By adding the False Pretense Coverage endorsement found in the ADCF, an auto dealer will have coverage when: a) The dealer discovers a worthless check was used for the purchase of a vehicle. b) A patron asks to take a vehicle on a test drive, but the patron never returns it. c) Malicious prosecution is involved in an employee-related claim for personal injury before, during, or after employment. d) The named insured acquires a vehicle from a seller knowing that the seller does not have legal title to the vehicle.

b

Carlota is a Vice President of Operations at LMN Enterprises. She is an exempt employee, meaning she is not entitled to: a) Contingent income b) Overtime pay c) Compensatory time off d) Pension benefits

b

Corporate directors are considered to have met their duty of care if they: a) Discharge their responsibilities according to the same standards that an employee of the organization would use b) Act in good faith and in a manner they reasonably believe to be in the best interests of the corporation c) Conduct themselves in a manner that guarantee's the enterprise's profitability d) Make informed decisions based upon their special business skills

b

Fiduciary liability loss exposures arise mainly when beneficiaries of a plan make a claim against the plan officials for breach of their fiduciary duties. Which one of the following is a specific duty of a plan fiduciary? a) To act in a way that is solely in the best interests of the organization providing the benefits. b) To ensure that the plan's investments are sufficiently diversified to minimize the risk of large losses. c) To carry out duties in such a way that no investment plans will lose money for the beneficiaries. d) To minimize actions that comply with the plan documents but may not be in compliance with the law.

b

In order to apply coverage regardless of legal liability for damage to a customer's vehicle in the insured's care, custody, or control, an Auto Dealers Coverage Form would also need: a) Broad Form Products coverage. b) Garagekeepers Direct Primary coverage c) Customer Complaint Legal Defense coverage d) Dealers Driveaway Collision coverage

b

Many D&O liability policies may contain a 3rd insuring agreement called Coverage C. Coverage C makes the corporation an entity for claims made against it for wrongful acts. Which one of the following explains why bother Coverage B, which insures the corporation, and Coverage C which also insures the corporation, may both be needed? a) Coverage C would cover individual directors and officers while Coverage B covers for reimbursement to the corporation. b) Coverage B covers for indemnification to its directors and officers while Coverage C covers for the corporation's wrongful acts. c) If the Insurance carrier were to decline coverage under Coverage B, the Insured would still be able to make claim under Coverage C. d) If the limits under Coverage B were exhausted the Insured would be able to proceed under the Coverage C provision of the policy.

b

Marcus has filed na employment discrimination claim against his employer and lodged a complaint with the Equal Employment Opportunity Commission (EEOC). If the EEOC dismisses Marcus's discrimination complaint, it will: a) Bar his suit b) Not bar his suit c) Diminish the value of his suit d) Transfer the claim to another gov't agency

b

Normally, a motor carrier would not need physical damage coverage for a trailer during the time that it is borrowed by another motor carrier. This is because: a) The borrowing carrier's coverage is narrower than the lending carrier's coverage. b) The borrowing motor carrier should have trailer interchange coverage. c) The trailer interchange exclusion eliminates coverage when a trailer is borrowed. d) The trailer interchange exclusion should have been deleted from the borrowing carrier's coverage.

b

One difference between the BCF and the MCCF concerns the trucking industry's use of owner-operators. Which one of the following statements about owner-operators is most accurate? a) The motor carrier that hires an owner-operator for the initial trip provides the coverage for the backhaul trip. b) Customarily, the auto liability insurance of motor carriers covers owner-operators while hailing for the insured motor carrier. c) Liability for the negligence of an owner-operator acting within the terms of the lease cannot be imputed to the motor carrier. d) Owner-operators typically furnish their own trailers to haul cargo using truck-tractors provided by the motor carrier.

b

Regarding sexual harassment claims, isolated incidents are insufficient from a legal standpoint to establish the existence of which one of the following types of work environments? a) Unpleasant b) Hostile c) Diverse d) Congenial

b

The "employment at will" legal dcotrine has allowed employers to terminate employment relationships with or without cause at any time. An exception to "employment at will" is: a) The practice of constructive discharge. b) The theory of implied contract. c) Claims for a hostile work environment. d) Retaliation type claims.

b

The Broad Form Products Coverage endorsement can be used: a) To delete the CGL Coverage Form exclusion for defective products. b) To delete the ADCF exclusion fro defective products. c) To delete both the CGL and ADCF exclusions for defective products. d) To add an exclusion to the CGL and ADCF for defective products.

b

The Broad Form Products Coverage endorsement negates the ADCF exclusion for defective products. Insurers often agree to provide this coverage by endorsement because: a) It provides a service that helps to develop customer goodwill and market the insurer's services. b) They can frequently obtain subrogation recoveries against parts manufacturers. c) Many auto parts sold or supplied by dealers are expensive and fall outside the deductible. d) Defects in products sold by a garage business are ultimately the responsibility of the garage.

b

The Customer Complaint Legal Defense Coverage endorsement provides coverage for: a) Damages or awards only. b) Legal defense costs only. c) Both damages or awards and legal defense costs. d) Neither damages or awards nor legal defense costs.

b

The Customer Complaint Legal Defense Coverage endorsement to the ADCF provides coverage for legal defense costs related to an auto dealer's customer complaints regarding: a) Product recall issues. b) Sales, service, or repair. c) Personal and advertising injury. d) Warranty agreements.

b

The General Liability Bodily Injury and Property Damage Liability limit in Section II of the ADCF is comparable to which one of the following limits in the CGL Coverage Form? a) Products-Completed Operations Aggregate b) Each Occurrence c) General Aggregate d) Medical Expense

b

The Health Insurance Portability & accountability Act of 1996 (HIPAA) required that certain provisions in fiduciary liability policies be changed. One of those changes was to the definition of "wrongful act." How did many Insurers change the definition of "wrongful act" in their fiduciary liability policies in response to the passage of HIPAA? a) Many Insurers removed the definition of "wrongful act." b) Many Insurers added "breach of duties imposed by HIPAA" to the definition of "wrongful act." c) Many Insurers decided to wait for court action before changing their definition of "wrongful act." d) Many Insurers removed coverage for fines assessed under HIPAA.

b

The ISO Auto Dealers Coverage Form eligibility would include a(n): a) Repair shop b) Non-franchised dealer c) Service station d) Auto detailing shop

b

The MCCF and BACF differ in terms of: a) Care, custody or control b) Trailer interchange coverage c) Handling of property d) Movement of property

b

The Motor Carrier coverage form can be modified to provide coverage for the transport of hazardous cargo by adding: a) Trailer interchange coverage b) The MCS 90 endorsement c) Pollution coverage d) Bobtailing coverage

b

The former director of a microchip manufacturing company has recently been hired by a computer manufacturing company. The microchip manufacturing company alleges that the director has breached a confidentiality agreement signed at his departure and revealed trade secrets regarding the microchip manufacturing company tot eh computer manufacturing company. The microchip manufacturing company further alleges that this has resulted in the computer manufacturing company being awarded a significant contract meant for the microchip company, Under a typic directors and officers (D&O) liability policy, the directors legal fees and other losses indemnified by the company would be paid under: a) Coverage A b) Coverage B c) Coverage C d) Coverage

b

The marketing department of a software company suggest raising the price of its most successful and popular software. The board of directors approves the decision. The price increase causes the company a large decrease in market share and the company stock prices go down. 12 men & 8 women employees of the marketing department are involved in the pricing strategy that ultimately lead to the product's decline. All of the women are terminated; however, none of the men lose their positions. Shareholders file a derivative suit against the directors claiming a breach of duty for approving the change in product pricing without requesting and reviewing adequate information to substantiate the change. Additionally, the women employees file suit for wrongful termination and sex discrimination. The software company's: a) Directors and officers liability policy will respond to the shareholder suit, and the fiduciary liability policy will respond to the suit by the terminated employees. b) Directors and officers liability policy will respond to the shareholder suit, and the employment practices liability policy will respond to the suit by the terminated employees. c) Fiduciary liability policy will respond to the shareholder suit, and the employment practices liability policy will respond to the suit by the terminated employees. d) Directors and officers policy will respond to the shareholder suit, and the employment practices liability policy will exclude coverage for the suit by the terminated employees due to its being an Equal Employment Opportunity Commission (EEOC) violation.

b

Tom and Jerry own a General Motors vehicle dealership, and they have purchased an ADCF with the False Pretense Coverage endorsement. In January, Chuck (one of their salespeople) makes a deal with Max for a new car. Chuck gives Max $30,000 for his 2 trade-in vehicles and Max drives away with a new car worth $40,000. Later that week, the dealership business office discovers that Max did not have proper title to either of the trade-in vehicles, and now the dealership cannot sell them. How much, if anything, will Tom and Jerry's ADCF pay towards the loss suffered by the taking of these 2 cars? a) Full amount of $30,000 for this loss. b) $25,000 c) Nothing d) Pay for whichever car had the higher trade-in value.

b

Under the Employee Retirement Income Securities Act (ERISA), the duties of a plan fiduciary include which one of the following? a) Supervision b) Diversification c) Record-keeping d) Non-disclosure

b

What is the difference in the coverage provided by a directors and officers liability insurance policy (D&O) and the coverage provided under the Commercial General Liability Coverage Form (CGL) and the Business Auto Coverage Form (BACF)? a) The D&O liability insurance policy provides coverage against indirect losses, while the CGL & BACF cover only direct losses. b) The D&O liability insurance policy provides coverage for wrongful acts that do not qualify as bodily injury, property damage, personal injury, or advertising injury. c)The D&O liability insurance policy provides coverage against direct losses, while the GL & BACF cover only indirect losses. d) The D&O liability insurance policy only provides remedies in the form of "actions", while the CGL & BACF pay cash.

b

What is the purpose of Coverage A under a Directors and Officers (D&O) liability policy? a) To indemnify the corporation for its own wrongful acts, if such indemnification is not required or permitted by law. b) To indemnify the individual directors and officers for their wrongful acts, if such indemnification is neither required nor permitted by law. c) To reimburse the corporation for sums that it must pay on behalf of its directors and officers , if such reimbursements is not required or permitted by law. d) TO reimburse the corporation for hte premiums paid to the D&O insurer if such reimbursement is not required or permitted by law.

