Casualty Policies
When does a business need to purchase a liquor liability policy? AWhen it entertains customers or employees at events where liquor is served BWhen it is in the business of manufacturing, distributing, serving, or furnishing alcoholic beverages CWhen employees consume alcoholic beverages DWhen it does not have a general liability policy
When it is in the business of manufacturing, distributing, serving, or furnishing alcoholic beverages Homeowners and general liability policies provide host liquor liability coverage to insureds that entertain guests, employees, or organizations at events where liquor is served, but those in the business of manufacturing, distributing, selling, serving, or furnishing alcoholic beverages need to purchase liquor liability coverage.
Which of the following special liability coverages will provide protection to managers of a corporation for claims arising from a wrongful act committed by the manager while in an official capacity? ADirectors and officers liability BEmployment practices liability CErrors and omissions insurance DMalpractice insurance
Directors and officers liability Directors and officers liability policies will pay those damages that the corporation or nonprofit entity would, under the law, be required to reimburse the individual director or officer for judgments arising from actions alleging wrongful acts.
What is another name for liquor liability insurance? AErrors & omissions insurance BIntoxicants and narcotics insurance CDram shop insurance DThird-party liability insurance
Dram shop insurance Liquor liability is also known as dram shop liability, and refers to the exposure that bars, restaurants and other similar establishments face due to the selling, distributing, manufacturing, or serving of alcoholic beverages.
All of the following are parts of a personal auto policy EXCEPT AGarage coverage. BMedical payments coverage. CDuties after an accident or loss. DLiability coverage.
Garage coverage. PAP is divided into 6 parts: Liability Coverage, Medical Payments Coverage, Uninsured Motorist Coverage, Coverage for Damage to Your Auto, Duties after an Accident or Loss, and General Provisions. Garage Coverage is a section in a commercial auto policy.
An owner of a parking lot wants liability coverage for damage to vehicles while in her custody. She needs AMotor carrier coverage. BBusiness auto coverage. CGarage liability coverage. DGaragekeepers coverage.
Garagekeepers coverage. Garagekeepers insurance provides physical damage coverage on customers' autos while in the care, custody, and control of the garage operation.
When does a business need to purchase a liquor liability policy? AWhen it is in the business of manufacturing, distributing, serving, or furnishing alcoholic beverages BWhen employees consume alcoholic beverages CWhen it does not have a general liability policy DWhen it entertains customers or employees at events where liquor is served
When it is in the business of manufacturing, distributing, serving, or furnishing alcoholic beverages Homeowners and general liability policies provide host liquor liability coverage to insureds that entertain guests, employees, or organizations at events where liquor is served, but those in the business of manufacturing, distributing, selling, serving, or furnishing alcoholic beverages need to purchase liquor liability coverage.
Which of the following would be covered under the Garage Liability Coverage Form? AProduct recalls BFellow employees CLoss of use DInsured's business premises
Insured's business premises The garage coverage form provides liability protection for the insured's premises, autos, products, and work performed. All the other answer choices are exclusions from coverage.
If an employer in a state with elective workers compensation laws chooses not to be subject to those laws, what does the employer lose? AIts common law defenses against liability suits BIts ability to provide group health insurance CIts right to hire persons with disabilities DIts eligibility for workers compensation insurance2
Its common law defenses against liability suits Elective law means the employer does not have to be subject to the state's workers compensation laws, but if the employer chooses not to be subject to the laws, it loses its common law defenses against liability suits.
Most insurance policies exclude losses by ABurglary. BRobbery. CMysterious disappearance. DTheft.
Mysterious disappearance. Losses by mysterious disappearance are excluded by most insurance policies.
Workers compensation benefits are provided for an employee injury or death that arises out of the course of normal employment in all of the following situations EXCEPT AOn his evening stroll, an employee of an advertising company is injured while watching a competitor's billboard sign being removed from an advertising site. BAn employee who delivers overnight packages is injured while voluntarily running the "package race" at the mandatory company picnic. CAn employee suffers an injury while working at a jobsite. DAn employee working as an over-the-road truck driver suffers injury while loading freight at a vendor's dock.
On his evening stroll, an employee of an advertising company is injured while watching a competitor's billboard sign being removed from an advertising site. Workers compensation provides coverage for injuries that occur in the course of normal employment, activities that add to the employer's goodwill and interests, and activities that an employee normally would engage in during the course of employment. The employer is liable for compensation for injuries that occur during employer-sponsored off-duty activities.
Rental Reimbursement is only available if the policy includes which coverage? AOther Than Collision Coverage BExtended Nonowned Coverage for Named Insured CTowing and Labor Costs DNamed Nonowner Coverage
Other Than Collision Coverage This endorsement is only available if the policy includes other than collision coverage. This endorsement will reimburse the insured for rental charges incurred because the covered auto is out of use because of a covered loss.
