Ch. 9 Practice Questions

A CGL policy with a general aggregate limit of $300,000 and a per-occurrence limit of $100,000 would have how much remaining after paying a claim for a $200,000 loss, and subsequently a second claim for a $100,000 loss?

$100,000 -The first claim would only be paid up to the per occurrence limit of $100,000. The second claim would paid in full. Combined, the two claims could reduce the aggregate by $200,000, leaving only $100,000 available for all other claims in the policy period.

An insured's CGL has a Products and Completed Operations Aggregate Limit of $100,000 with a $20,000 limit per occurrence. Following claims for two separate occurrences in the amounts of $35,000 and $25,000, how much of the aggregate remains for all other claims in the policy period?

$60,000 -Only $20,000 is paid by the insurer on each of the two claims because the per occurrence limit is $20,000. This reduces the remaining Aggregate to $60,000 ($100,000 - $40,000 = $60,000).

Reasonable medical expenses incurred and reported within how many years following an accident are covered under Medical Payments coverage of the CGL?

1 -The time to incur and report medical expenses is limited to 1 year under this policy.

Which of the following is not an example of personal injury?

A broken leg -A broken leg is an example of bodily injury, not personal injury.

Which injury would be covered by a CGL policy?

A customer injured while standing in an area marked 'For Employees Only' -A customer injured on the premises is covered under a CGL. Employees are covered under Workers' Compensation and a sole proprietor's spouse is considered an insured and is not covered.

Product liability would cover:

A restaurant customer who contracts food poisoning -Product liability applies to bodily injury the product causes away from the insured's premises. A customer contracting food poisoning is a perfect example of product liability.

Which of the following is covered by Medical Payments under the CGL?

Bodily injury to an insured's customer while shopping on the insured's business premises -The insurer will pay for medical expenses caused by an accident on the insured's premises or because of the insured's operations.

Which of the following is not a type of personal and advertising Injury under the CGL?

Breach of contract -Breach of contract is excluded from the definition of personal and advertising injury.

Which of the following is excluded under both the Limited Pollution Liability coverage form and Pollution Extension endorsement?

Clean up costs -Government imposed clean up costs incurred from environmental damage caused by a pollution incident are covered under the Pollution Liability coverage form, but not the Limited Pollution Liability coverage form or Pollution Extension endorsement.

What type of insurance indemnifies the legal liability of an insured for the actions of the insured's subcontractors?

Contingent Liability Insurance -Contingent liability arises when a business is held legally liable for the actions, or failures to act, of other parties, such as sub-contractors or independent contractors.

Choose the false statement regarding the application of coverage under the Products Exposure Liability Coverage.

Coverage applies to damage to the product itself -Products Liability Coverage as relates to Commercial General Liability Insurance covers damage or injuries caused by the product, but does not include damage to the product itself.

All of the following are true of medical payments under the Commercial General Liability Coverage Forms, except:

Coverage applies to the insured's injuries -Medical Payments coverage is not available for any insured.

Which of the following would be found in Section I of a CGL?

Coverage for bodily injury and property damage -Coverage A provides coverage for bodily injury and property damage liability. The conditions are found in Section IV, the definitions are found in Section V, and Who Is An Insured is found in Section II.

Choose the false statement about the CGL policy.

Coverage is automatically provided for watercraft liability -No liability coverage is provided for bodily injury or property damage arising out of the ownership, maintenance, use, or entrustment to others of aircraft, autos, and watercraft.

Why is bodily injury to an employee excluded in Commercial General Liability Insurance?

Coverage is provided under Workers' Compensation -General Liability policies exclude injuries to employees because they are covered by Workers' Compensation.

In commercial liability policies, the word 'tail' is synonymous with:

Extended reporting period -If a claims-made policy is not renewed or replaced, the claims-made form contains a provision for the extension of time during which claims must be reported. This time frame is called an extended reporting period or tail coverage.

All of the following are true of the Commercial General Liability Conditions (Section IV) under the Claims-Made Form, except:

Insolvency of the insured relieves the insurer of any obligations under the policy -Neither bankruptcy nor insolvency of the insured or of the insured's estate relieves the insurer from its obligations.