b

What is the term given to the duty to act for someone else's benefit? a) An imposed duty b) A fiduciary duty c) An insurable duty d) A non-exempt duty

b

What is the unique term for the Named Insured in a fiduciary liability policy? a) Fiduciary organization b) Sponsoring organization c) Benefit organization d) Employee organization

b

What was the reason for the 1988 passage of the "Worker Adjustment & Retraining Notification Act?" a) To make mass layoffs of workers easier for employers b) To mitigate the effects of mass layoffs c) To outlaw mass layoffs of workers by employers d) To provide new training for current employees

b

When the value of a 401-K plan drops significantly, what is the name of the Federal law under which the effected employees may bring suit? a) Social Security Act b) ERISA c) Federal Pension Reform Act d) Federal Employer Liability Act

b

Which one of the following ISO classification descriptions is eligible for coverage under the Auto Dealers Coverage Form (ADCF)? a) Auto repair shop b) Non-franchised dealer c) Parking lot d) Auto detailing shop

b

Which one of the following best describes the types of plans the Employee Retirement Income Security Act applies to? a) Employee benefit plans that relate to retirement funding. b) All types & sizes of employee benefit plans. c) Employee benefit plans for employers with 5 or more employees. d) All plans declared as employee benefit plans & registered by the employer.

b

Which one of the following businesses is eligible for the Auto Dealers Coverage Form? a) Auto service repair shop b) Non-franchised residence trailer dealer c) Contractor that stores their owned vehicles in their owned garage d) Auto detailing service shop

b

Which one of the following captions describes the Coverage C insuring agreement of a directors and officers (D&O) policy? a) Direct coverage b) Entity coverage c) Corporate reimbursement coverage d) Indemnification coverage

b

Which one of the following correctly describes physical damage coverage for autos leased or rented to others under the ADCF? a) All physical damage coverage for autos leased or rented to others is excluded. b) Physical damage coverage for leased or rented autos is excluded unless the auto is rented to a customer whose auto is being repaired. c) Physical damage coverage for autos leased or rented to others is added by indicating Symbol 31 in the declarations. d) Physical damage coverage for autos leased or rented to others is included for the auto dealer's covered autos.

b

Which one of the following is a difference between the MCCF and the BACF? a) Under CLM rules, eligibility for the MCCF is limited, with few carriers meeting the criteria. b) Physical damage coverage under the MCCF excludes loss to a covered auto while in someone else's possession under a written trailer interchange agreement. c) The MCS 90 Endorsement is only available for the BACF. d) The BACF automatically covers owners & lessors of autos hired by the named insured.

b

Which one of the following is a fiduciary duty of directors and officers? a) Duty of information b) Duty of care c) Duty of adherence d) Duty of consent

b

Which one of the following is a specific duty of a fiduciary supported by the Employee Retirement Income Security Act (ERISA)? a) Obtain Certified Public Accountant-level training b) Carry out duties with the diligence of a prudent person c) Be a beneficiary of plan d) Administer the investment plan assets

b

Which one of the following must be endorsed to a fiduciary liability policy to be considered an "insured plan?" a) Customized retirement plan b) Multi-employer plan c) A group health insurance plan d) Profit-sharing plan

b

Which one of the following statements is TRUE regarding the Broad Form Products Coverage endorsement used with the ADCF? a) The Broad Form Products Coverage endorsement covers the Named Insured for losses that can often be subrogated against the individual doing the service or repair work. b) The Broad Form Products Coverage endorsement covers the Named Insured's liability for PD to the Named Insured's products resulting from defects to those products. c) The Broad Form Products Coverage endorsement covers the Named Insured's liability for damages resulting from the improper installation or repair of their products. d) The Broad Form Products Coverage endorsement covers the Named Insured for the expenses involved in the recall and replacement of defective products.

b

Which one of the following statements is accurate concerning a standard, unendorsed directors and officers (D&O) policy? a) A policy provides 15-25 day automatic tail coverage, with an occurrence coverage trigger. b) A policy provides 30-60 day automatic tail coverage, with a claims made coverage trigger. c) A policy provides 120-day automatic tail coverage, with a claims-made coverage trigger. d) A policy does not provide automatic tail coverage, with an occurrence coverage trigger.

b

Which one of the following statements is true regarding Coverage B of a directors and officers (D&O) liability policy? a) Coverage B insures the individual directors and officers, indemnifying them for covered claims when neither required nor permitted by law. b) Coverage insures the corporation for amounts that it is lawfully required to pay to settle claims against the directors and officers. c) Coverage B coverage is restricted to losses for which the corporation does not or cannot provide indemnification to the director or officer. d) Coverage B makes the corporation itself as an insured for claims made against it because of wrongful acts covered by the policy.

b

Wrongful termination claims can sometimes allege implied employment contracts arising from which one of the following types of documents? a) Mission statement b) Employee handbook c) Code of conduct d) Vision statement

b

XYZ, LLC has a 401-K plan for its 401-K plan for its employees. Employees may contribute up to 10% of their salary on a pre-tax basis to the plan and XYZ, LLC promises to match the first 4% of each employee's contribution. However, XYZ has been experiencing some severe money troubles for several years. As a result, the Chief Financial Officer ordered that the 401-K's. When they get their account statements, they see that the contributions have not been made and file a suit against XYZ, LLC. Explain whether or not the fiduciary liability policy that XYZ has will cover the defense and any potential judgement arising out of this lawsuit. a) No, the fiduciary liability policy will not cover XYZ, LLC for any expenses arising out of this suit - defense expenses or any potential judgment. The policy contains a specific exclusion of any intentional acts on the part of the Insured. b) No, the fiduciary liability policy will not cover XYZ, LLC for any expenses arising out of this suit - defense expenses or any potential judgment. The policy contains a specific exclusion for the Insured's failure to properly fund an employee benefit plan. c) Yes, the fiduciary liability policy will cover both the defense expenses and any potential judgment against XYZ, LLC that arise out of this suit. d) Yes, the fiduciary liability policy will cover the defense expenses, but not cover any potential judgment against XYZ, LLC that arise out of this suit.

b

coverages under ADCF Section II - General Liability

bodily injury and property damage liability; personal and advertising injury liability; locations and operations medical payments

WC&EL limits of liability

bodily injury by accident limit; bodily injury by disease - policy limit; bodily injury by disease - each employee limit

common ADCF endorsements

broad form products coverage; dealers driveaway collision coverage; false pretense coverage; customer complaint legal defense coverage

A 35-year-old female was employed at a company for 5 years. During her term of employment the company began having financial difficulty and determined that they needed to layoff 5 of its 125 employees in order to stay in business. The company laid off the female employee and 4 other female coworkers. All of the women had a history of receiving positive employee evaluations. The laid-off workers filed a claim against the company alleging discrimination. Which one the following best describes the basis of the employment practices claim filed against the company? a) Sexual harassment b) Age discrimination c) Wrongful termination d) Retaliation

c

A claims representative is handling a claim for an auto dealership insured under the ADCF. Several new autos and autos left for service by customers were damaged when a fire started in the service building. The representative has verified that the loss occurred to the named insured at an insured location during the policy period; that Sections I & II of the ADCF apply to the losses and that the autos qualify as covered autos. The next step that the representative should take in determining whether coverage applies is to: a) Review the policy declarations to gain the proper context for determining the application of coverage. b) Review the insuring agreements to determine which ones could apply to the described losses. c) Review the policy conditions to determine whether they preclude coverage at the time of loss. d) Review the policy exclusions to determine whether they exclude or limit coverage for loss.

c

A company has had significant declines in an employee benefit plan. Significant abuses and underfunding have left the benefit plan on the brink of being insolvent. When employees file a suit against the company, which one of the following policies would respond? a) Employment practice liability policy b) Directors & Officers insurance policy c) Fiduciary liability insurance policy d) Employee Retirement Income Security Act (ERISA)

c

A corporation's directors are: a) Elected by the corporation's officers b) Appointed by the corporation's officers c) Elected by the corporation's shareholders d) Appointed by the corporation's management

c

A fiduciary liability claim has been filed by the employees of a company. The employees allege that poor funding administration of the company-managed health insurance plan has resulted in an exponential increase in the plans cost. Which one of the following acts would govern any abuses in managing the plans funding? a) Family & Medical Leave Act (FMLA) b) Health Insurance Portability & Accountability Act of 1996 (HIPAA) c) Employee Retirement Income Security Act (ERISA) d) Consolidated Omnibus Budget Reconciliation Act (COBRA

c

A franchised motorcycle dealer has an ADCF with Garagekeepers comprehensive coverage with a garage coverage symbol 30 (Autos Left With You For Service, Repair, Storage or Safekeeping). The coverage has a $250,000 limit of insurance and $250 deductible with a max deductible of $1,000 per event. It also has a garage coverage symbol 31 (Dealers Auto Physical Damage Coverage) with a $10,000,000 limit of insurance and a $1,000 deductible per vehicle and a max deductible of $5,000 any one event. During a hail storm, damage to customers' motorcycles as well as motorcycles waiting to be sold occurred. 6 of the customers' motorcycles sustained $50,000 in damage. 20 of the motorcycles on display in the lot sustained $2,000,000 in damage. Based on the information provided, how much would the Insurance Co. pay for this loss? a) $1,980,000 b) $2,028,500 c) $2,044,000 d) $2,500,000

c

A typical securities class action complaint contains an allegation such as: a) Directors and officers have failed to fulfill legal duties owed to employees under the Employee Retirement Income Security Act of 1974 (ERISA) b) Directors and officers have violated state environmental statutes c) Insiders have profitably sold their personal holdings in the company's shares while the share price was artificially inflated d) Directors and officers have used the corporate jet for personal use

c

ABC Corporation encourages its directors and officers to serve as outside directors for local not-for-profit organizations and consequently ABC wishes to provide the D&O coverage for them for this service. Why might ABC obtain a separate policy called an outside directors liability policy rather than include the exposure on its corporate policy? a) Coverage for separate entities is not available under the basic corporate D&O policy. b) As a not-for-profit, the rate will be much less than adding the coverage to the corporate policy. c) Claims paid will not reduce the aggregate limit of liability under the regular corporate policy. d) Claims are not as likely to be made against a not-for-profit company as under the corporate policy.