Workers compensation will pay under which of the following situations? APaid without consideration of fault or negligence on the part of either employee or employer BOnly when the employer is engaging in a negligent act COnly when the employee is engaging in a negligent act DOnly when an employee is at fault
Paid without consideration of fault or negligence on the part of either employee or employer Workers compensation, which takes the form of a monetary benefit, is paid without any consideration of fault or negligence on the part of either the employee or employer.
If an insured bakery is sued because its marketing states that the products of another bakery may not be safe, which coverage of a commercial general liability policy will defend the suit? ACompleted operations BPersonal and advertising injury liability CPremises and operations DProduct liability
Personal and advertising injury liability Personal injury and advertising injury liability covers suits arising from slander and libel.
A customer was injured in a supermarket parking lot when a grocery cart rolled into the customer's leg. Coverage for this claim would be provided under APremises and operations. BCompleted operations. CWorkers compensation. DProduct liability.
Premises and operations. Premises and operations would cover claims arising from injuries that occur on the insured's premises or because of the insured's business operations.
Crunchy Flakes Cereal Company shipped some of its product in faulty containers that caused spoilage. This resulted in some consumers becoming ill. If the company is sued for this event, it would be an example of a APersonal injury claim. BContractual liability claim. CProduct liability claim. DPremises and operations claim.
Product liability claim. Product liability provides coverage against loss arising out of the legal liability incurred by a manufacturer, merchant, or distributor due to injury or damage resulting from the use of a covered product.
Which of the following liability policies is usually written on a "claims-made" form? AUmbrella liability BProfessional liability insurance CAutomobile liability DPersonal liability
Professional liability insurance Most professional liability policies are written on a claims-made form which means that coverage may not be provided for claims arising from acts that occurred prior to the inception of the policy and for claims arising for acts that occur during the coverage period, but where the claim is not made until after the expiration of the policy, will not be covered, unless an "extended reporting period" (tail-coverage) is purchased.
While an insured was towing a utility trailer with his auto, the trailer came loose and ran into a store front. What part of the insured's auto policy would pay for the damage to the store? AProperty damage liability BCollision coverage COther-than-collision coverage DThis loss would not be covered.
Property damage liability The auto policy provides liability coverage to a trailer being towed by a covered auto.
Employee theft bonds may be written as all of the following EXCEPT APosition schedule. BSingle form. CBlanket position. DName schedule.
Single form. Employee theft may be written as an individual, name schedule, position schedule, commercial blanket, or blanket position bond.
Workers compensation rating is developed by applying a rating bureau job classification rate to each A$1,000 of payroll. B$100 of payroll. C$250 of payroll. D$500 of payroll.
$100 of payroll. Workers compensation rating is developed by applying a rating bureau job classification rate to each $100 of payroll.
If an insured needs protection on property other than money and securities inside the premises from losses caused by breaking and entering after business hours, which of the following Crime Coverage forms should be purchased? ARobbery and Safe Burglary BExtortion CTheft, Disappearance and Destruction DInside Premises - Robbery or Burglary of Other Property
nside Premises - Robbery or Burglary of Other Property Covers taking of property, other than money or securities, when there is visible sign of forcible entry or exit from the premises.
An insured hits a deer and crashes his car into a tree. The total damage to the vehicle is $6,000. How will this loss be covered? AThis would not be a covered loss. B$6,000 would be paid under other-than-collision coverage. C$3,000 would be paid under other-than-collision; $3,000 would be paid under collision coverage. D$6,000 would be paid under collision coverage.
$6,000 would be paid under other-than-collision coverage. Because the proximate cause of the loss was contact with an animal, all of the damage would be paid under other-than-collision coverage.
The Employee Theft crime policy form includes a coverage extension that applies to employees temporarily outside the coverage territory for up to A30 days. B60 days. C90 days. D120 days.
90 days. The coverage includes a coverage extension that applies to employees temporarily outside the coverage territory for up to 90 days.
Which of the following Employee Fidelity Bonds would cover all employees? AA named schedule bond BA position schedule bond CA blanket position bond DAn individual bond
A blanket position bond A Blanket Bond covers all employees, and limits are expressed on a per employee basis.
An uninsured motor vehicle includes all of the following EXCEPT AA vehicle not covered by an auto insurance policy. BA vehicle that has no liability bond in force. CA vehicle owned and operated by a self-insurer. DA vehicle which flees a hit-and-run accident.
A vehicle owned and operated by a self-insurer. An uninsured motor vehicle does not included vehicles owned and operated by self-insurers, unless the self-insurer becomes insolvent.
Which would NOT be covered by the inside the premises - robbery or safe burglary of other property coverage? ATwo men break a window during an attempted robbery. BSomeone breaks in after business hours, pries open a wall vault and steals several valuable paintings. CA store clerk is forced into the storage room and locked in while the intruder steals high-value merchandise. DAn employee is caught stealing cash from the register.