Which of the following is not a provision found in Section IV of the CGL?

Inspection and surveys -The inspection and surveys provision is found in the Common Policy Conditions section of the CPP, not in the Commercial General Liability policy.

All of the following are considered an insured under the Commercial General Liability Coverage Part to the Commercial Package Policy, except:

Members of a past partnership not shown as a Named Insured in the Declarations -No person or organization is an insured that is not shown as a Named Insured in the Declarations.

Which of the following would not be excluded under Coverage A of the CGL?

Operation of mobile equipment -The operation of mobile equipment is covered, though the transportation of this equipment to or from a job site is specifically excluded.

A CGL policy provides coverage for:

Operations Liability -Pollution, Contractual, and Employee Liability are exclusions under a CGL.

An insured contract includes all of the following, except:

Pollution liability -

An insured who goes to client's offices and homes for appointments would need coverage for which liability exposure?

Premises and Operations -Premises and operations exposure includes the insured's legal liability for bodily injury or property damage arising out of his/her business premises or operations (away from the premises).

ABC Industries contracts with municipal governments to build bridges, viaducts, and similar engineering projects. If workers from ABC Industries cause damage to a taxicab while pouring the foundation for a new overpass, which kind of liability exposure would this be an example of?

Premises and operations -An insured business conducts its operations both at its own premises and elsewhere. If a business, or anyone acting on its behalf, causes bodily injury or property damage, the business may be considered legally liable for such injury or damage. CGL coverage is provided for the insured's legal liability for bodily injury or property damage arising out of the insured's premises or the insured's operations.

Which of the following is not an example of contingent liability exposure?

Premises liability exposure -Contingent liability exposures exist when the insured is held liable for the actions or failure of actions of others. Premises liability is not a contingent liability exposure.

Which of the following is true concerning the Premium Audit condition of the Commercial General Coverage Part to the Commercial Package Policy?

Premium audit determines what the earned premium will be at the end of the policy period -The insured must keep records sufficient for the insurer to compute premiums based upon sales, receipts, or payroll. After an audit, an additional premium is required if these records show that these items are greater than the estimates that developed the deposit premium.

The CGL's general aggregate limit does not cover which of the following?

Product recall -Coverage is excluded when a product is withdrawn from the market because of a defect. This is sometimes called the Sistership Exclusion.

Which of the following is an insured under the CGL policy?

Spouse of a partner -The spouse of any individual or partner designated on the Declarations is also an insured.

Which of the following statements is incorrect about Supplementary Payments under the CGL?

Supplementary payments apply to losses under all Section I coverages -Supplementary Payments only apply losses insured under Coverages A and B. They are not applied to no fault Medical Payments, since these are issued without involvement of a suit.

Which of the following statements regarding Supplementary Payments under the CGL is false?

Supplementary payments will reduce the limits of the policy -Claims payable under Supplementary Payments do not reduce the limits of the policy.

What is the date after which an occurrence can take place and be covered under the claims-made form?

The Retroactive Date -The Retroactive Date is the date that defines the period of coverage under a claims-made form. Claims resulting from occurrences prior to the policy's stated retroactive date are excluded.

Which of the following is not true of the supplemental extended reporting period under the Claims-Made Form of the CGL?

The insurer may void it after the premium has been paid by the insured -Once the premium has been paid, the Supplemental Extended Reporting Period Endorsement cannot be terminated.

Which of the following is true regarding the Supplemental Extended Reporting Period?

The premium is a one-time charge -The cost of the endorsement may be up to 200% of the CGL's annual premium. This is a one-time charge and is fully earned at issuance.

All of the following are true about extended reporting periods, except:

The supplemental tail requires an annual premium -The supplemental extended reporting period has a one-time premium.

What are the territorial limits of the Commercial General Liability Coverage Part of the Commercial Package Policy?

United States, its territories and possessions, Puerto Rico and Canada -Coverage applies to occurrences that take place in the coverage territory, or if the products were made in the coverage territory and the suit is brought in the coverage territory.