P&C Chapter 9 - Commercial General Liability Coverage

According to the CGL conditions, If the insurer decides not to renew, the First named Insured is to be notified how many days before the expiration date? A: 60 B: 10 C: 30 D: 20

A: 60 Must be notified in writing

Which of the following is not covered in the Limited Pollution Liability coverage and Pollution Extension endorsement? A: Clean up costs B: Escape of pollutants C: Threatened discharge of pollutants D: Waste disposal leaks

A: 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.

All of the Following are true, except: A: Dram Shop Liability protects against legal liability that may be imposed on a seller of a packaged liquor store B: The insurer may examine the insured's books anytime during the policy period, or within 3 years after the policy ends C: Contingent Liability Policies are also called Owners and Contractors Protective Liability D: The insurer's written consent is required for any transfer of rights and duties to another person

A: Dram Shop Liability protects against legal liability that may be imposed on a seller of a packaged liquor store Dram Shop Liability applies to the seller of liquor by the drink, i.e., a bar, etc.

All of the following are true of the Commercial General Liability Conditions (Section IV) under the Claims-Made Form, except: A: Insolvency of the insured relieves the insurer of any obligation under the policy B: Insurance applies as if each named insured were the only named insured, and separately to each insured against whom the claim is brought C: The insured must maintain records necessary so the insurer may compute the premium D: The insured cannot sue the insurer until all terms of the policy have been fully complied with

A: Insolvency of the insured relieves the insurer of any obligation under the policy DOES NOT relieve the insurer of its duties under the policy

A tourist's car is damaged by paint spilled by a work crew on an overhead scaffold. Which type of liability would apply? A: Operations B: Premises C: Completed Operations D: Products

A: Operations A business owner may be held legally liable in the event of BI and/or PD arising out of conditions on or (in the case of operations liability) away from owned or rented premises

All of the following are correct concerning Medical Payments under the Commercial General Liability Insurance, except: A: Payments are made only if the insured is deemed to be legally liable B: Payments are made for expenses incurred and reported within one year of the accident C: Payments are made regardless of fault D: Covered is medical expenses for BI caused by an accident on the insured's premises or because of the insured's operations

A: Payments are made only if the insured is deemed to be legally liable Medical Payments provides coverage for the insured's customers and members of the public. Excluded from coverage are the insured and the insured's employees

Damages from libel would be covered under which type of coverage? A: Personal and advertising injury B: Medical Payments C: Professional liability D: Bodily injury and property damage

A: Personal and advertising injury Libel is an example of personal and advertising injury

Which of the following is true concerning the condition of Premium Audit of the Commercial General Coverage Part to the Commercial Package Policy? A: The advance premium is only a premium deposit, and the earned premium will be based on an audit at the end of the policy period B: Premium audit refers to the right of the insured to contest the premium after policy issuance C: Premium audit is the action taken by the insurer to see that the insured's rating is properly classified D: Premium Audit is the comparison of the insured's premium with the average premium in the insured's rating classification

A: The advance premium is only a premium deposit, and the earned premium will be based on an audit at the end of the policy period

All of the following are true of the supplemental extended reporting period, except: A: The insurer may cancel it after the premium has been paid by the insured B: It is an optional extended reporting period of unlimited duration C: It must be purchased within 60 days after the end of the policy D: The one time premium may not exceed 200% of the annual premium for the coverage part

A: The insurer may cancel it after the premium has been paid by the insured Once the premium has been paid, the Supplemental Extended Reporting Period Endorsement cannot be cancelled

Which of the following is true regarding the Supplemental Extended Reporting Period? A: The premium is a one-time charge B: Cancellation by the insurer requires 90 days notice of cancellation C: It covers claims that take place after the policy term, during the Supplemental Extended Reporting Period D: The charge for the Supplemental Extended Reporting period shall not exceed the premium of the expiring policy

A: The premium is a one-time charge Presumably, the premium for the exposure was charged during the policy period so that a single premium for claims that may be made in the future is sufficient and proper

All of the following are true of supplementary payments, except: A: They apply to coverages A, B, and C B: They are paid in addition to the limit of liability C: They cover all claim-related expenses D: They cover loss of earnings up to $250 a day

A: They apply to coverages A, B, and C Supplementary payments apply to Coverages A and B only