c

An Auto Dealer filed a report to its Insurer showing auto values of $3 million. The dealer then had a loss from a hailstorm of $500,000. When the loss occurred, the actual value of the dealer's autos was $4 million. Disregarding any deductible that might apply, how much would the insurer pay for the loss? a) Nothing b) $300,000 c) $375,000 d) $500,000

c

An Insured covered under the ADCF (CA 00 25) sustained a loss when one of its employees negligently backed a customer's vehicle into a building, causing damage to the customer's automobile. The customer is demanding payment to repair the automobile. Which one of the following coverages would apply to this claim? a) Physical Damage b) Auto Liability c) Garagekeepers d) Dealers Driveaway Collision

c

An auto dealer accepts a used car with an odometer reading of 54,000 miles as a trade-in. The dealer performs routine maintenance on this vehicle and then advertises it for sales as being in great condition. A customer purchases ten vehicle for $7,000. A week later, the brakes and electrical systems fail. The customer's attorney learns from the State Dept. of Motor Vehicles that the last mileage reported was actually 104,000 miles. The attorney files a lawsuit claiming false advertisement of the vehicle's condition and failure to disclose accurate odometer mileage. Which one of the following correctly describes coverage for this claim under the ADCF? a) There will not be coverage for either the false advertising description or the failure to disclose accurate odometer mileage under the ADCF? b) There will be coverage for the false advertising description, but not for the failure to disclose accurate odometer mileage under the ADCF. c) There will be coverage for the failure to disclose the accurate odometer mileage, but not for the false advertising description under the ADCF. d) There will be coverage for both the failure to disclose accurate odometer mileage and the false advertising description under the ADCF.

c

An auto dealer advertises that a new vehicle is available for $18,000 with no down payment and an interest rate of 1%. A customer attempts to purchase the vehicle, but is told that the price is now $21,000 and the interest rate is 9%. The customer files suit, alleging false advertisement of prices and failure to comply with the Truth in Lending Act. Which one of the following correctly describes coverage for this claim under the ADCF? a) There will not be coverage for either the false advertisement of prices or the failure to comply with the Truth in Lending Act. b) There will be coverage for the false advertisement of prices, but not for the failure to comply with the Truth in Lending Act. c) There will be coverage for the failure to comply with the Truth in Lending Act, but not for the false advertisement of prices. d) There will be coverage for both the false advertisement of prices and the failure to comply with the Truth in Lending Act.

c

An auto dealer sells a used auto for $5,000. The check used to pay fro the auto fails to clear the bank because of insufficient funds. The auto dealer, which has a False Pretense Coverage endorsement on its ADCF, files a claim with its insurer. Which one of the following explains whether the claim would be covered? a) The claim would be covered because the auto dealer has a False Pretense Coverage endorsement. b) The claim would be covered because the amount of the loss is within the limits of the False Pretense Coverage endorsement. c) The claim would not be covered because of the endorsement's exclusion for failure of a bank to pay funds. d) The claim would not be covered because the insured acquired the auto from someone who did not have legal title.

c

An auto dealer with a False Pretense Coverage endorsement on its Auto Dealers Coverage Form (ADCF) sold a vehicle for $15,000 to a person who was using a stolen identity. The police arrested the person involved and impounded the vehicle. The auto dealer filed a claim with the Insurer but made no effort to recover the vehicle from the impoundment lot. Which one of the following explains whether the claim would be covered? a) The claim would be covered because the auto dealer had a False Pretense endorsement to the ADCF. b) The claim would be covered because the insured auto dealer had legal title to the auto before the loss occurred as required by the False Pretense Coverage endorsement. c) The claim would not be covered because of the exclusion in the False Pretense Coverage endorsement requiring the Insured to make every effort to recover the auto. d) The claim would not be covered because the loss exceeded the limits of coverage applicable to the False Pretense Coverage endorsement.

c

An auto import non-franchised dealer carries garagekeepers coverage on a direct primary basis on an Auto Dealers Coverage Form with comprehensive coverage and a $500 deductible. An employee of the dealer took a customer's car without permission to use for a night on the town. The owner discovered the vehicle missing and reported a theft to the police. Subsequently the vehicle was set on fire by vandals. Damage to the customer's vehicle was repairable at $4,000. The insured's policy would: a) Not pay, as the customer's policy would be primary and respond to the fire damages. b) Pay $4,000 less $500 deductible, since the cause of loss was fire, not theft. c) Not pay, as theft by an employee is an exclusion under the garagekeepers coverage. d) Pay $4,000, as the cause of loss was theft and would not be subject to the comprehensive deductible.

c

An employer's fiduciary liability policy has a one-year term beginning on June 1. On July 15, a claim is filed as a result of a lawsuit by an employee alleging a breach of the employer's obligation in benefits administration. The suit alleges the employer negligently failed to collect required contributions from the employee in February of the same year, resulting in the employee's health insurance being canceled and several medical expenses being denied. The provisions of the fiduciary liability policy will respond by: a) Denying coverage because the loss occurred prior to the policy inception. b) Providing coverage because the claim was made after the policy inception date. c) Denying coverage due to the exclusion related to collection of employee contributions. d) Providing coverage due to the claim being reported after the policy inception and meeting the definition of a wrongful act.

c

An occupation-specific directors and officers policy such as an Educators' Professional Liability policy may be preferrable to a non-specific independent directors liability policy because: a) The policy can not be rescinded even in the event of nonpayment of premiums. b) Coverage is excess over the corporation's directors and officers liability policy. c) Coverages often include Employment Practices liability and Professional liability. d) The policy provides Side A-only coverage for a reduced premium.

c

Auto dealers have potential liability for damage to customers' autos in their care, custody, or control. Which one of the following provides this coverage? a) False pretense coverage. b) Bailees coverage. c) Garagekeepers coverage. d) Physical damage coverage.

c

Delmond Auto Dealer (Delmond) is covered under an Auto Dealers Coverage Form (ADCF). One of Delmond's technicians improperly performed work on the brakes of a customer's auto. The faulty work resulted in the customer's auto striking and damaging another parked auto. Which one of the following statements is correct regarding the coverage provided by Delmond's ADCF? a) Delmond's ADCF would only provide coverage for the damages to the customer's auto. b) Delmond's ADCF would only provide coverage for the damages to the parked auto. c) Delmond's ADCF would provide coverage for the damages to both autos, but not the cost to repair the brakes. d) Delmond's ADCF would only provide coverage for all BI and PD that resulted from the accident, including the cost to repair the brakes.

c

Directors and officers are considered to have met their duty of care if they have met 2 standards. Which one of the following is one of these standards? a) Maintaining and enforcing the corporate charter & bylaws. b) Approve important financial matters & corporate reports c) Act in a manner believed to be in the corporation's best interests d) Be involved in establishing the goals & policies of the organization

c

Directors and officers of a corporation owe special duties to the stockholders of that corporation. Those duties include: the duty of care; the duty of loyalty; the duty of disclosure; and the duty of obedience. What is the term used to describe these duties? a) Legal b) Moral c) Fiduciary d) Ethical

c

Directors' and Officers' fiduciary duties include the duty of: a) Trustworthiness b) Reliability c) Obedience d) Credibility

c

Employers face a number of potential loss exposures due to federal legislation and state laws. Of the various types of Employment Practices Liability (EPL) claims, which one of the following is a major type of EPL claim? a) An overtime pay claim b) A retirement claim c) A retaliation claim d) An exempt employment claim

c

Fiduciary liability loss exposures from benefit plans arise mainly out of the possibility that: a) Employees will allege that they did not receive salary and other compensation commensurate with their contributions to the organization. b) Shareholders will allege that the organization's directors & officers were negligent in allocation resources to benefit plans. c) Beneficiaries of an employee benefit plan may make a claim against the plan officials for breach of their fiduciary duties. d) Vendors that provide benefits will file liens against the corporation's assets for unpaid balances due.

c

In most ways, fiduciary policies closely resemble D&O and employment practices liability (EPL) policies. Which one of the following is true about fiduciary liability policies? a) The policy provides liability coverage for all participants or beneficiaries of the plan. b) Covered legal defense expenses are provided in addition to the policy limits. c) To be covered claims must be first reported during the policy period. d) The definition of a wrongful act includes acts of any plan participant or beneficiary.

c

Joe owns a small stock brokerage, XYZ Company. He also serves as a director & pension fund fiduciary at XYZ Company. Most of the pension fund at XYZ Company is invested in the company's own stock. When XYZ starts having financial troubles, the price of the stock goes down. Various brokers at Joe's firm want to move much of the XYZ pension fund to a safer investment. However, Joe fails to approve the transfer, because he fears the effect such a move would have on XYZ. As a result, the value of the pension fund drops. Which one of the following fiduciary duties is Joe breaching by focusing solely on the possible financial impact that a change would have on XYZ Company? a) Duty of prudence b) Duty of diversification c) Duty of loyalty d) Duty of adherence

c

Normally, a motor carrier would not get physical damage coverage for a trailer during the time that it is borrowed by another motor carrier. It is good business practice for the lending motor carrier to have the coverage, however, because: a) The lending motor carrier is not legally liable for damage to the trailer. b) The borrowing motor carrier might keep the trailer longer than agreed. c) The borrowing motor carrier might have narrower or lapsed coverage. d) The lending motor carrier is under no obligation to lend the trailer to the other carrier.

c

On March 1, 2009, a townhouse association purchased a Directors & Officers Liability Policy for the March 1, 2009 to March 1, 2010 policy period. The policy contains a March 1, 2009 retroactive date. On April 23, 2009 the association was named in a lawsuit alleging improper removal of a board member in which the lawsuit took place on February 1, 2009. Which one of the following best describes the scope of coverage provided by the claims-made provision of the policy? a) The would be coverage under the policy since the claim was reported within the policy period. b) There would be coverage under the policy since the association had no knowledge of the claim prior to the effective date of the policy c) There would be no coverage under the policy since the wrongful act occurred prior to the retroactive date of the policy. d) There would be no coverage under the policy since the policy contained a full prior acts exclusion.

