Unit 7
The insured, a contractor, built a condominium building. Six months after completion, the roof of the lobby fell in due to faulty plumbing. Pipes in the wall were not connected properly, causing the loss. The Completed Operations coverage will pay?
Coverage for damage caused by defective construction, but no coverage for repair or replacement of pipes
Who is an insured under the CGL policy?
If the named insured is a partnership or joint venture, the partners and their spouses are insureds while conducting business If the named insured is a corporation, executive officers, directors and stockholders are insured in their status as such. If the named insured is an individual, the spouse is also an insured while conducting business
What are the exceptions to the exclusion for liability assumed under a contract?
If the insured would have been legally liable, regardless of the contractual assumption Some contracts are an exception such as leases, sidetrack agreements, easement agreements and certain other agreements so long as they are entered into prior to the injury or damage
Which of the following describe when the "basic extended reporting period" in a claims-made policy may be used?
If the policy is cancelled or not renewed If the policy is renewed with a retroactive date later that the date stated in the declarations If the policy is renewed on an occurrence policy
An insured had a CGL policy with limits of $100,000 each occurrence BI and PD, $100,000 Personal and Advertising Injury, $300,000 General Aggregate, $300,000 Products Aggregate, $5,000 Medical Payments and $50,000 Fire Damage Liability. Assume covered occurrences and claims were all during the current policy period: The Company paid a $30,000 liability claim for fire damage to the building rented by the insured. What limit is available if the same type of loss should occur again at the same building?
$50,000 - limit applies per fire.
The Dane Company finds a defect in one of its products. 100 units must be destroyed, valued at $700 each. The recall of units on the market will cost an additional amount of $5,000 to replace. How much will the Commercial General Liability policy will pay?
Nothing
What is the transfer condition in the general liability policy?
Rights and duties are automatically transferred if the insured dies, first to one who has temporary custody of the property and then to the legal representative The insured may not transfer any rights or duties under the policy except with the written consent of the insurer
An insured had a CGL policy with limits of $100,000 each occurrence BI and PD, $100,000 Personal and Advertising Injury, $300,000 General Aggregate, $300,000 Products Aggregate, $5,000 Medical Payments and $50,000 Fire Damage Liability. Assume covered occurrences and claims were all during the current policy period: The Company paid a $60,000 PD claim for an occurrence during an ongoing construction job. After this claim, how much coverage is available to the insured for the next claim for BI or PD?
$100,000, the each occurrence limits; $240,000 general aggregate.
An insured had a CGL policy with limits of $100,000 each occurrence BI and PD, $100,000 Personal and Advertising Injury, $300,000 General Aggregate, $300,000 Products Aggregate, $5,000 Medical Payments and $50,000 Fire Damage Liability. Assume covered occurrences and claims were all during the current policy period: Three persons were injured in an accident. There are no liability claims, but there are medical expenses of $3,000 for one person, $7,000 for the second person and, $12,000 for the third person. How much is payable?
$13,000 payable - maximum $5,000 per person.
Assume, for each of the following, the insured had calendar year policies: occurrence policies in 2000 and 2001, claims-made policies in 2002 and 2003, both stating retroactive date 1-1-02. The insured retired from business and did not renew or replace the 2003 policy. If there is a BI or PD from a covered occurrence, which policy or policies (if any) applies for; "Insured sold product which caused injury in 2000, it injured claimant in 2001, claimant first made claim against insured in 2002."
2001 occurrence policy applies (occurrence form applies to BI/PD which occurs during the policy term). The 2002 claims-made policy does not apply because the occurrence happened before retroactive date.
The insured under a Commercial General Liability policy rents an additional warehouse. He would be covered without notice to the agent or the insurer for which of the following?
90 days
Which of the following are included in the definition of a suit as covered by the EPL?
A civil proceeding alleging damages Administrative hearings conducted by a government agency. Arbitration, alternative dispute resolutions
Which of the following would be covered by the products and completed operations exposure of the CGL?
A claimant spills hot coffee on himself or herself after driving through the drive through at the fast food restaurant A weed eater purchased by the claimant and being used to trim weeds at their home damages the claimant's pants
Which of the following would be covered by the premises and operation exposure of the CGL?
A falling brick at a construction site of the insured hits a claimant A claimant falls on a banana peel left on the floor at the insured's premises
What is an example of a business's liability for the existence of "direct" hazards?
A person being injured by an allegedly unsafe condition in premises owned or occupied by the insured.
The CGL policy is written with several basic limits, which state the maximum the insurer will pay in the event of a loss. What are these limits?
A separate products-completed operations aggregate limit with a basic limit of $200,000 states the maximum the insurer will pay during the policy period for claims involving products or completed operations A basic limit of $100,000 applies to each occurrence for bodily injury and property damage A basic limit of $200,000 applies to the general aggregate limit
Which of the following describe when the "supplemental reporting period" in a claims-made policy may be used?