An employee is caught stealing cash from the register. Dishonest or criminal acts of any employee or representative are specifically excluded.
Workers compensation statutes provide coverage for diseases that occur as a result of working in the employer's working environment. Which of the following is an example of a disease that would NOT be covered by such provisions? AAn employee of a chemical plant who suffers from cancerous tumors BAn employee of municipal fire department who suffers from smoke inhalation CAn employee of a data-processing company who suffers from carpel tunnel syndrome DAn employee of a medical facility who suffers from a common cold
An employee of a medical facility who suffers from a common cold Although a cold could have been caught as a result of the working environment, it is not specific enough to that environment for it to be considered causal.
If an insured has an umbrella liability policy in addition to his personal auto policy, which would be considered the underlying policy? AExcess policy BGeneral liability policy CAuto policy DUmbrella policy
Auto policy The underlying policy is the primary liability policy. In this scenario, it's the insured's personal auto policy.
How are surety bonds different from insurance? AInsurance guarantees specific duties or obligations will be fulfilled; surety bonds pay for losses. BSurety bonds guarantee that losses will be paid; insurance pays for obligations to be fulfilled. CSurety bonds are issued by the government; insurance is issued by private companies. DSurety bonds guarantee specific duties or obligations will be fulfilled; insurance pays for losses.
Surety bonds guarantee specific duties or obligations will be fulfilled; insurance pays for losses. Surety bonds are not insurance in the traditional sense. Unlike insurance, surety bonds do not expect to pay for losses. Instead, they guarantee specific duties or obligations will be fulfilled. Surety bonds may be issued by private companies.
Which one of the following symbols used in business auto coverage is correctly described? ASymbol 9 - nonowned autos only BSymbol 1 - owned auto only CSymbol 2 - owned autos subject to no-fault DSymbol 7 - hired autos only
Symbol 9 - nonowned autos only Symbol 1 is used for any auto, Symbol 2 is used for owned autos only, and Symbol 7 is used for specifically described autos only.
Who is NOT considered an employee in a commercial general liability (CGL) policy? ATemporary worker BLeased worker CFull-time worker DPart-time worker
Temporary worker In a CGL policy, a temporary worker is not considered an employee.
An employee is injured while visiting the employer's out-of-state site. How will the workers compensation benefits be determined? AThe legal system will determine which state's benefits apply to this particular loss. BThe state's benefits that pay the lowest amount will be selected by the insurance company. CThe employee may elect to receive benefits from both the home state and the state in which the injury occurred. DBenefits will be provided if the state was listed on the policy information page.
Benefits will be provided if the state was listed on the policy information page. Employers must list all states in which they do business on the policy information page for coverage to apply in those states.
Surety bonds are written for a definite limit called ALoss costs. BThe bond penalty. CIndemnity limit. DThe limit of liability.
The bond penalty. If the specific obligation guaranteed by the bond is not fulfilled, a sum of money, known as a penalty, becomes payable as damages.
Which of the following statements is true regarding the commercial general liability policy's Coverage C - Medical Payments? AThe coverage provides high limits of insurance for bodily injury losses. BThe coverage is considered good will because payments are made without regard to fault. CThe coverage applies to bodily injury to the named insured. DThe coverage is liability insurance because it pays only if the insured is legally liable.
The coverage is considered good will because payments are made without regard to fault.
Which of the following statements is true regarding the commercial general liability policy's Coverage C - Medical Payments? AThe coverage is liability insurance because it pays only if the insured is legally liable. BThe coverage provides high limits of insurance for bodily injury losses. CThe coverage is considered good will because payments are made without regard to fault. DThe coverage applies to bodily injury to the named insured.
The coverage is considered good will because payments are made without regard to fault. Coverage C - Medical Payments provides necessary medical, surgical, ambulance, hospital, nursing or funeral expenses for injuries to third parties. Payments will be paid without regard to the fault or negligence of the insured.
The occurrence form trigger is based on which of the following? AThe amount of the insured's deductible BThe number of claims made during the policy period CThe date when injury or damage occurs DThe place where the injury or damage occurs
The date when injury or damage occurs The occurrence form trigger is based on the date when injury or damage occurs and covers claims made at any time for injuries that occur during the policy period.
All of the following conditions must exist for injury or damage to be included in the products and completed operations hazard of a commercial general liability policy EXCEPT AThe injury or damage must arise out of the insured's product or work. BThe injury or damage must occur after the insured has released physical possession of the product to another. CThe injury or damage must occur within 90 days after the insured's work is completed. DThe injury or damage must occur away from the insured premises.
The injury or damage must occur within 90 days after the insured's work is completed.
What are the two major sections of commercial crime policies? AProperty and liability BOccurrence and claims made CCommercial entities and government entities DDiscovery form and loss sustained form
Commercial entities and government entities The crime program offers policies in two major sections: commercial entities and government entities. For each section the insured can select a form that has different coverage triggers, discovery form or a loss sustained form.