c

Some Employment Practices Liability (EPL) insurers offer additional coverage and services to its Insureds. Additional coverages commonly offered by an EPL Insurer include which one of the following coverages? a) Errors & omissions coverages b) Workers compensation coverage c) 3rd-party discrimination coverage d) Occupational Safety & Health Act violations coverage

c

Some fiduciary liability policy exclusions differ from those in other professional liability policies. Which one of the following is an exclusion under a typical, unendorsed fiduciary liability policy? a) Obligations for certain penalties imposed by ERISA b) Obligations to cover claims arising under COBRA c) Obligations to pay for losses resulting from a failure to collect required employee contributions d) Obligations to pay claims made for acts that occur after the retroactive period

c

The Argot Auto Dealership (Argot) sold a new auto to Daniel. The dealer accepted a used auto as a trade-in toward the purchase of the new auto. Weeks later the dealer discovered that the used auto actually belonged to Daniel's father, and Daniel did not have legal title. Which one of the following common ADCF endorsements would provide Argot with coverage for this loss? a) Dealers Driveaway Collision Coverage b) Customer Complaint Legal Defense Coverage c) False Pretense Coverage d) Broad Form Products Coverage

c

The Customer Complaint Legal Defense Coverage endorsement to the ADCF is subject to the limits of insurance shown in the declarations. Which one of the following limits applies in addition to the customer complaint legal defense aggregate limit? a) Per location legal defense limit b) Per auto legal defense limit c) Per customer complaint legal defense limit d) Per dealer legal defense limit

c

The Insurance Services Office (ISO) 'Commercial Lines Manual' (CLM) defines businesses eligible for the Auto Dealers Coverage Form as: a) Service stations and repair shops b) Detailing and automated car washing outlets c) Franchised and non-franchised auto and trailer dealers d) Parking lot and valet parking services

c

The MCCF covers owners & lessors of autos hired by the named insured, subject to conditions. When the hired auto is a trailer, the owner, or anyone else from whom the named insured hires or borrows a covered trailer, is an insured while the trailer is connected to a power unit that is a covered auto or while the trailer is: a) Being used to transport cargo in the furtherance of the named insured's business. b) On or adjacent to the named insured's covered property whether connected to a power unit or not. c) Not connected to a power unit but is being used exclusively in the named insured's business d) Listed as a covered auto by use of the symbol 68 in the insuring agreements section of the policy.

c

The Motor Carrier Act of 1980 requires that certain minimum liability insurance limits be maintained on vehicles meeting certain requirements. Which one of the following best identifies one of those requirements? a) Trucks that transport cargo in bulk, regardless of vehicle gross weight b) Trucks for hire used for intrastate transportation of any type of material c) Trucks of 10,000 pounds or more gross weight used to transport certain hazardous cargoes. d) Trucks of 10,000 pounds or more gross weight, regardless of cargo.

c

The administrators of a retirement plan decide the plan will exclude all women from coverage. The women formerly covered by the plan file suit with allegations that the decision to negate their coverage was imprudent. The administrators of the plan should seek protection from lawsuit under which one of the following policies? a) Directors and officers liability b) Employment practices liability c) Fiduciary liability d) Commercial general liability

c

The purpose of the severability of interests provision of a directors and officers liability policy is to: a) Provide automatic coverage for directors and officers of new entities resulting from mergers. b) Continue coverage for directors and officers after they have retired from their positions c) Remove a coverage exclusion for innocent directors and officers who did not have knowledge of wrongful acts d) Exclude coverage for claims made against directors and officers covered under prior policies

c

To prove that a hostile work environment exists, an employee generally must show several facts. Which one of the following is one of those facts? a) The employer did not know about the harassment. b) Remedial action taken by the employer was ineffective. c) The harassment affected a term or condition of employment. d) The employee is not a member of a protected class.

c

Tom left his car at the ABC Dealership for some work on the transmission. While parked in ABC's lot, Tom's car suffered hail damage to the extent of $850. Tom did not have any automobile physical damage coverage on his vehicle. Which one of the following is true regarding ABC's Auto Dealers Coverage which is provided on a direct and an excess basis? a) No coverage would exist as the damage was caused by an act of God. b) Tom would be responsible to pay the deductible and the balance would be covered. c) ABC's coverage would respond in full for Tom less ABC's deductible. d) There would be no coverage for Tom as ABC's coverage is an excess coverage.

c

Under common law and the Securities & Exchange Act of 1934, no director or officer can sue which one of the following types of information to buy or sell corporation stock? a) Outsider information b) Public information c) Insider information d) Quantitative information

c

Unlike the BACF, and CGL form(s), the definition of "auto" in the Auto Dealers Coverage Form (ADCF) implicitly includes mobile equipment. This is because the ADCF" a) Excludes coverage for mobile equipment in the exclusions section of the policy. b) Contains an exception to the exclusions that specifically describes mobile equipment. c) Is intended to cover liability arising out of both covered autos and mobile equipment. d) Is designed to cover mobile equipment as an endorsement to the standard policy.

c

What is the name given to directors and officers coverage that covers only the individual liability of the insured directors and officers? a) Directors-only coverage b) Officers-only coverage c) Side-A only coverage d) Individuals-only coverage

c

What is the term applied to directors of a company who are not otherwise affiliated with that company and who do not have a pre-existing relationship with the company? a) Outside directors b) Inside directors c) Independent directors d) Dependent directiors

c

Which one of the following explains the difference between the "broad form" & the "named perils" form definition for wrongful acts in the employment practices liability insurance policy? a) The named perils form provides indemnity and defense cost while the broad form provides "all-risks" coverage. b) The named perils form provides coverage on a claims made basis while the broad form provides coverage on an occurrence basis. c) The named perils form provides a listing of offenses while the broad form provides a general description. d) The named perils form provides for wrongful acts on an "all-risks" basis while the broad form provides coverage for a brief listing.

c

Which one of the following federal laws gives workers and their families who lose their health benefits the right to choose whether to continue group health benefits provided by their group health plan for a limited period of time under certain circumstances? a) Family Medical Leave Act (FMLA) b) Fair Labor Standards Act (FLSA) c) Consolidated Omnibus Budget Reconciliation Act (COBRA) d) Employee Retirement Income Security Act (ERISA)

c

Which one of the following is an eligible busienss for the Auto Dealers Coverage Form under the ISO 'Commercial Lines Manual' (CLM) rules? a) A franchised new residence dealer b) A non-franchised used auto servicer c) A non-franchised used auto dealer d) A non-franchised recreational vehicle servicer

c

Which one of the following is correct regarding customers' qualification as persons insured for covered autos liability coverage under the Auto Dealers Coverage Form? a) Customers may never qualify as Insureds under the covered autos liability coverage. b) Customers may qualify as Insureds for covered autos liability coverage while driving the auto dealer's covered autos only if they have no insurance. c) Customers may qualify as Insureds while driving the auto dealer's covered autos if they have no insurance or their insurance is less than the compulsory state limits. d) Customers usually qualify as Insureds while driving the dealer's covered autos, such as "loaners" that customers drive while their autos are being serviced.

c

Which one of the following is covered under Section III -- Acts, Errors, or Omissions Liability Coverages: Insured's Failures, of the ADCF? a) The insured's wrong description of prices. b) A defect in work performed by the Insured. c) A defect in title in connection with the sale of an auto. d) Injury to a customer because of the Insured's failure.

c

Which one of the following is the advantage in securing a separate outside directors liability policy for corporate directors serving in an organization not affiliated with the insured corporation? a) The outside entity and the Insured corporation's consent are required to settle the claim. b) The deductible on the corporation's regular directors and officers policy would be waived. c) Claims paid by the policy will not reduce the aggregate limit of the Insured corporation's regular directors and officers policy. d) Coverage would apply even if the Insured organization had no direct knowledge of the director's participation.

c

Which one of the following losses would be covered under Section II of the Auto Dealers Coverage Form (ADCF)? a) Pollution damage caused by the improper disposal of oil and other fluids used in the operations. b) Expenses resulting from the need to recall autos with defective air bags. c) Property damage to an auto engine caused by oil leaking after a technician failed to replace a plug. d) Hail damage to new autos being stored on an open lot.

c

employees subject to Defense Base Act

civilian employees at U.S. military bases acquired from foreign governments; civilian employees working overseas under contracts with agencies of the U.S. government

employees subject to Nonappropriated Fund Instrumentalities Act

civilian employees of non-appropriated fund instrumentalities on U.S. military bases, such as stores and theaters

long-tail claims

claims that are not reported or settled until long after the policy has expired

employees subject to Federal Black Lung Benefits Act

coal miners who have suffered or are suffering from black lung disease and were or are employed in one or more underground coal mines for ten years or more

WC&EL policy

combines coverage for (1) the insured's obligation to pay benefits required by a workers compensation law and (2) the insured's legal liability to pay damages because of occupational injury to the insured's employees as a result of a claim or suit based on legal grounds other than a workers compensation law or a similar law

categories of damage recoverable for breach of contract

compensatory damage; consequential damages; liquidated damages; nominal damages

garagekeepers coverage options

comprehensive; specified causes of loss; collision

Item Six

contains a table for indicating the types of autos and interests covered fro each of the available physical damage coverages

garagekeepers exclusions

contractual obligations; theft; defective parts; faulty work; electronic equipment; war

trailer interchange coverage

coverage for a motor carrier's liability for damage to trailers in its possession under a written trailer interchange agreement

foreign voluntary workers compensation coverage

coverage that insures employees who are working outside the U.S. and who are not subject to a workers compensation law for benefits equal to those provided under either the workers compensation statute of a specified state or a specified federal compensation act

medical payments coverage

coverage that pays necessary medical expenses incurred within a specified period by a claimant for a covered injury, regardless of whether the insured was at fault

common characteristics of professional liability policies

covered acts and consequences; persons and organizations insured; defense coverage; claims-made provisions; coverage territory; exclusions

protection and indemnity (P&I)

covers a variety of liability loss exposures of shipowners, may or may not include coverage for the shipowner's liability for death or injury to crew members

prior acts coverage

covers claims made during the policy period for wrongful acts that occurred either during the policy period or at any time before the policy period