Advertising Injury Coverage includes all of the following, except: A: Wrongful entry B: Misappropriation of advertising ideas or style of doing business C: Violation of copyright, title or slogan D: Infringement of copyright

A: Wrongful entry Advertising injury arises out of slander, libel, copyright infringement, or misappropriation of advertising ideas. Wrongful entry would constitute Personal Injury

Advertising Injury Coverage includes all of the following except: A: Wrongful entry B: Violation of copyright, title or slogan C: Infringement of copyright D: Misappropriation of advertising ideas or style of doing business

A: Wrongful entry Wrongful entry would constitute personal injury

A ramp collapses after being built and injures a pedestrian. Which type of liability would apply? A: Premises B: Completed Operations C: Operations D: Products

B: Completed Operations If the walk ramp had collapsed while being built, Operations coverage would apply, but since it collapsed after completion, Completed Operations applies

The occurrence form and claims-made form are identical in all respects except which of the following? A: Length of reporting period B: Coverage trigger C: Limit of Liability D: Number of insureds

B: Coverage trigger Coverage trigger is the date of the claim in the case of occurrence form, and the date of submission for claims made form

Products liability is based on what common law principle? A: Fiduciary duty B: Implied warranty C: Rescission D: Estoppel

B: Implied warranty Common Law declares that the seller of a product makes an implied warranty that the product is safe. A manufacturer, wholesaler, or retailer is therefore liable for any negligence, breach of warranty, or strict liability associated with a product

The optional extended reporting period of unlimited duration that may be purchased by endorsement to a Claims-Made Form is called: A: Midi-Tail B: Maxi-Tail C: Mini-Tail D: Basic Extended Reporting Period

B: Maxi-Tail The SERP is an optional reporting period of unlimited duration that may be purchased by endorsement if requested within 60 days of the end of the policy term. The unlimited duration of the tail of this reporting period is also known as the Maxi-Tail

Which of the following forms responds to losses that occur while the policy is in force and provides a defense and payment of claims for which the insured is legally liable, regardless of when the claim is made against the insured as long as the loss occurred during a policy period? A: Products Form B: Occurrence Form C: Claims-Made Form D: Premises and Operations Form

B: Occurrence Form An Occurrence Form provides protection regardless of when the claim is made, as long as the injury or damage claimed occurred during a period when coverage was in force.

Under BI and PD liability of the Commercial General Liability Coverage Part of the CPP, all of the following are excluded from coverage, except: A: Workers' Compensation claims B: Operation of mobile equipment C: Expected of intended injury

B: Operation of mobile equipment The mobile equipment exclusion applies to the TRANSPORTATION of mobile equipment on an auto owned/operated by or rented/loaned to an insured

All of the following are considered liability assumed under insured contracts, except: A: Sidetrack agreements B: Ordinance or Law C: Elevator maintenance agreements D: A lease of premises

B: Ordinance or Law Simply put, ordinances or laws are not contracts

Which statement is false regarding Supplementary Payments under the Commercial General Liability policy? A: Coverage only applies to Coverages A and B B: Payments made under this section reduce the limits of the policy C: Claim related expenses are included D: The cost of bail bonds is included up to $250

B: Payments made under this section reduce the limits of the policy Supplementary payments are made in addition to the applicable limits of the policy

Coverage B of the CGL provides which type of coverage? A: Medical Payments B: Personal and advertising injury C: Bodily injury and property damage D: Professional liability

B: Personal and advertising injury BI and PD are Coverage A. Medical payments are Coverage C. Professional Liability coverage is not provided by the CGL

False arrest is a type of: A: Advertising injury B: Personal injury C: Property damage D: Bodily injury

B: Personal injury Personal injury, as distinguished from BI, includes false arrest, invasion of privacy, and malicious prosecution

Which of the following pollution forms will an agent recommend to an insured whose business requires protection for pollution liability and clean-up costs? A: Limited Pollution Extension Endorsement B: Pollution Liability Coverage Form (Designated Sites) C: Pollution Extension Endorsement D: Limited Pollution Liability Coverage Form (Designated Sites)

B: Pollution Liability Coverage Form (Designated Sites) Only the Pollution Liability Form includes coverage for pollution-related clean-up costs

