Question 1

The Americans with Disabilities Act (ADA) requires employers to do which of the following?

Accepted Answer

A)  Hire a minimum number of disabled persons 
B)  Discriminate in favor of disabled persons 
C)  Actively seek out disabled persons as potential employees 
D)  Make reasonable accommodations for disabled employees or qualified job applicants 
A)  Hire a minimum number of disabled persons 
B)  Discriminate in favor of disabled persons 
C)  Actively seek out disabled persons as potential employees 
D)  Make reasonable accommodations for disabled employees or qualified job applicants

Question 2

Which of the following theories says an "injury" occurred when the injured person first experienced the disease-causing substance?

Accepted Answer

A)  Exposure theory 
B)  Double trigger theory 
C)  Manifestation theory 
D)  Retroactive theory 
A)  Exposure theory 
B)  Double trigger theory 
C)  Manifestation theory 
D)  Retroactive theory

Question 3

One of the suggested solutions to the professional liability problem is a redefinition of the term "negligence."

Accepted Answer

A) True 
 B)False

Question 4

A claims-made contract pays for claims made in the policy period that stem from occurrences that took place after the retroactive date.

Accepted Answer

A) True 
 B)False

Question 5

All of the following have contributed to the increasing costs corporate liability risks, except:

Accepted Answer

A)  higher tax rates 
B)  the passage of acts protecting the environment 
C)  more litigious consumers 
D)  decreased use of contributory negligence 
A)  higher tax rates 
B)  the passage of acts protecting the environment 
C)  more litigious consumers 
D)  decreased use of contributory negligence

Question 6

The long tail problem is present in several types of legal liability coverage because:

Accepted Answer

A)  sudden and accidental events causing injury must be paid for by existing contracts 
B)  the time between the injury and payment of the claim is long 
C)  the time between the discovery of the injury and the time the lawsuit is filed is usually long 
D)  insurance companies generally do not cover events discovered after the policy has expired 
A)  sudden and accidental events causing injury must be paid for by existing contracts 
B)  the time between the injury and payment of the claim is long 
C)  the time between the discovery of the injury and the time the lawsuit is filed is usually long 
D)  insurance companies generally do not cover events discovered after the policy has expired

Question 7

A claims-made liability insurance contract pays for:

Accepted Answer

A)  injuries suffered by the insured during the policy period 
B)  defense costs if the insured is sued, but not for actual damages awarded to a plaintiff 
C)  claims only when an insured is sued, but does not pay for defense costs 
D)  claims filed against the insured during the policy period 
A)  injuries suffered by the insured during the policy period 
B)  defense costs if the insured is sued, but not for actual damages awarded to a plaintiff 
C)  claims only when an insured is sued, but does not pay for defense costs 
D)  claims filed against the insured during the policy period

Question 8

Which of the following types of legal liability coverage is most likely to have a "long tail" problem, and thus be insured under a claims-made contract?

Accepted Answer

A)  Water craft liability 
B)  Auto liability 
C)  Contractual liability 
D)  Products liability 
A)  Water craft liability 
B)  Auto liability 
C)  Contractual liability 
D)  Products liability

Question 9

Which of the following factors is primarily responsible for the increase in medical malpractice insurance premiums?

Accepted Answer

A)  Losses on medical malpractice claims 
B)  The number of attorneys per capita 
C)  The number of doctors working in managed care systems 
D)  A decline in physician intelligence 
A)  Losses on medical malpractice claims 
B)  The number of attorneys per capita 
C)  The number of doctors working in managed care systems 
D)  A decline in physician intelligence

Question 10

If the EEOC does not find an employer guilty of discrimination, the employee must accept its decision without further action against the employer.

Accepted Answer

A) True 
 B)False

Question 11

All the following are legal duties of a product manufacturer except:

Accepted Answer

A)  police vendor's activities when the product is in the vendor's hands 
B)  manufacture safe products 
C)  provide safe packaging 
D)  provide adequate instructions 
A)  police vendor's activities when the product is in the vendor's hands 
B)  manufacture safe products 
C)  provide safe packaging 
D)  provide adequate instructions

Question 12

Proponents of no-fault automobile legislation argue that the tort-liability insurance system:

Accepted Answer

A)  pays too much for big claims and too little for small claims 
B)  pays claims too quickly and passes the increased cost on to motorists 
C)  encourages bad driving and accidents 
D)  is not efficient in returning dollars to automobile accident victims 
A)  pays too much for big claims and too little for small claims 
B)  pays claims too quickly and passes the increased cost on to motorists 
C)  encourages bad driving and accidents 
D)  is not efficient in returning dollars to automobile accident victims

Question 13

Long-tail claims are those filed:

Accepted Answer

A)  as a result of animal injuries 
B)  by shareholders against the board of directors of a corporation 
C)  several years after the actual injury takes place 
D)  in a no-fault state 
A)  as a result of animal injuries 
B)  by shareholders against the board of directors of a corporation 
C)  several years after the actual injury takes place 
D)  in a no-fault state

Question 14

The controversy over class action liability suits:

Accepted Answer

A)  is silly 
B)  centers on the fact that there is too much publicity surrounding them 
C)  offer potential advantages to all parties involved 
D)  centers on the fact that there are too many defendants and plaintiffs in one court room 
A)  is silly 
B)  centers on the fact that there is too much publicity surrounding them 
C)  offer potential advantages to all parties involved 
D)  centers on the fact that there are too many defendants and plaintiffs in one court room

Question 15

Which of the following is not a defense of the tort liability-system?