ADCF Customer Complaint Legal Defense Coverage endorsement

covers legal defense costs related to complaints or lawsuits filed by an auto dealer's customers; provides coverage for complaints or suits related to the sale, service, or repair of an auto that occurred in the operations of the named insured

garagekeepers specified causes of loss coverage

covers perils of fire, lightning, explosion, theft, mischief, or vandalism

cure, under maritime law

covers the cost of medical care

garagekeepers collision coverage

covers the perils of collision and overturn or a customer's auto

Sarbanes-Oxley Act of 2002

created the Public Company Accounting Oversight Board to establish and oversee standards for auditors of public companies; independence of the audit committee of a public company's board of directors; certification of corporate financial reports by the company's CEO and CFO; rapid, current, and transparent reporting

Securities Exchange Act of 1934

created the SEC and gives it broad regulatory authority over all aspects of the securities industry

A claim representative is handling a claim for an auto dealership insured under the ADCF. Several new autos and autos left for service by customers were damaged when a fire started in the service building. The representative has verified that the loss occurred to the named insured at an insured location during the policy period; that Sections I and II of the ADCF apply to the losses and that the autos qualify as covered autos; and that the Insured complied with all policy conditions that affect coverage. The next step that the representative should take in determining whether coverage applies is to: a) Review the policy declarations to gain the proper context for determining the application of coverage. b) Review the insuring agreements to determine which ones could apply to the described losses. c) Review the policy conditions to determine whether they preclude coverage at the time of the loss. d) Review the policy exclusions to determine whether they exclude or limit coverage for the loss.

d

A common defense used to protect directors and officers against claims that allege a breach in the duty of care is the: a) Ultra vires rule b) Securities & Exchange Act of 1934 c) CLass-Action Fairness Act of 2005 d) Business judgment rule

d

A corporate officer serves on the board of directors at a local, not-for-profit charity organization at the request of his corporation. If the risk management goal of the corporation is to provide coverage for this officer while preserving the aggregate limit of the corporation's policy from any claims paid with respect to the officer's service to the not-for-profit, which is their best alternative? a) The corporation should assume the officer has adequate coverage under the policy for the non-profit organization and take no further action. b) The corporation should cover the officer by adding an endorsement to its existing directors and officers (D&O) policy. c) The corporation needs to take no other action as this officer is covered by its existing directors and officers (D&O) policy. d) The corporation should cover the officer with an outside directors liability policy.

d

A corporation owned by its shareholders is controlled by its: a) Management b) Board of Advisors c) Proxies d) Board of Directors

d

A key difference between the MCCF and the BACF is that the MCCF: a) Provides liability coverage only b) Broadly covers motor truck cargo c) Does not impose a trailer interchange exclusion d) Automatically covers owners & lessors of autos hired by the insured

d

A plan fiduciary who fails to act according to plan documents has most clearly breached which one of the following fiduciary duties? a) Prudence b) Loyalty c) Diversification d) Adherence

d

A regional barbecue restaurant decided to expand nationally. Although market research indicated that the expansion would not be profitable, the restaurant chain's management decided to move forward with the plans. The company's retirement assets were heavily invested in corporate stock. After the expansion, the stock price fell more than 50%. Which one of the following management liability policies would respond to the employees' suit against the company for the reduction in their retirement assets? a) Employee benefits liability policy b) Employment practices liability policy d) Directors & officers liability policy d) Fiduciary liability policy

d

A specific observable action to discriminate against a person or class of persons is: a) Overt impact b) Disparate impact c) Disparate treatment d) Overt discrimination

d

Acts, errors, or omissions liability coverage provided in Section III of the ADCF would provide coverage for a claim involving which one of the following? a) The insured's improper installation of a new radiator in a customer's auto. b) The insured's incorrect statement of prices for goods or services in the insured's advertisement. c) The insured's false arrest of an individual while on the dealership lot. d) The insured's failure to comply with local, state, or federal regulations regarding disclosure of accurate odometer mileage to consumers.

d

An auto dealer with a Customer Complaint Legal Defense Coverage endorsement receives a complaint from a customer claiming that repair to the moon roof of a vehicle covered under a warrant from the auto dealer was improperly made and the resulting leaks damage the auto's leather interior. The dealer files a claim with its insurer. Which one of the following explains whether this claim will be covereD? a) Only legal defense costs related to this claim will be covered because the dealer has a Customer Complaint Legal Defense Coverage endorsement. b) Damages and legal defense costs related to this claim will be covered because the dealer has a Customer Complaint Legal Defense Coverage endorsement. c) There will not be coverage for this claim because there has not yet been a lawsuit, and damages or awards have not yet been made. d) There will not be coverage for this claim because the Customer Complaint Legal Defense Coverage endorsement excludes any obligation under a warranty.

d

An employee benefit plan fiduciary has a duty of prudence, meaning that: a) The fiduciary's actions must be solely in the best interests of the plan and all of its participants and beneficiaries. b) The fiduciary must ensure that the plan's investments are sufficiently diversified to minimize the risk of large losses. c) The fiduciary must act according to the plan documents and applicable law. d) The fiduciary must carry out the duties with the skill, prudence, and diligence of a prudent person familiar with such matters.

d

Bill and John are employees of XYZ Corp. and also serve on XYZ's board of directors. They have been asked to serve as directors for New Charity Organization. XYZ wants to protect Bill and John from any possible financial loss from their service for New Charity Organization. What is the name of the type of policy that XYZ can purchase to protect Bill and John while they serve on the board at New Charity Organization? a) An other company directors liability policy b) An inside directors liability policy c) An excess directors liability policy d) An outside directors liability policy

d

Directors (& sometimes officers) owe a duty of loyalty to the: a) Federal Securities and Exchange Commission b) Employees that support the corporation they serve c) Customers of the corporation they serve d) Stockholders who elect them

d

Employee practices liability (EPL) policies typically agree to pay loss resulting from claims made during the policy period for a wrongful act. Which one of the following is a correct statement regarding claim awards that include back pay? a) EPL policies all address the issue of coverage for both front pay as well as for back pay. b) EPL policies exclude claims for back pay relating to discrimination claims. c) EPL policies provide coverage for front pay awards but exclude claims for back pay. d) Some EPL policies cover claims for back pay for certain types of claims.

d

Employment practices liability loss exposures are effected by a statute which establishes minimum wage & overtime rates, and regulates the employment of children. The statute applies to employers with at least 2 employees engaged in interstate commerce and a business volume of over $500,000 per year. Which one of the following statutes is described? a) Civil Rights Act of 1991 b) Employee Retirement Income Security Act c) Consolidated Omnibus Budget Reconciliation Act d) Fair Labor Standards act

d

How did many insurers change the definition of "sponsored plan" in their fiduciary liability policies in response to the passage of the Health Insurance Portability & Accountability Act (HIPAA) of 1996? a) Many Insurers removed the definition of "sponsored plan." b) Many Insurers narrowed the definition of "sponsored plan" to specifically exclude those plans subject to HIPAA. c) Many Insurers decided to wait for court action before changing the definition of "sponsored plan." d) Many Insurers broadened the definition of "sponsored plan" to include those plans subject to HIPAA.

d

How is the word "loss" used differently in a directors and officers (D&O) liability policy versus in a Commercial General Liability (CGL) policy? a) In a CGL policy, the total "loss" payable includes payments of defense expense; in a D&O policy, defense expenses are outside the total amount payable b) In a D&O policy, defense expenses are not payable. c) In a CGL policy, defense expenses are not payable. d) In a D&O policy, the total "loss" payable includes payment of defense expense; in a CGL policy, defense expenses are outside the total amount payable.

d

Human Resource Manager Jim has received medical records of employee Drew in connection with a pending health insurance claim. Distracted by an unrelated conversation, Jim left Drew's medical records near the office photocopier, where 5 co-workers were able to view the materials. Jim & his company may have some legal exposure pertaining to which one of the following federal laws that calls for protection of employee medical information and subjects employers & fiduciaries to penalties for non-compliance? a) RICO b) FICA c) ERISA d) HIPAA

d

Independent directors on the board are those that are not otherwise affiliated with the corporation they are serving. They may insist on having their own D&O coverage. A reason for this request would be...? a) That it would not be as likely that issues of coverage for the total board would be construed against them. b) So that it would be less likely that they would be sued for issues of other board members c) Due to the fact that it is less expensive than covering the total board of directors d) So that their insurance limits will not be diluted by claims against other directors.

d

Jean is a director on the board of an apparel promotion company. Towards the company, Jean owes a duty of: a) Undivided time b) Profitability c) Divided loyalty d) Undivided loyalty

d

Jill has bad allergies and gets weekly shots to combat their effects. She wants to change jobs, but fears that her new employer's group health insurer will not cover her allergy expenses. However, her new employer tells her that the Federal law known as the Health Insurance Portability & Accountability Act (HIPAA) takes care of that for her. How is Hill helped by HIPAA in this instance> a) HIPAA makes sure that the health insurer can collect na appropriate premium for the exposure. b) HIPAA provides for a "set-aside" fund to cover Jill's allergy expenses c) HIPAA allows for coverage of Jill's allergy expenses after she has been employed for year. d) HIPAA limits the application of the exclusion of "pre-existing medical conditions."