What are the two major sections of commercial crime policies? AProperty and liability BOccurrence and claims made CCommercial entities and government entities DDiscovery form and loss sustained form Id
Commercial entities and government entities The crime program offers policies in two major sections: commercial entities and government entities. For each section the insured can select a form that has different coverage triggers, discovery form or a loss sustained form.
A plasterer has finished a job. What kind of liability coverage would protect him if the plaster falls and hurts someone because he did not do the job correctly? AMedical payments BProducts CProfessional errors & omissions (E&O) DCompleted operations
Completed operations The plasterer's completed operations pays because his negligence led to the loss. It does not pay to redo the job.
In commercial auto insurance, what type of coverage will pay for loss or damage to a covered auto by any cause other than collision or overturn? ALoss of use BSpecified CComprehensive DBlanket
Comprehensive Comprehensive coverage pays for loss or damage to a covered auto by any cause other than collision or overturn.
In which of the following sections of a commercial auto policy will you find specific information about the policy period? AAdditional coverages BSelected endorsements CDefinitions DConditions
Conditions The conditions section of an auto policy defines coverage in greater detail and determines such things as policy period, coverage territory, and how coverage will apply in certain situations.
Which of the following risks is eligible for coverage under a businessowners policy? ABanks BAutomobile dealers CBars or taverns DCondominiums
Condominiums Insurance Services Office, Inc. (ISO) maintains a list of risks not eligible for consideration for a BOP. Financial institutions, auto dealers, and bars and grills are specifically excluded from coverage.
The members of a limited liability company are insureds under a businessowners policy (BOP) if AA single individual member of the limited liability company is listed as the named insured. BMembers of a limited liability company cannot be insureds under a BOP. CThe limited liability company is designated as the named insured. DEach individual is listed as a named insured on the policy.
The limited liability company is designated as the named insured. If the named insured is designated as a limited liability company, the named insured and members also are insureds, but only with respect to the conduct of the business. Managers are insureds, but only with respect to their duties as managers.
Tom's Truck Service's vehicle is stolen. The policyholder may obtain coverage for transportation expenses subject to which of the following limits? A$25 per day; $450 maximum B$20 per day; $600 maximum C$15 per day; $300 maximum D$15 per day; $450 maximum
$20 per day; $600 maximum The physical damage section includes a coverage extension that would pay for substitute transportation, up to $20 per day for a maximum of $600, after the theft of a covered auto.
Under the commercial crime coverage inside the premises - robbery or safe burglary of other property, what is the special per occurrence limit that applies to loss or damage to precious metals, precious and semiprecious stones, pearls, furs, manuscripts, drawings, or records? A$1,000 B$5,000 C$10,000 D$25,000
$5,000 A special limit of $5,000 per occurrence applies to loss or damage to precious metals, precious and semiprecious stones, pearls, furs, manuscripts, drawings or records.
A premium discount is the term that describes when an insured owes a total standard premium greater than A$10,000. B$15,000. C$1,000. D$5,000. Incorrect
$5,000. A premium discount is when an insured owes a total standard premium greater than $5,000.
The Employee Theft crime policy form includes a coverage extension that applies to employees temporarily outside the coverage territory for up to A30 days. B60 days. C90 days. D120 days.
90 days. The coverage includes a coverage extension that applies to employees temporarily outside the coverage territory for up to 90 days.
Employee fidelity may be written in all the following ways EXCEPT ALocation schedule. BIndividual. CName schedule. DPosition schedule.
ALocation schedule. Fidelity bonds are purchased by employers and may be written for individual named employees, on a named schedule basis where one bond is issued for several employees listed by name, or position schedule where several positions are listed and whoever is occupying a scheduled position is covered.
While an insured's covered auto is in the repair shop following damage caused by a collision, the insured would have coverage for which of the following vehicles under a personal auto policy? AAny vehicle while located inside a racing facility for the purpose of racing BAny vehicle not owned by the insured, but furnished for use while the covered auto is out of normal use because of repair CAny vehicle used by the insured without the reasonable belief that the insured is entitled to use such vehicle DAny auto furnished for the insured's regular use, but not named on the policy
Any vehicle not owned by the insured, but furnished for use while the covered auto is out of normal use because of repair The temporary auto coverage provision allows the personal auto policy to provide coverage for an insured while using any vehicle as a temporary substitute for any other vehicle described in the policy that is out of normal use because of breakdown, repair, or servicing. This coverage does not apply to vehicles not owned by the insured, but furnished for an insured's regular use.