Accepted Answer

A)  Encourages good driving 
B)  Reduces fraud 
C)  Places the blame for negligence on those responsible 
D)  Maximizes the dollars going to the injured due to legal involvement of attorneys 
A)  Encourages good driving 
B)  Reduces fraud 
C)  Places the blame for negligence on those responsible 
D)  Maximizes the dollars going to the injured due to legal involvement of attorneys

Question 16

Which of the following is not a type of professional liability policy available in today's insurance marketplace?

Accepted Answer

A)  Physicians', surgeons', and dentists' policy 
B)  Hospital liability policy 
C)  Directors' and officers' liability insurance 
D)  Business auto liability insurance 
A)  Physicians', surgeons', and dentists' policy 
B)  Hospital liability policy 
C)  Directors' and officers' liability insurance 
D)  Business auto liability insurance

Question 17

Which of these is not a criticism of the current tort system?

Accepted Answer

A)  Fraud is reduced by using our current tort system. 
B)  Recovery under the tort system is often slow. 
C)  Much of the money that changes hands does not go to the injured party. 
D)  Negligence is difficult to determine in many cases. 
A)  Fraud is reduced by using our current tort system. 
B)  Recovery under the tort system is often slow. 
C)  Much of the money that changes hands does not go to the injured party. 
D)  Negligence is difficult to determine in many cases.

Question 18

Which of the following statements about medical liability is false?

Accepted Answer

A)  In the 1970s, medical liability insurance premiums rose rapidly, and some types of insurance were simply not available. 
B)  The most frequent type of claims brought against physicians today allege failure to diagnose, failed surgery, or improper treatment. 
C)  Defensive medical costs are not incurred under today's tort liability system. 
D)  Several solutions for dealing with the medical liability problem have been proposed, but none address the problem of professional incompetence. 
A)  In the 1970s, medical liability insurance premiums rose rapidly, and some types of insurance were simply not available. 
B)  The most frequent type of claims brought against physicians today allege failure to diagnose, failed surgery, or improper treatment. 
C)  Defensive medical costs are not incurred under today's tort liability system. 
D)  Several solutions for dealing with the medical liability problem have been proposed, but none address the problem of professional incompetence.

Question 19

All the following are suggestions for reducing the cost of commercial liability coverage except:

Accepted Answer

A)  statute of limitations on filing suits 
B)  reduce non-economic injuries 
C)  end contingency fees for lawyers 
D)  eliminate state of the art evidence rules 
A)  statute of limitations on filing suits 
B)  reduce non-economic injuries 
C)  end contingency fees for lawyers 
D)  eliminate state of the art evidence rules

Question 20

Explain the need for a claims-made form. Explain how a liability insurance contract written on a claims-made form works.

Accepted Answer

Claims-made insurance contracts are need

Exam 23: Commercial Liability Insurance

The Americans with Disabilities Act (ADA) requires employers to do which of the following?

Which of the following theories says an "injury" occurred when the injured person first experienced the disease-causing substance?

One of the suggested solutions to the professional liability problem is a redefinition of the term "negligence."

A claims-made contract pays for claims made in the policy period that stem from occurrences that took place after the retroactive date.

All of the following have contributed to the increasing costs corporate liability risks, except:

The long tail problem is present in several types of legal liability coverage because:

A claims-made liability insurance contract pays for:

Which of the following types of legal liability coverage is most likely to have a "long tail" problem, and thus be insured under a claims-made contract?

Which of the following factors is primarily responsible for the increase in medical malpractice insurance premiums?

If the EEOC does not find an employer guilty of discrimination, the employee must accept its decision without further action against the employer.

All the following are legal duties of a product manufacturer except:

Proponents of no-fault automobile legislation argue that the tort-liability insurance system:

Long-tail claims are those filed:

The controversy over class action liability suits:

Which of the following is not a defense of the tort liability-system?

Which of the following is not a type of professional liability policy available in today's insurance marketplace?

Which of these is not a criticism of the current tort system?

Which of the following statements about medical liability is false?

All the following are suggestions for reducing the cost of commercial liability coverage except:

Explain the need for a claims-made form. Explain how a liability insurance contract written on a claims-made form works.

Introduction to Enterprise Risk Management and Insurance

Risk Identification

Risk Assessment and Pooling

Risk-Handling Techniques: Loss Control, Risk Transfer, and Loss Financing

Risk-Handling Techniques: Diversification and Hedging

Fundamentals of Insurance

Insurable Perils and Insuring Organizations

Insurance Functions

Insurance Markets: Economics and Issues

Insurance Regulation

Insurance Contracts

The Personal Auto Policy

Homeowners Insurance

Professional Financial Planning

Life Insurance Policies

Standard Life Insurance Contract Provisions and Options

Annuities

Health Insurance and Disability Income

Employee Benefits

Social Security

Unemployment and Workers Compensation Insurance

Commercial Property Insurance

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