d

Mitch has been as underwriter at Regional Insurance Company for several years. He has always been attracted to one of the file clerks named Debbie. One year on his birthday, Mitch approached Debbie in the file room and asked for a "birthday kiss." Debbie said "no" and laughed it off. Unfortunately, Mitch persisted and became more and more aggressive in his pursuit of the "birthday kiss." Debbie complained to her supervisor, Louise, about the incident with Mitch. Debbie also contended that Mitch has said several things to her over the years and that Louise knew about it but didn't do anything, saying that "Mitch is harmless and wouldn't hurt a fly." Debbie then claims sexual harassment and quits her job. She then sues Regional Insurance Company stating that she could no longer work there under the current "working conditions." What is the term for the "working conditions" to which Debbie was referring? a) Unwelcome advances b) Interference with job responsibilities c) Inability to earn a living d) Hostile work environment

d

Patrick works in the benefits department at a company whose responsibilities involve selecting investments that support the employee benefit plan. One of the investment options happens to be at a firm where Patrick's friend works. He knows the friend could use the money that would come from the substantial investment the benefit plan would create. Despite the fact there are more sound investments, Patrick decides to invest heavily in the friend's company. The investments perform adequately. Is this a violation of Patrick's fiduciary duties? a) No, his duties would have been violated, had the investment performed poorly. b) No, the investment provided adequate performance and no harm was done. c) Yes, the plan had the potential to perform better than it did. d) Yes, he has a duty to act solely in the interest of the plan and participants.

d

QRS, LLC has been a small town's largest employer for a long time. When the owner of QRS, LLC died, the company was forced to lay off 25% of its workforce, because the proper life insurance was not in force for the owner. These mass lay-offs resulted in bad publicity in the town paper and much negativity directed at the company in various town meetings. The Employment Practice Liability (EPL) policy in force for QRS, LLC provided money to cover QRS's costs to retain a PR firm. Such costs are called: a) Bail out costs b) Unnecessary costs c) Forced costs d) Reputation management costs

d

Symbol 31 in the declarations of an Auto Dealers Coverage Form indicates: a) Autos that would meet the definition of mobile equipment. b) General liability coverage for the dealers' autos. c) Garagekeepers coverage. d) Physical damage coverage for the dealer's autos.

d

The ABC Dealership is covered under an endorsed ADCF with the coverage limits shown. 24 of the new cars belonging to ABC were damaged by a sever windstorm that went through the area. The average damage to the vehicles was $1,000 with a total of $24,000. The total values reported the prior month was correct at the time but had increased by $200,000 in the week before the storm. Which one of the following correctly indicates what payment would be made for these damages, if any? Garagekeepers Comprehensive Coverage: $250,000 -- $250 deductible/$1,000 max. each event Physical Damage Coverage - Comprehensive: $10,000,000 -- $1,000 deductible/$5,000 max. each event a) Since the loss arose from windstorm which is an act of God, there would not be any coverage for the loss. b) Since the inventory values exceed the reported values there would be a penalty as well as a deductible applied to the loss. c) Since the limits are adequate the maximum $1,000 deductible would apply bringing the payment to $23,000. d) Since 24 vehicles were involved the $5,000 max. deductible applies bringing the payment to $19,000.

d

The ADCF uses eleven symbols to describe the autos that qualify as covered autos, 9 of which are similar to the BACF. Which one of the following symbols is unique to the ADCF? a) 23 -- Owned Private Passenger Autos Only b) 25 -- Owned Autos Subject to No-Fault c) 29 -- Non-owned Autos Used in Your Garage Business d) 31 -- Dealers Autos

d

The Customer Complaint Legal Defense Coverage endorsement to the ADCF will only provide coverage IF which one of the following is TRUE? a) The complaint results in damages or awards being paid under the policy. b) The claim is made within 60 days of the end of the policy period. c) The damage to the auto occurred during the policy period. d) The claim is made within the policy period.

d

The Employment Retirement & income Security Act (ERISA) governs: a) Employers exempt from the federal minimum wage law. b) Federal and state pension plans. c) Employers engaged in interstat commerce. d) Employee benefit & retirement plans.

d

The Garagekeepers Coverage in Section I of the ADCF provides liability coverage for the Named Insured for damage: a) Regardless if the Insured was legally liable for the cause of loss, but only for excess coverage if the customer does not carry physical damage coverage. b) Caused by the faulty work of the Insured to customer's auto and equipment, which causes the customer to have an accident. c) To customer's auto and equipment only if the Named Insured is a franchised or non-franchised auto dealer or servicer. d) To customer's auto and equipment left in the Insured's care, custody, or control, for attending, servicing, repairing, parking, or storing.

d

The Health Insurance Portability & Accountability Act (HIPAA) sets standards for health insurance, prohibits discrimination in enrollment, and improves disclosure about group health plans. Which one of the following is a response that fiduciary insurers have provided in response to the HIPAA law? a) They have provided coverage for up to $100,000 for any criminal fines imposed due to HIPAA. b) They provide endorsements for fidelity bond coverage for the fiduciary liability policy. c) They extend coverage for loss due to failure to collect required employee contributions. d) They have provided an endorsement to cover civil fines that HIPAA can impose.

d

The MCCF covers owners and lessors of autos hired by the named insured, subject to conditions. When the hired auto is a power unit, the owner-operator is an insured under the named insured's MCCF under two conditions: First, the vehicle must be leased to the named insured under a written agreement that does not require the owner-operator to hold the motor carrier harmless; and Second: a) The owner-operator is insured on a primary basis under the motor carrier's auto liability insurance. b) The owner-operator is covered by physical damage and uninsured motorist insurance and personal injury protection. c) The owner-operator is covered by liability insurance that is limited to covering only non-trucking use of the rig. d) The owner-operator is covered only while the leased auto is used in the named insured's business as a motor carrier for hire.

d

The named Insured in a fiduciary liability policy is: a) The plan trustee b) The Insured plan c) The plan administrator d) The sponsor organization

d

Though most employer-employee relationships are "at will", an employer can change that by creating: a) An implied warranty b) An explicit warranty c) A mission statement d) An implied contract

d

Tom, Bill, and Adam are the 3 largest shareholders in ABC Corporation. Recently, the price of ABC's stock has dropped severely. Tom, Bill, and Adam decide to bring a suit in their own names against the directors. In that suit, Tom, Bill, and Adam allege that the directors failed to review the company's financial statements and that they also failed to properly monitor the company's affairs. The suit being brought by Tom, Bill & Adam is referred to as: a) Derivative suit b) Nuisance suit c) Unnecessary suit d) Non-derivative suit

d

What are the 2 ways that an employment practices liability (EPL) policy defines "wrongful acts?" a) "All-risks" & named perils b) Broad form & "all-risks" c) Named perils & named exclusions d) Broad form & named perils

d

What does ERISA stand for? a) Employee Retirement Income Stability Act b) Employer Retirement Income Security Act c) Employee Retirement & Insurance Security Act d) Employee Retirement Income Security Act

d

Which one of the following business operations is eligible for coverage under the Insurance Services Office, Inc. (ISO) Auto Dealers Coverage Form (CA 00 25)? a) Automobile parts dealer b) Detailing shop c) Service station d) Non-franchised residence trailer dealer

d

Which one of the following correctly describes the requirements of the Dealers Driveaway Collision Coverage endorsement? a) There are no requirements with this endorsement except for payment of premium. b) There is a reporting requirement, but no full reporting clause or premium adjustment. c) There is a reporting requirement with a full reporting clause but no premium adjustments. d) There is a reporting requirement with a full reporting clause, and premiums are charged based on the reports.

d

Which one of the following is an important sattute for organizations seeking to identify & analyze fiduciary liability loss exposures? a) Fair Labor Standards Act b) Equal Employment Opportunity Commission Acts c) Americans with Disabilities Act d) Employee Retirement Income Security Act (ERISA)

d

Which one of the following is correct regarding options for GarageKeepers direct coverage under the Auto Dealers Coverage Form? a) There are no options other than the legal liability basis. b) There is an option for excess insurance only on a direct coverage basis. c) There is an option for primary insurance only on a direct coverage basis. d) There are options for both excess and primary insurance on a direct coverage basis.

d

Which one of the following losses is excluded under a Garagekeepers Coverage? a) Damage to the vehicle while being repaired by an employee b) Damage to the vehicle caused by an employee while parking the vehicle c) Damage tot he vehicle caused by a fire in the garage. d) Theft or conversion of the vehicle by an employee of the garage.

d

Which one of the following losses would be covered by the False Pretense coverage endorsement of the ADCF? a) A car was stolen from the dealer's lot during night when no one was working. b) A prospective buyer pushed the salesman out of the car and drove off during a test drive. c) The customer bought an auto with a check drawn from an account with insufficient funds. d) The named insured bought an auto from a seller who did not have a legal title.

d

Zeb's Dealership is insured under the ADCF, which includes comprehensive coverage for damage to customers' autos under garagekeepers coverage. The policy also has Garagekeepers Direct Primary Coverage indicated in the declarations. One night, lightning struck a tree on the insured property, which fell into a car belonging to Mary, a customer who has comprehensive coverage on her auto with a $500 deductible. If the damage to Mary's auto was $3,000. Zeb's insurer will pay: a) $0 b) $500 c) $2,500 d) $3,000

d

claims for care and loss of services, or loss of consortium

damages that the spouse of an injured or a deceased person can obtain from the liable party

Racketeer Influence and Corrupt Organizations (RICO) Act

defines racketeering to include such offenses as mail fraud, wire fraud, and certain securities laws violations

Federal Employers' Liability Act (FELA)

defines the right of eligible employees to sue their employers in federal court for damages resulting from occupational injury caused in whole or in part by the negligence of the employer or its agents or employees

types of D&O suits

derivative suits; nonderivative suits; class action suits

professional liability policies

designed to cover claims arising from rendering or failing to render professional services

D&O Coverage A

direct coverage for the directors and officers

D&O

directors and officers

types of EPL claims

discrimination; wrongful termination; sexual harassment; retaliation; other types

fiduciary duties

duty of care; duty of loyalty; duty of disclosure; duty of obedience

occupational injury

either injury or disease arising out of an in the course of the injured person's employment

False Pretense exclusion

eliminates coverage for (1) voluntarily parting with a covered auto as the result of a trick, a scheme, or false pretenses or (2) acquiring an auto from a seller who does not have legal title

Products Recall exclusion

eliminates coverage for any damage or loss resulting from a part or product withdrawn or recalled from the market because of a known or suspected defect or dangerous condition

Autos Leased or Rented to Others exclusion

eliminates coverage for loss to any covered auto leased or rented to others, unless the auto is rented to a customer of the named insured while the customer's auto has been left with the named insured for service or repair

Collision of Transporting Conveyance exclusion

eliminates coverage for loss to any covered auto resulting from the collision or upset of any vehicle transporting the covered auto

Defective Products exclusion

eliminates coverage for property damage to any of the insured's products if the damage is caused by a defect existing in any part of the product when it was transferred to another

Work You Performed exclusion

eliminates coverage for property damage to work performed by the insured if the property damage results from any part of the work or from the parts, material, or equipment used in performing the work

employees subject to Federal Employers' Liability Act

employees of interstate railroads

employees subject to Outer Continental Shelf Lands Act

employees on fixed offshore drilling and production platforms on the Outer Continental Shelf of the U.S.