After the basic extended reporting period takes effect The insured pays for the supplemental reporting coverage The insured makes a request in writing within 60 days after policy expiration for the supplemental reporting coverage
Which of the following describes the Individual Professional coverage of the Physicians, Surgeons and Dentists (PS&D) form?
Applies to each person named in the declarations page as an insured as well as the insured's employees, or anyone else under the personal direction, control or supervision of the insured, including services by the insured on any professional board Coverage excludes any liability incurred as a member, partner, officer, director or stockholder of any professional partnership, association or corporation Claims are paid for legal liability resulting from any 'medical incident' defined as the furnishing a medical or dental services.
An appliance store sells a refrigerator to Mrs. Smith. The refrigerator is installed in Mrs. Smith's kitchen and after the installation had been completed, the refrigerator blows up catching fire and damaging the kitchen and injuring Mrs. Smith. The appliance store's Commercial General Liability policy covers?
Bodily Injury to Mrs. Smith and damage to the, kitchen but not the refrigerator
Which of the following apply to the other insurance condition of the CGL policy?
Both CGL forms are excess over property insured that applies to the insured's completed work or to premises rented to the insured Except as otherwise provided, the policy is primary insurance. In the claims-made CGL form, the policy is excess over any other policy that is not claims-made
What is the difference between the "Occurrence" and the "Claims-Made" versions of the BI and PD coverage in a CGL Policy?
Claims-made applies to claims which occur on or after the "retroactive date" and if the claim is received or recorded during the policy period. Occurrence applies to claims, which occur during the policy period, regardless of when a claim is made It deals with how the policy will apply to occurrences and claims-made policies
Which of the following are covered as part of Coverage A Bodily Injury and Property Damage of a Commercial General Liability Policy?
Contingent Liability caused by a subcontractor of the insured Liability assumed under a lease contract Liability due to one's products injuring others
Which of the following apply to the separation of insured condition of the CGL policy?
Coverage applies separately to each insured as if that interest were the only insured
A product purchased in the U.S. subsequently injured a claimant in Europe. Which of the following best explains the merchant's coverage under his Product's Liability coverage?
Covered if any suits are brought in the U.S. or one of the covered territories
Identify the three different legal theories of recovery that CGL insurance may protect an insured against.
Direct Contractual Indirect or contingent
Describe the effect of the "Known Loss Rule" on the CGL policy.
If the insured knew that BI or PD had occurred before the CGL effective date, then any known or unknown continuation of that BI or PD during or after the CGL policy period would be considered a known loss and excluded Both of the answers are correct Insuring agreements now impose coverage restrictions with respect to known injury or damage
What are the limits of insurance in a CGL Policy?
Limits apply to each occurrence for BI, PD and Medical Payments. (1) The basic limit is $100,000. Lower limits of $25,000 or $50,000 are available. Higher limits such as $200,000, $300,000, $500,000 or $1,000,000 are commonly written.
Other than, commercial general liability, what other forms of liability insurance are available?
Liquor Liability Coverage Pollution Liability Coverage and Pollution Liability Owners and Contractors Protective Liability
The claims-made form provides coverage for any claim where the claim is made after a 'retroactive date':
Normally the retroactive date is the same date at the effective date of the first claims-made policy issued for the insured If the policy has no retroactive date, the insurer would be providing coverage for any claim made during the policy period regardless of when the claim occurred The retroactive date is a separate date stated on the claims-made declarations of the policy
Explain Coverage C - Medical Payments Coverage in a CGL Policy.
Payment is for medical, dental, hospital and funeral services incurred within one year from the date of the accident to persons who suffer BI by accident (1) on or next to the insured's owned or rented premises, or (2) because of the insured's operations The basic limit is $5,000 Limits apply to each occurrence for BI, PD and Medical Payments.
The insured purchased a Commercial General Liability policy. The insured, suspecting illegal activities by a tenant, checked the tenant's apartment while the tenant was absent. The tenant sued for damages claiming wrongful entry. Which coverage under the Commercial General Liability policy applies?
Personal and Advertising Injury
Which of the following property or injury are not covered in the CGL policy?
Personal property in the insured's care, custody or control Damage to the insured's product arising out of the product itself after being sold Damage to the insured's own work after completed
Assume, for each of the following, the insured had calendar year policies: occurrence policies in 2000 and 2001, claims-made policies in 2002 and 2003, both stating retroactive date 1-1-02. The insured retired from business and did not renew or replace the 2003 policy. If there is a BI or PD from a covered occurrence, which policy or policies (if any) apply for; "Claimant injured in 2002. Claim was first made against insured on 7-1-03?"