Which of the following would be considered an insured under a business auto coverage form? AA partner of the named insured for any covered auto owned by that person or a member of his or her household BAnyone while using, with permission, a covered auto owned by the named insured CThe owner or anyone else from whom the named insured hires or borrows a covered auto DAnyone using a covered auto while working in a business of selling, servicing, repairing, or parking autos if it is not the named insured's business
Anyone while using, with permission, a covered auto owned by the named insured The business auto coverage form provides coverage on covered autos while used by the insured or employees of the insured (or others using the covered auto with permission) but does not cover the exposure of other autos not owned, hired, or leased by the named insured.
Under a businessowners policy, an insured can cancel the policy AOnly at the time of policy renewal. BAt any time by mailing a written notice of cancellation. CAt any time with 10 days' advance written notice. DOnly after the policy has been in force for 120 days.
At any time by mailing a written notice of cancellation. The insured may cancel the policy at any time by mailing a written notice of cancellation to the insurance company.
A professional who wants coverage for all liability exposures should purchase what form of liability insurance? AEmployee benefits BCommercial general and professional CDirectors and officers DFiduciary and employment practices
Commercial general and professional Commercial general liability excludes professional liability, and professional liability does not cover premises liability.
A bank manager has had several instances of employee dishonesty involving transfer of funds. His risk manager is researching the best coverage for this situation. Which bond rider should he recommend to the bank manager? ACash bond rider BElectronic data rider CComputer systems rider DServicing contractors rider
Computer systems rider The computer systems rider protects against misuse of the telephone by a customer or employee to request a fraudulent fund transfer in the bank's computer system.
A professional liability policy will provide coverage for loss in all of the following cases, except, when the insured doctor was shown to be ACriminally negligent. BIncompetent. CNegligent. DImproperly trained.
Criminally negligent. The policy will not cover criminal acts of an insured.
Directors and officers liability insurance defends actions against a corporation or its officers and directors alleging wrongful acts. With regard to the coverage provided, wrongful acts include any of the following EXCEPT ABreach of duty. BEmbezzlement. CMisstatements. DNeglect.
Embezzlement. Embezzlement is a criminal act. There is no "standard" director and officers policy; however, most policies specifically exclude coverage for defense or payment of claims resulting in fines or penalties resulting from criminal acts, nor will they pay punitive damages.
Which federal act provides benefits to injured civilians who are employed by the federal government? AU.S. Longshore and Harbor Workers Compensation Act BFederal Employees Compensation Act CFederal Employers Liability Act (FELA) DThe Jones Act
Federal Employees Compensation Act The Federal Employees Compensation Act provides benefits to injured civilians who are employed by the federal government; no private insurers are involved.
If an insured needs protection on property other than money and securities inside the premises from losses caused by breaking and entering after business hours, which of the following Crime Coverage forms should be purchased? AInside Premises - Robbery or Burglary of Other Property BRobbery and Safe Burglary CExtortion DTheft, Disappearance and Destruction
Inside Premises - Robbery or Burglary of Other Property Covers taking of property, other than money or securities, when there is visible sign of forcible entry or exit from the premises.
Which of the following statements is NOT true regarding a personal umbrella liability policy? AIt may cover certain exposures not provided under the primary layer. BIt may require the payment of a self-insured retention. CIt provides excess liability coverage over underlying personal liability. DIt provides errors and omissions coverage for an agency.
It provides errors and omissions coverage for an agency. Personal umbrella policies cover the personal exposure of the insured. Errors and omissions coverage is provided only in a professional liability policy.
A policy condition that states if a policy is broadened with no additional premium, then the expanded coverage will be automatically applied to all policies of the same type is known as ALimit of insurance clause. BLiberalization clause. CMaximum indemnity clause. DLoss control clause.
Liberalization clause. The liberalization clause states that if a policy is broadened with no additional premium, then the expanded coverage will be automatically applied to all policies of the same type.
Which of the following is TRUE regarding business liability and medical payments coverage? ALoss of electronic data is excluded under a business liability policy. BLiability arising from alcohol intoxication is only covered for alcohol distributors. CNonowned watercraft less than 60 feet long are covered. DMobile equipment may be covered, as long as it is attached to an insured auto.
Loss of electronic data is excluded under a business liability policy. Damages arising out of damage to or loss of electronic data are not covered under business liability and medical payments coverage.
In which type of commercial crime policy coverage is triggered by a loss that happens during the policy period but is not necessarily discovered during the policy period? ARetroactive form BMysterious disappearance form CDiscovery form DLoss sustained form
Loss sustained form Loss sustained crime coverage pays for losses that occur during the policy period and are found for up to 1 year after the policy is terminated.
In which type of commercial crime policy coverage is triggered by a loss that happens during the policy period but is not necessarily discovered during the policy period? ALoss sustained form BRetroactive form CMysterious disappearance form DDiscovery form
Loss sustained form Loss sustained crime coverage pays for losses that occur during the policy period and are found for up to 1 year after the policy is terminated.
The type of professional liability coverage a medical doctor needs is AOrdinance and law coverage. BMalpractice coverage. CErrors and omissions coverage. DDruggist liability.