EPL

employment practices liability

War Hazards Compensation Act (WHCA)

enacted to supplement the DBA and shift to the U.S. government the costs of compensation for civilians who are injured by a war-risk hazard while working in a war zone

medical incident

encompasses any act or omission in furnishing medications, appliances, food, or beverages in connection with providing professional services

Maritime Coverage Endorsement

endorsement that amends the WC&EL policy to cover an employers liability for injury or death of crew members

Voluntary Compensation and Employers Liability Coverage Endorsement

endorsement that amends the WC&EL policy to cover employees who are not subject to a workers compensation statute

board of directors

establishes corporate policy, makes major business and financial decisions, and appoints the corporation's executive officers to manage the corporation's daily operations

Fair Labor Standards Act (FLSA)

establishes minimum wage and overtime rates and regulates the employment of children

stop-loss coverage

excess insurance to cover loss in excess of the amounts that they actually with to retain in a self-insurance plan

garagekeepers direct coverage options

excess; primary

Insurance for Non-Trucking Use (IFNTU) endorsement

excludes liability coverage for any covered auto listed in the endorsement while the auto is being used to carry property in any business or in the business of anyone to whom the auto is rented

hostile work environment

exists when an employee is subjected to sexual harassment that is so severe or pervasive that it alters the conditions of his or her employment and cre4ates an abusive working environment

tail coverage

extended reporting period provisions

Nonappropriated Fund Instrumentalities Act

extends LHWCA benefits to civilian employees of the U.S. government

Outer Continental Shelf Lands Act (OCSLA)

extends the benefits of the LHWCA to employees engaged in exploration for and development of natural resources on the outer continental shelf of the U.S.

categories of federal laws covering occupational injury

federal compensation statutes; federal statutes that permit employees to sue; remedies under maritime law

organizations eligible for the ADCF

franchised and nonfranchised auto and trailer dealers

Jones Act

gives injured crew members of a vessel the same right to sue their employers as FELA gives to railroad employees

Consolidated Omnibus Budget Reconciliation Act (COBRA)

gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances

nonfranchised dealer

has no franchise agreement with an auto manufacturer and typically sells used vehicles; includes dealers of mobile equipment and related implements

enhanced Side A-only DIC policies

have broader wording or fewer exclusions than some Side A-only policies, in addition to providing excess coverage

temporary employees

hired for short-term assignments to cope with peak workloads or to replace an employee who is on sick leave or vacation

third-party-over claims

if an employee of the insured sues a third part for an occupational injury, the third party can sue the employer

discovery provision

if the insured becomes aware of a wrongful act that is reasonably expected to result in a covered claim and provides written information on the act to the insurer during the policy period, then any subsequent claim arising out of that wrongful act will be covered

D&O "loss" definition

includes all damages that the directors and officers become legally obligated to pay, subject to certain exclusions and limitations; usually includes defense costs

"auto" in the ADCF

includes any land vehicle, which includes both autos and mobile equipment

D&O "claim" definition

includes any of these actions taken against a director or an officer for a wrongful act: (1) a written demand for monetary or nonmonetary relief, (2) a civil proceeding commenced by serving a complaint or similar pleading, or (3) a formal administrative or regulatory proceeding commenced by filing a notice of charges, formal investigative order, or similar document

maintenance, under maritime law

includes the costs of lodging and food for the crew member until maximum medical cure is achieved

death benefits

income replacement to the deceased employee's surviving spouse and dependents and a burial allowance

Dodd-Frank Act of 2010

increased regulation of the trading and reporting of hedge funds and other derivatives; increase in the Federal Deposit Insurance Corporation requirement to $250K; creation of a Consumer Financial Protection Bureau to prevent credit card and mortgage lending abuses; Abolished Troubled Asset Relief Program (TARP); established free credit scores for consumers

D&O Coverage B

indemnification coverage for the corporation

WC&EL Part 3C - Other States Insurance

indicates that workers compensation coverage will be extended automatically to the additional states listed if the insured expands its operations to jurisdictions other than those listed in 3A

owner-operators

individuals who lease themselves and the owned trucks to motor carriers to transport property for the motor carrier

nonderivative suit

initiated by customers, competitors, employees, creditors, governmental entities, or stockholders alleging that an injury or injustice resulted from wrongful acts or omissions of directors and/or officers

WC&EL conditions

inspection; long-term policy; transfer of your rights and duties; cancellation; sole representative

other states insurance

insurance that automatically extends coverage to the insured's operations in any state listed in Item 3C of the WC&EL Information Page

D&O liability insurance

insurance that covers a corporation's directors and officers against liability for their wrongful acts covered by the policy and also covers the sums that the insured corporation is required or permitted by law to pay to the directors and officers as indemnification

EPL insurance

insurance that covers an organization, its directors and officers, and its employees against claims alleging damages because of wrongful employment practices

fiduciary liability insurance

insurance that covers the fiduciaries of an employee benefit plan against liability claims alleging breach of their fiduciary duties involving discretionary judgment

employers liability insurance

insurance that protects an employer against employee injury claims that are not covered by workers compensation laws

workers compensation insurance

insurance the provides coverage for benefits an employer is obligated to pay under workers compensation laws

EPL insuring agreement

insurer agrees to pay, on behalf of the insured, loss resulting from claims first made during the policy period for a wrongful act

ADCF Section II BI & PD Liability coverage

insurer's agreement to pay all sums an insured legally must pay as damages because of bodily injury or property damage to which the insurance applies and that is caused by an accident and results from the named insured's auto dealer operations other than the ownership, maintenance, or use of autos

garagekeepers Comprehensive coverage

insures against causes of loss except collision or overturn of the customer's auto, subject to the garagekeepers exclusions

compensatory damages

intended to indemnify a person for injury or damage sustained

exclusions unique to the ADCF

leased autos; defective products; work you performed; damage to impaired property or property not physically damaged; products recall

WC&EL Part 3D - Endorsements

lists any endorsement attached to the policy

WC&EL Part 3A - Workers Compensation Insurance

lists benefits required by the workers compensation law of the state or states specifically listed that will be paid in the event of an injury to an employee

categories of D&O exclusions

loss exposures better covered by other insurance; claims covered or reported under prior policies; failure to effect or maintain insurance; insured-versus-insured exclusion; loss exposures that are difficult to insure

duties of a plan fiduciary

loyalty; prudence; diversification; adherence

remedies under general maritime law

maintenance and cure; vessel owner's warranty of seaworthiness; liability for death under the Moragne remedy

assigned risk plans

make workers compensation insurance available to employers that cannot obtain such insurance in the voluntary market by assigning undesirable exposures to each licensed insurer in proportion to the insurer's share of the voluntary workers compensation market in that state

D&O Coverage C

makes the corporation itself an insured for claims made against it because of wrongful acts covered by the policy; also known as Entity Coverage

employees subject to LHWCA

maritime employees, with some exceptions

bilateral basis

means that the insured may purchase the optional tail when either the insured or the insurer decides not to renew the expiring policy

categories of workers compensation benefits

medical benefits; disability benefits; rehabilitation benefits; death benefits

employees subject to the Jones Act or Death on the High Seas Act

members of a vessel's crew

employees subject to Migrant and Seasonal Agricultural Worker Protection Act

migrant and seasonal farm workers

employees subject to Federal Employees' Compensation Act

nonmilitary employees of the U.S. government

methods of demonstrating financial security for workers compensation statutes

obtaining insurance from the voluntary market; obtaining insurance from an assigned risk plan; obtaining insurance from a state fund; having a qualified self-insurance plan; participating in a self-insured group

dual-capacity claims

occur when an injured employee sues his or her employer for damages resulting from the employer having acted in some capacity other than as an employer

exempt employee

one who is not entitled to overtime wages

concurrent jurisdiction

overlapping of state and federal authority

Loss at Unnamed Locations exclusion

physical damage coverage does not apply to autos displayed or stored at any location not named in the declarations if the loss occurs more than fort-five days after he insured begins using the unnamed locations

Driveaway Collision exclusion

physical damage coverage does not cover collision damage to any covered auto while being driven or transported from a point of purchase or distribution to its destination if such points are more than 50 road miles apart

Profits exclusion

physical damage coverage excludes expected profits of the named insured

common allegations against architects and engineers

practicing beyond the scope of the license; breach of contract; conflict of interest; negligent preparation of plans or designs; negligent selection of materials / equipment; negligent supervision of construction; liability to other parties

irrebuttable presumption

presumption that cannot be overcome by any additional evidence or argument

fellow-servant rule

prevented injured employees from recovering damages for occupational injuries caused by the negligence of fellow employees

assumption-of-risk defense

prevented injured employees from recovering damages for occupational injuries resulting from risks or dangers to which the employees knowingly and voluntarily exposed themselves

contributory negligence defense

prevented injured employees from recovering damages for occupational injuries resulting in part from the employees' own negligence

Americans with Disabilities Act (ADA)

prohibits discrimination against disabled persons and requires an employer to make reasonable accommodations in the workplace for disabled employees

Age Discrimination in Employment Act (ADEA)

prohibits discrimination against individuals age forty or older based solely on their age

Title VII of the Civil Rights Act of 1964

prohibits discrimination by employers based on color, race, religion, sex, or national origin; later amended to include pregnancy, childbirth, or related medical conditions

goals of the U.S. workers compensation system

promptly paying adequate income and medical benefits to injured employees or their dependents regardless of fault; eliminating the delays and costs of litigation to the employee and to society; establishing a guarantee of benefit payment, secured by insurance; promoting industrial safety and hygiene