The 2002 claims-made policy applies (occurrence after retroactive date, claim fist made during its term).
What is the coverage of the "supplemental extended reporting period "in a claims-made policy?
The aggregate limits of the policy are reinstated for the supplemental reporting period The effect of this option is to extend the basic period to unlimited duration Unlike the basic extended reporting period, the supplemental extended reporting period, requires an endorsement and additional premium payment
What is an example of a business's liability being assumed under a contract?
The business being held liable for liability ordinarily belonging to another, but the business agreed by contract to indemnify or hold harmless one whose direct actions produced the claim.
The insured has a Commercial General Liability policy written on a Claims Made basis. During the policy term an incident occurred and was reported to the agent. No claim was made until two years after the expiration of the policy and after coverage had been renewed by another insurer. Which of the following describes how the insurer will respond?
The claim is covered by the carrier at the time of the incident, since the incident was reported during the policy period and the claim was made within five years of expiration of the claims made policy
What is the coverage territory of the CGL policy?
The entire world if the product was made or sold by the insured in the defined territory and if the suit or claim is filed in the defined territory The U.S. and its territories or possessions, Puerto Rico and Canada including international waters and airspace between these places
ABC Construction owns a forklift. While clearing land for future development, the self-propelled forklift hits and destroys a Florida Power and Light power line. Is the damage to the power line covered by ABC's CGL policy?
The forklift being defined equipment is covered under the CGL
An insured with coverage under a Commercial General Liability policy buys a new crane and immediately drives the crane on the highway to a job site. While driving on the highway, the insured had an at-fault accident. Which of the following describes how the insurer will respond?
The insurer will cover the loss since mobile equipment is covered and the crane meets the definition of mobile equipment covered by the policy
What requirements must be met for Coverage A Bodily Injury to respond to a claim?
The obligation must be for damages (what a court would assess, in money, for the claimant's injury or property damage) The claim must be against someone who had the status of an 'insured' There must be a legal obligation to pay (a moral obligation is not sufficient)
Assume, for each of the following, the insured had calendar year policies: occurrence policies in 2000 and 2001, claims-made policies in 2002 (no retroactive date) and 2003 (retroactive date 1-1-02). If there were a BI or PD occurrence in 2001 from a covered occurrence and the claim was made in 2002, which policy or policies (if any) apply if the 2002 claims-made policy contained no retroactive date?
The occurrence policy would still apply and the 2002 claims-made policy would also apply (with no retroactive date, it applies to claims for all prior occurrences if first made during its term)
Which of the following best describes the Basic Extended Reporting period provision?
The provision allows claims to be made within five years after policy expiration, if the occurrence was reported not later than 60 days after policy expiration The provision allows claims to be made within sixty days after policy expiration The basic extended reporting period provision is automatic, cannot be canceled, and is free of charge
What coverage is provided by coverage a of the CGL form?
There must be a legal obligation to pay and that obligation must be for damages. The form states: "We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" (BI) or "property damage"" (PD) to which this insurance applies". The claim must be against someone who has the status of "insured"
Which of the following best describes the supplemental extended reporting period provision?
This coverage must be requested by the insured in writing within sixty days after policy expiration This option extends the basic extended reporting period provision to unlimited duration The supplemental provides a limit equal to the expiring policies general aggregate and products-completed operations aggregate
An insured is a restaurant operator who carries a Commercial General Liability policy. The insured's premises include a parking area used for valet parking of customer's cars. An employee of the insured, while parking a customer's automobile, hit another automobile in the parking lot. In addition to damaging to the automobile, a customer was injured while standing beside the damaged automobile. Which of the following describes how the insurer will respond?
Will pay injuries to injured customer
Which of the following describes Coverage C Medical Payments?
The claimant must suffer bodily injury by accident (1) on or next to the insured's premises (2) because of the insured's operation. Payments are made on a voluntary basis without admitting liability Payments are made for medical, dental, hospital and funeral services incurred within one year from the date of accident
Which of the following would be covered by the products and completed operations exposure of the CGL? Select one:
The claimant becomes ill after purchasing eating bad seafood purchased through the drive through at the fast food restaurant A container of gasoline exploded after the claimant placed the container in the trunk of his car
Which of the following would be covered by the products and completed operations exposure of the CGL?
None of the answers are correct
How do the two coverages apply in the P, S&D insurance policy?
Individual coverage applies to each person named in the Declarations. Partnership coverage applies to the organization, as well as a member, partner, or employee or others acting under the direction, control or supervision of the insured.
Which of the following describes the EPL form?
The EPL policy provides employers with claims-made coverage for liability arising out of claims for injury to an employee because of an employment-related offense The EPL policy has several exclusions Unlike policies with a deductible, the EPL policy has a co-payment provision. Under this provision, the insured shares payment for claims subject to a maximum amount.