Malpractice coverage. The type of professional liability insurance written to protect those in the medical field is called medical malpractice.
Which of the following is NOT included in the definition of an "auto" under a commercial auto policy? AMobile equipment BA land motor vehicle CA trailer DA semitrailer
Mobile equipment
A bond is written for a set limit, and the surety will be liable only for this amount of the limit. This limit is known as the APenalty. BFace value. CStated amount. DLimit of liability.
Penalty. ! A bond is written for a set limit, sometimes called the penalty. If the principal's obligation exceeds the limit, the surety will be liable only for the amount of the limit.
Which of the following limits, shown in the declarations of a policy, applies to medical expenses? APer injury BPer incident CPer person DPer occurrence
Per person A combined single limit of insurance is applicable for all bodily injury and property damage losses that arise from a single occurrence. Medical expenses are limited to the per person limit shown on the declarations.
Who are the parties to a bond? AContractor, broker, and dealer BPrincipal, obligee, and guarantor CInsured and agent DSurety and custodian
Principal, obligee, and guarantor The principal (obligor) makes a promise to perform for the obligee (insured); the guarantor (surety) pays loss to obligee if the promise is not kept.
In a personal umbrella policy, the amount paid by the insured for certain losses not covered under the primary coverage is called AParticipation requirement. BSelf-insured retention. CStop-loss. DCoinsurance.
Self-insured retention. In casualty insurance, the portion of a claim not paid by insurance is called a retention. In property insurance, it is called a deductible.
Chapter: Types of Casualty Policies, Bonds, and Related Terms Question 2 of 15 Employee theft bonds may be written as all of the following EXCEPT ASingle form. BBlanket position. CName schedule. DPosition schedule.
Single form. Employee theft may be written as an individual, name schedule, position schedule, commercial blanket, or blanket position bond.
AThe agency negligently fails to offer an increased limit of coverage or benefit under a policy. BThe agency is sued by an insured for giving incorrect advice. CThe agency negligently fails to renew a policy causing a client to suffer a financial loss. DThe agency loses commission income from policies that were not issued by the insurer.
The agency loses commission income from policies that were not issued by the insurer. Errors and omissions insurance protects an insured against actions claiming the insured has failed to act in a professional manner. It does not cover claims arising out of criminal wrongs.
Surety bonds are written for a definite limit called AIndemnity limit. BThe limit of liability. CLoss costs. DThe bond penalty.
The bond penalty. If the specific obligation guaranteed by the bond is not fulfilled, a sum of money, known as a penalty, becomes payable as damages.
The occurrence form trigger is based on which of the following? AThe number of claims made during the policy period BThe date when injury or damage occurs CThe place where the injury or damage occurs DThe amount of the insured's deductible
The date when injury or damage occurs The occurrence form trigger is based on the date when injury or damage occurs and covers claims made at any time for injuries that occur during the policy period.
Which of the following statements is true regarding a mobile equipment endorsement in commercial auto policies? AThe endorsement is automatic. BLiability coverage is not provided on equipment that is being towed. CMobile equipment is covered for property insurance. DThe endorsement is available for additional premium.
The endorsement is available for additional premium. The mobile equipment endorsement will provide auto coverages to mobile equipment upon payment of additional premiums.
Which of the following statements would be correct if an insured failed to maintain the underlying limits as required by a personal umbrella policy? AThe insured would have to pay the self-insured retention limit. BThe insured would be responsible for the amount required as underlying limits in the event of a claim. CIt would have no effect on the umbrella policy. DThe policy will be cancelled.
The insured would be responsible for the amount required as underlying limits in the event of a claim. The amount of insurance required as underlying limits in other policies is treated as a deductible amount to the umbrella for that particular exposure, so if underlying limits are not maintained, it is the insured's responsibility.
Which of the following IS considered a work-related injury/occupational disease under Workers Compensation law? AMary falls down a flight of stairs at her office building; at the hospital, it is discovered that she is intoxicated. BMike works for Ace Construction Company. He is walking through the job site without a hard hat and is struck on the head by a falling brick. CTom works as a painter in an auto body shop. The chemicals from the paint aggravate Tom's asthma to the point that he must be hospitalized for several days. DGreg is injured in a car accident while driving to work at 7:45 one morning.
Tom works as a painter in an auto body shop. The chemicals from the paint aggravate Tom's asthma to the point that he must be hospitalized for several days. Occupational disease must be caused or aggravated by a condition of the employment. The following types of injuries are generally excluded from coverage: injuries that occur traveling to and from work; injuries that result from intoxication of the employee; injuries willfully caused by the employee; injuries that result from a willful failure to follow safety precautions; injuries that occur from activities not a part of the job.
The insured with a claims-made commercial general liability (CGL) policy may request in writing claim and occurrence information from the insurer at any time up to 60 days after the policy period ends. The insurer must provide the information AAs soon as practical. BWithin 45 days. CWithin 30 days. DWithin 60 days.