Death on the High Seas Act (DOHSA)

provides an additional remedy for survivors of deceased crew members and other whose dies at sea; also permits crew members' survivors to sue for death resulting from the unseaworthiness of the vessel

Federal Employees' Compensation Act (FECA)

provides benefits similar to those mandated by state workers compensation statutes to civilian employees of the U.S. government for occupational injury sustained while performing their duties

ADCF Section II - Acts, Errors or Omissions Liability Coverages

provides coverage for damages the insured must legally pay because of any act, error, or omission of the insured to which the insurance applies and arising out of the named insured's auto dealer operations

ADCF Section II - General Liability coverages

provides coverages similar to those in the Commercial General Liability (CGL) Coverage Form to meet auto dealers' needs

Federal Black Lung Benefits Act

provides disability and death benefits for coal miners; creates a rebuttable presumption that the miner's respiratory disease arose out of such employment; and creates an irrebuttable presumption that a worker with respiratory disease can attribute disability or death to that disease

Moragne remedy

provides for recovery for deaths occurring within territorial waters or on the high seas that are caused by either negligence or unseaworthiness of the vessel

Longshore and Harbor Workers' Compensation Act (LHWCA)

provides for the payment of benefits for employment-related accidental injury, occupational disease, or death of a covered maritime employee

Family and Medical Leave Act (FMLA)

provides twelve weeks of unpaid leave in any twelve-month period to care for a new child or a family member with a serious illness

Migrant and Seasonal Agricultural Worker Protection Act

provides various rights to migrant and seasonal agricultural workers, including the right to sue their employers for occupational injury under defined circumstances

ADCF Section II personal and advertising injury exclusions

quality or performance of goods - failure to conform to statements; wrong description of prices

criteria for workers compensation medical benefits

related to the injury; reasonable in the amount of care given and the amount charged; necessary to cure or relieve the injury

Worker Adjustment and Retraining Notification Act (WARN)

requires employers to provide notice 60 days in advance of covered plant closings and mass layoffs

ADCF Dealers Driveaway Collision Coverage endorsement

requires the named insured to include, in its monthly or quarterly reports of values, a statement of the point of origin, the destination, and the factory price for each of the covered autos for delivery trips in excess of 50 road miles

constructive discharge

resigning due to unendurable conditions

employees subject to War Hazards Compensation Act

same employees covered by Defense Base Act, while in a war zone and injured by a war-risk hazard

Employee Retirement Income Security Act (ERISA)

sets minimum standards for most voluntarily established pension and benefit plans

hammer clauses

settlement opportunity clauses which apply some pressure on the insured to be reasonable in settling valid claims

WC&EL Part 3B - Employers Liability Insurance

shows the limits of liability under employers liability coverage for bodily injury by accident and by disease

Symbol 30

signals garagekeepers coverage

Symbol 31

signals physical damage coverage for dealers' autos; includes any autos and the interests in these autos described in Item Six of the Declarations

ADCF personal and advertising injury liability coverage

similar to those in the CGL coverage form but limits coverage to offenses arising out of the named insured's auto dealer operations

requirements for coverage under LHWCA

situs test; status test

types of excess insurance for self-insured workers compensation plans

specific excess; aggregate excess

overt discrimination

specific, observable action that discriminates against a person or class of persons

potential risk doctrine

specifies that an injury is considered to have arisen out of a worker's employment if the injury would not have occurred but for the fact that the conditions and obligations of the employment placed the claimant in the position where he or she was injured

second injury funds

state-operated or mandated fund that pays a portion of the workers compensation benefits of an injured employee whose disability is aggravated by a prior disability

federal statutes that permit employees to sue

statutes that give certain employees the right to sue their employers for occupational injury allegedly caused by their employers' negligence; include Migrant and Seasonal Agricultural Worker Protection Act; Federal Employers' Liability Act; Jones Act; Death on the High Seas Act

federal compensation statutes

statutes that provide for no-fault benefits in the same manner as state workers compensation laws; include Longshore and Harbor Workers' Compensation Act; Defense Base Act; War Hazards Compensation Act; Outer Contintental Shelf Lands Act; Nonappropriated Fund Instrumentalities Act; Federal Black Lung Beneftis Act; Federal Employees' Compensation Act

consequential bodily injury

suffered by family members of an injured employee as a consequence of injury to the employee (e.g., HIV infection)

types of disability benefits

temporary total disability (TTD); permanent total disability (PTD); temporary partial disability (TPD); permanent partial disability (PPD)

factors for evaluating reliability of expert testimony

testing; peer review; error rates; acceptability in the relevant scientific community

Securities Act of 1933

the "truth in securities" law; requires that investors receive financial and other significant information concerning securities being offered for public sale, and it prohibits deceit, misrepresentation, and other fraud in the sale of securities

Auto Dealers Coverage Form (ADCF)

the ISO coverage form designed to meet the auto, general liability, and errors and omissions liability insurance needs of auto and trailer dealers

contract claim

the allegation that the defendant failed to do something that was required by a contract

nonreporting approach

the applicable rates are applied to the policy limits

disparate impact

the application of personnel policies to all applicants or employees that have the effect of denying employment or advancement to members of protected classes

MCS 90 endorsement

the commercial auto endorsement required by the Motor Carrier Act of 1980, in which the insurer agrees to pay, up to specified limits, damages that the insured becomes legally obligated to pay for liability resulting from negligence in the operation, maintenance, or use of any motor vehicle subject to that law

allegations of a securities class action

the corporation's public statements contained material misrepresentations or omissions; alleged misrepresentations or omissions artificially inflated the corporation's stock price; insiders profitably sold their personal holdings while stock price was inflated

Motor Carrier Coverage Form (MCCF)

the coverage form filed by ISO that can be used to insure a person or an organization providing transportation by auto in the furtherance of a commercial enterprise

fiduciary duty

the duty to act in the best interests of another

" in the course of employment"

the employee must have been doing something for which he or she was employed; the employer must have set the time and place of employment

Waiver of Our Right to Recover From Others Endorsement

the endorsement in which a workers compensation insurer agrees not to enforce its right of subrogation against any organization listed in the endorsement's schedule

False Pretense Coverage endorsement

the endorsement that deletes the False Pretense exclusion from the ADCF and agrees to pay for loss as a result of the named insured's (1) being tricked into voluntarily parting with an auto or (2) acquiring an auto from a seller who did not have legal title

Alternate Employer Endorsement

the endorsement that extends WC&EL coverage to an additional organization named in the endorsement

Dealers Driveaway Collision Coverage endorsement

the endorsement that modifies the ADCF to cover an auto dealer for collision damage to any covered auto while being driven or transported from the point of purchase or distribution to its destination if such points are more than 50 road miles apart

claims-made coverage trigger

the event that triggers coverage under a claims-made coverage form; the first making of a claim against any insured during either the policy period or an extended reporting period

arising out of employment

the injury must arise out of some risk reasonably incidental to the injured person's employment

consent-to-settle provisions

the insured can, in effect, require the insurer to take what may be the more costly route of defending against a lawsuit rather than settling the claim out of court

employers liability insuring agreement

the insurer agrees to pay damages that the insured becomes legally obligated to pay because of bodily injury by accident or disease to an employee

reporting approach

the insurer calculates premiums ont he basis of the actual value of covered autos reported either monthly or quarterly to the insurer

direct excess coverage option

the insurer will also pay for damage to customers' autos when the insured is not legally liable

garagekeepers coverage

the insurer will pay for damages the insured must legally pay for loss to a customer's auto or auto equipment left in the insured's care while the insured is attending, servicing, repairing, parking, or storing it in the insured's auto dealer operations

direct primary coverage option

the insurer will pay the whole loss, even though other collectible insurance on the auto may exist

D&O liability policy each loss limit

the most that the insurer will pay for any one loss under Coverage A or Coverage B or both

bodily injury by disease - each employee limit

the most that the insurer will pay for bodily injury by disease to any one employee

bodily injury by accident limit

the most that the insurer will pay or bodily injury resulting from any one accident, regardless of the number of employees injured

D&O liability policy aggregate limit

the most the insurer will pay for al claims first made during the policy period or the extended reporting period

bodily injury by disease - policy limit

the most the insurer will pay for all bodily injury by disease, regardless of the number of employees who sustain disease

auto dealer operations

the ownership, maintenance or use of locations for an auto dealership and that portion of the roads or other accesses that adjoin these locations; also includes all operations necessary or incidental to an auto dealership

customer limitation

the provision in the ADCF that severely restricts coverage for customers of the insured auto dealer

workers compensation law in WC&EL policy

the workers' or workmen's compensation law and occupational disease law of each state or territory named in Item 3A of the Information Page

characteristics of experience rating plans

they apply only to employers whose average premiums for prior periods exceed a certain amount; they use 3 years' experience as the basis for the modification; they do not depend entirely on the insured's own loss experience; they give more weight to small losses than to large losses because small losses occur more frequently; they cap the maximum surcharge that can be applied

disparate treatment

unfavorable or unfair treatment of someone in comparison to how similar individuals are treated

sexual harassment

unwelcome sexual advances when submission to such conduct is made either explicitly or implicitly a term or condition of an individual's employment

ADCF Broad Form Products Coverage endorsement

used to delete the ADCF exclusion for defective products; covers the named insured's liability for property damage to the named insured's products resulting from defects in those products

sources of errors in experience modification calculations

using incorrect classification codes or payroll allowances; failing to include all payroll data when calculating expected losses; incorrectly reporting loss reserves; failing to remove the reserves for closed claims from the rating data; failing to revise claim values to reflect subrogation recoveries, second injury fund recoveries, and loss apportionment among different insurers

WC&EL endorsements

voluntary compensation and employers liability coverage; foreign voluntary compensation; LHWCA coverage; maritime coverage; waiver of our right to recover from others; alternate employer

ADCF Section II BI & PD exclusions

watercraft; defective products; work you performed; damage to impaired property or property not physically damaged; products recall; pollution

leased employees

work continuously for the same firm and are subject to control by the firm, just as they would be if they were the firm's regular employees