A customer in a housewares store is cut while handling a broken piece of glassware. Which type of liability would apply? A: Completed Operations B: Premises C: Products D: Operations

B: Premises Because the product was still under the insured's care, custody, and control, premises liability, not products liability, would apply

All of the following are true of Supplementary Payments under the Commercial General Liability Coverage Forms, except: A: Insurer's claim-related expenses are included B: Supplementary Payments apply to all Section I coverages C: They do not reduce the Limit of Liability D: The cost of bail bonds is included up to $250

B: Supplementary Payments apply to all Section I coverages Supplementary Payments only apply to Coverages A and B; not C

Which of the following constitutes the territory for Coverage A of the CGL? A: The U.S. Only B: The U.S. and Canada C: The U.S., Canada and Mexico D: Worldwide

B: The U.S. and Canada The coverage territory includes USA including its territories and possessions (including Puerto Rico), and Canada

In explaining the CGL Premium Audit to his policyholder, the agent would make which of the following statements? A: Premium Audit is the action taken by the insurer to see that the insured's rating is properly classified B: The advance premium is only a premium deposit, and the earned premium will be based on an audit at the end of the policy period C: Premium Audit refers to the right of an insured to contest the premium after policy issuance D: Premium Audit is the comparison of the insured's premium with the average premium in the insured's rating classification

B: The advance premium is only a premium deposit, and the earned premium will be based on an audit 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 may be required if the records show that these items are greater than the estimates which determined the deposit amount

Which of the following is true regarding Completed Operations Coverage? A: BI arising from negligent or faulty work of the insured is not covered if it occurs after the work is completed and turned over to its owner B: The coverage will pay for BI and/or PD caused by negligent or faulty work by the insured, but will not pay for the cost of replacing the work that caused the loss C: If faulty work negligently performed, causes damage to other property of the claimant, then coverage extends to include the faulty work D: Coverage applies only during the period that the insured has custody and control of the work deemed faulty or inadequately performed

B: The coverage will pay for BI and/or PD caused by negligent or faulty work by the insured, but will not pay for the cost of replacing the work that caused the loss It pays for BI and/or PD but does not play for the work that was faultily performed

John's Hardware Store is insured under a claims made Commercial General Liability policy effective January 1, with liability limits of $100,000 per occurrence and $300,000 aggregate. If a $200,00 claim was made in June and a $100,000 claim was made in September, how much of the aggregate claims limit is available to pay a $200,000 claim made in December? A: $300,000 B: None C: $100,000 D: $200,000

C: $100,000 In the first occurrence with a 200k loss, the policy pays 100k because the occurrence limit is 100k. This payment reduces the Aggregate Limit by 100k. The second occurrence with a 100k loss is paid in full, reducing the aggregate limit by the same amount. 100k remains available to pay the December loss.

Personal Injury Coverage includes all of the following, except: A: Libel and Slander B: Malicious prosecution C: Bodily injury from eviction D: False arrest

C: Bodily injury from eviction Personal Injury, as distinguished from BI, includes false arrest, invasion of privacy, malicious prosecution, and so on

Which of the following coverage forms covers those that sell liquor by the drink? A: Products Liability B: Liquor Liability C: Dram Shop Liability Coverage D: Contractual Liability

C: Dram Shop Liability Coverage Dram shop liability laws hold alcohol servers responsible for harm that intoxicated or underage patrons cause to other people

Which of the following is not a type of insured contract? A: Lease of premises B: Elevator maintenance C: Employment contract D: Sidetrack agreement

C: Employment contract The 5 types of insured contracts are; lease of premises, sidetrack agreement, easement or license agreement, municipality indemnification, and elevator maintenance agreements

The Limited Pollution Liability Coverage Form differs from the Pollution Liability Coverage Form in what respect? A: The Limited form does not include a leak from a waste facility on premises B: The Limited form has a lower limit of liability C: The Limited form does not include clean up D: The Limited form is not available in all states

C: The Limited form does not include clean up The Limited Pollution Liability Coverage Form is identical to the Pollution Liability Coverage Form except that it does not include clean up

The Retroactive date is: A: The date on which the extended reporting period begins B: The date the grace period begins for late premium payments C: The earliest date after which a covered occurrence of injury or damage can take place D: The date of policy inception

C: The earliest date after which a covered occurrence of injury or damage can take place Earliest date that an occurrence of injury can take place and be covered under the claims-made form

All of the following are true of medical payments, except: A: They include first aid expenses B: The injury must be reported within one year of its occurrence C: They pay for personal injury, not bodily injury D: They are paid regardless of fault

C: They pay for personal injury, not bodily injury Medical payments pay for medical expenses due to bodily injury.