Within 45 days. This is a standard CGL claims-made provision.
Chapter: Types of Casualty Policies, Bonds, and Related Terms Question 14 of 15 A tow truck was stolen from the insured's premises. The insured has loss of use coverage on his commercial auto policy. How much will the insured be able to collect from the coverage if unable to use the town truck in its operations for 40 days? A$200 B$400 C$600 D$800
$600 The insurer will pay expenses for which an insured becomes legally liable for loss of use of a vehicle rented or hired without a driver under a written rental contract. If the coverage is purchased, this coverage extension will pay for loss of use of the damaged vehicle up to $20 per day to a maximum of $600.
In a participation plan, the insured may be eligible for which of the following? ALower premiums BGuaranteed dividends CA partial premium refund DAn increase in insurance over time
A partial premium refund The insured is eligible for dividends (partial premium refund) if the experience during the policy term falls within guidelines established by the insurer at the inception of the policy term. Dividends are not guaranteed, and to be eligible for participation, the account must generate a minimum amount of premium.
A businessowners policy is AA special policy designed for large retail operations. BPart of a commercial package policy. CA monoline policy. DA self-contained prepackaged policy.
A self-contained prepackaged policy. A businessowners policy is similar in structure to the personal lines homeowners policy except it covers a business exposure for both property and liability losses.
What's the difference between a fidelity bond and a surety bond? AA fidelity bond guarantees something will happen; a surety bond guarantees something will not happen. BThe trigger is different. CA fidelity bond is a court bond; the surety bond is an honesty bond. DA surety bond guarantees something will happen; a fidelity bond guarantees something will not happen.
A surety bond guarantees something will happen; a fidelity bond guarantees something will not happen. A fidelity bond is sometimes called an honesty bond and pays if someone has been dishonest. A surety bond is a guarantee someone will perform as promised and pays if they do not.
An insured owns and operates a ranch. The insured has several vehicles that are used in the ranching operation and for personal use. Which of the following could NOT be insured under a personal auto policy? AA two-ton grain truck with a 6,500-pound capacity BA two-wheeled trailer designed to be towed by the station wagon CA farm pickup with 1,000-pound capacity DA station wagon that is used personally
A two-ton grain truck with a 6,500-pound capacity A two-ton truck weighs 4,000 pounds. With its cargo weight of 6,500 pounds, it exceeds the 10,000-pound gross vehicle weight (GVW) limit and would not be eligible. The GVW is the maximum recommended weight, including the weight of the vehicle, fuel and fluids, passengers, and all cargo.
With respect to the personal auto policy, which of the following vehicles could be classified as a nonowned auto? AA vehicle leased to the named insured for 12 months by a leasing company BA vehicle that is titled and insured by the named insured, but is driven principally by the named insured's son, who is resident of the household CA vehicle rented for the insured's personal use DA vehicle that is titled to another person, but is being used with permission by an insured
A vehicle that is titled to another person, but is being used with permission by an insured Because the personal auto policy provides coverage on both owned and nonowned autos, situations will exist in which two or more policies will apply in a given situation. If the auto is owned and insured by someone other than the operator, then that policy will be primary coverage for that auto, and the operator's insurance would act as excess.
Which of the following special liability coverages will provide protection to managers of a corporation for claims arising from a wrongful act committed by the manager while in an official capacity? ADirectors and officers liability BEmployment practices liability CErrors and omissions insurance DMalpractice insurance
Directors and officers liability Directors and officers liability policies will pay those damages that the corporation or nonprofit entity would, under the law, be required to reimburse the individual director or officer for judgments arising from actions alleging wrongful acts.
Chapter: Types of Casualty Policies, Bonds, and Related Terms Question 6 of 15 Which commercial crime form would provide coverage for a loss that did not necessarily happen during the policy period but was revealed during the policy period? AReporting form BLoss sustained form CDiscovery form DRetro form
Discovery form The discovery form is used for losses that are discovered during the policy period but may not have happened during the policy period. The discovery form is one of the conditions contained in the crime general provisions forms, which contain conditions and exclusions applying to all crime forms. The discovery period is normally 1 year.
In addition to the common policy conditions, all of the following conditions apply to liability coverage EXCEPT ABankruptcy. BEmployers liability. CSeparation of insured. DLegal action against insurer.
Employers liability. The following conditions apply to the liability coverage in addition to the common policy conditions: bankruptcy, duties in event of occurrence, claim or suit, legal action against the insurer, and separation of insured. Employers liability is an exclusion.
Professional liability coverage protects the insured against legal liability resulting from ALiability assumed under a contract. BDishonest acts. CThe unprofessional conduct of an employee. DErrors and omissions.
Errors and omissions. Professional liability in fields other than medical is classified as errors and omissions insurance. It covers liability arising out of the failure to use due care and the degree of skill expected of a person in a particular profession.
What method of premium computation relates an employer's losses, payroll, and premiums to the rating bureau's classifications of operations? AWorkers classification factor BMerit rating plan CArbitration plan DExperience modification factor
Experience modification factor An experience modification factor is developed by a rating bureau. The calculations relate an employer's losses, payroll, and premiums, segregated according to classifications of operations, all as reported to the bureau by the employer's insurance company.
An insurance producer fails to obtain automobile insurance for a client after agreeing to do so. The client is involved in an automobile accident after running a red light and is found to be at fault. The damage to the other vehicle totals $5,000. Which statement regarding the producer's errors and omissions liability policy is true? AIt will not provide coverage because the property damage resulted from the client breaking the law. BIt will provide coverage because punitive damages have been awarded. CIt will provide coverage because the damage to the client resulted from the producer's negligence. DIt will not provide coverage; such physical damage to property is not covered. Id: [E153701]
It will provide coverage because the damage to the client resulted from the producer's negligence. Errors and omissions coverage protects insurance producers and brokers from financial losses they may suffer if an insured sues to recover his or her financial loss due to the producer giving incorrect advice or not informing the insured of important issues.
Employee fidelity may be written in all the following ways EXCEPT ALocation schedule. BIndividual. CName schedule. DPosition schedule.
Location schedule. Fidelity bonds are purchased by employers and may be written for individual named employees, on a named schedule basis where one bond is issued for several employees listed by name, or position schedule where several positions are listed and whoever is occupying a scheduled position is covered.
Erroneous Publishing copied all the material from Angels Inc.'s book. The only changes made by Erroneous were to rename the title and chapters, put a different cover on it, and distribute it as its own. Angels Inc. files a claim against Erroneous and seeks damages. Will a commercial general liability policy cover the claim? ANo, because this event does not meet the definition of infringement. BNo, because the claim results from copyright infringement and is not in an advertisement. CNo, because there is no bodily injury or property damage. DYes, because the claim is a result of Erroneous products and work.
No, because the claim results from copyright infringement and is not in an advertisement. Advertising injury is defined in the policy as any of the following: libel, slander, defamation, or violation of the privacy of others, misappropriation of advertising, ideas, and infringement of copyright, title, or slogan. However, because the copyright infringement was in a product and not an advertisement, coverage is specifically excluded.
Which of the following would be the insured's duty in the event of a loss according to the duties in event of occurrence, claim, or suit condition? AInitiating the investigation of a claim BPromptly notifying the insurer of a claim by phone CProviding specific details regarding an occurrence DDelivering a claim to the insurer in person
Providing specific details regarding an occurrence In the event of a loss, the insured's duties include the following: promptly notifying the insurer of the occurrence (how, when, where, names and addresses of any injured persons); prompt written notice of a claim; promptly notifying the insurer of any legal papers received related to the loss; and cooperating and assisting in the investigation of a claim.
What is the deductible of a personal liability umbrella policy called? AThe CPP BThe SIR CThe PIL DThe CGL
The SIR The self-insured retention (SIR) is an initial part of a loss the insured pays before the umbrella pays if no other policy covers the loss.
When an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays AA percentage of the loss as described on the declarations. BThe excess over the self-insured retention. CThe amount specified in the policy under the additional coverage provisions. DThe amount in excess of the policy's limits of liability.
The excess over the self-insured retention. Retention is the equivalent of a deductible in property insurance.
In personal auto policies, the term "you" refers to AAny person reading the policy. BThe insurer. CThe named insured. DAny person injured in a covered accident.
The named insured. The name"You" means the named insured. "We" means the insurance company.d insured.
What is the primary objective of workers compensation? ATo provide accident insurance to employees injured either on or off the job BTo improve employee's working conditions CThe payment of benefits to employees for injuries arising out of their employment DThe payment of benefits to employees temporarily unemployed
The payment of benefits to employees for injuries arising out of their employment Workers compensation is a type of liability insurance purchased by employers to pay for employment-related injuries to employees.
A trucking business swaps trailers with other carriers. What coverage is necessary to cover loss to the other's trailer while in the borrower's possession? AOwner-operator motor carrier coverage BTrailer interchange coverage CInterstate carrier coverage DMobile equipment
Trailer interchange coverage Because truckers frequently hire or borrow trailers from others with a written trailer interchange agreement, they need coverage for the trailer while in their possession to cover the liability imposed upon them because of the agreement.
What is the business auto coverage territory for? AUnited States and its territories, Canada, or worldwide for private passenger hired autos BOnly for the specific location of the business CUnited States only DUnited States and Mexico
United States and its territories, Canada, or worldwide for private passenger hired autos The defined coverage territory for both business auto policies and personal auto policies is the United States, its territories and possessions, and Canada, or worldwide for private passenger hired autos.