Which of the following is not an example of personal injury? A: False arrest B: Misappropriation of a title or slogan C: Infringement of copyright D: A broken leg

D: A broken leg A broken leg is an example of BI, not personal injury

All of the following are true of the Claims-Made Form, except: A: The mini tail allows up to 60 days after the end of the policy period for reporting a claim B: Supplemental payments are automatically included C: For coverage to apply, the injury or damage must have occurred after the retroactive date or during the policy period D: A claim occurring less than 60 days prior to the retroactive date would be covered

D: A claim occurring less than 60 days prior to the retroactive date would be covered The retroactive date is the earliest day a claim will be covered by the current policy

At what point in time is the earned premium used to compute the final premium determined for the premium audit? A: Monthly B: At the time the premium deposit is made C: At the beginning of the policy period D: At the end of the policy period

D: At the end of the policy period An additional premium is required if the earned premium is greater than the premium deposit. A premium credit (or refund) may apply if the deposit was greater than the minimum premium required by the audit

Which type of policy reporting tail may be added to a claims-made form? A: Midi B: Mini C: Multi D: Maxi

D: Maxi The mini and midi tails are components of the Basic Extended Reporting Period, which is automatically provided with the policy. The maxi tail is a component of the Supplemental Extended Reporting Period, which may be added by endorsement. There is no multi tail

Which of the following is provided by Coverage C of the CGL? A: Property Damage B: Personal Injury C: Bodily Injury D: Medical Expenses

D: Medical Expenses

Which of the following is not grounds for a claim under the Employment Practices Liability Insurance (EPLI) policy? A: Sexual harassment B: Discrimination C: Whistleblower status D: Plant closure

D: Plant closure Large scale layoff and plant closures are excluded under the policy

Which of the following would NOT be excluded from Coverage A of the CGL? A: Contractual liability B: Workers' Compensation C: Product recall D: Premises liability

D: Premises liability Premises liability is one of the four main exposures of the CGL. The other answer choice are each excluded from the policy

All of the following are true, except: A: Section III of the Commercial General Liability Coverage Forms describes the limits of insurance B: The each occurrence limit is the most the company will pay for damages under Coverage A and Coverage C, arising out of any one occurrence C: The general aggregate limit is the most the company will pay for all damages during a policy period under Coverage A, Coverage B, and medical payments under Coverage C, except for products and completed operations claims D: The aggregate limits of the policy that are stated in the Declarations are the maximum amount payable for a single claim in any policy period

D: The aggregate limits of the policy that are stated in the Declarations are the maximum amount payable for a single claim in any policy period The limits stated in the policy apply separately to each consecutive annual period. An aggregate limit is the amount payable for all claims in a single policy period

Which of the following would not reduce the General Aggregate Limit under a Commercial General Liability Coverage Form? A: A customer is injured on premises and the insured calls an ambulance to take the injured party to the hospital B: The insured misappropriates the advertising slogan of a competitor C: A small fire in the insured's office causes damage to the leased premises D: The insurer pays a claimant injured by a product made by the insured

D: The insurer pays a claimant injured by a product made by the insured A products claim has its own aggregate, and product losses do not reduce the General Aggregate

All of the following are true, except: A: If the named insured cancels a policy, the refund will be sent to the first named insured B: Medical payments under the CGL Policy do not cover injuries resulting from liquor liability C: Medical payments under the CGL include funeral expenses D: Under Section II (Who is an Insured) of the Commercial General Liability Coverage Forms, newly acquired organizations are automatically included for a maximum of 30 days or until expiration of the policy, whichever comes first

D: Under Section II (Who is an Insured) of the Commercial General Liability Coverage Forms, newly acquired organizations are automatically included for a maximum of 30 days or until expiration of the policy, whichever comes first Newly acquired organizations are automatically covered for 90 days