Question 1

A customer was injured when a furnace exploded following its faulty installation by a heating and cooling business.For the heating and cooling business,this is an example of

Accepted Answer

A)  contingent liability.
B)  completed operations liability.
C)  products liability.
D)  contractual liability. B

Question 2

Which of the following statements about errors and omissions insurance is (are)true?
I.It is purchased by professionals to protect against claims arising for negligent acts,errors,and omissions.
II.It is designed to meet the needs of stock brokers,attorneys,engineers,architects and other professionals who give advice to clients.

Accepted Answer

A)  I only
B)  II only
C)  both I and II
D)  neither I nor II C

Question 3

The auto dealers coverage form includes coverage for violating odometer (mileage)disclosure laws and selling a vehicle where there was a title defect.Which coverage under the auto dealers coverage form would respond to such claims?

Accepted Answer

A)  garagekeepers liability coverage
B)  liability coverage for "covered autos"
C)  general liability insurance coverage
D)  acts,errors or omissions liability coverage D

Question 4

Which of the following exposures is covered under a Commercial General Liability Policy with no endorsements?

Accepted Answer

A)  liability arising out of seepage of pollutants
B)  employment-related practices liability
C)  personal injury liability
D)  aircraft liability

Question 5

Executives of a Fortune 500 firm blocked an acquisition attempt by a larger company.When the stockholders learned they could have made large profits had the acquisition not been blocked,they filed a lawsuit against the executives of the firm.What type of liability insurance protects the executives of the organization against such suits?

Accepted Answer

A)  dram shop liability insurance
B)  directors and officers liability insurance
C)  employers liability insurance
D)  employment related practices liability insurance

Question 6

Ted is risk manager of XYZ Company.He is concerned his company might be sued by current or former employees alleging wrongful termination,failure to promote,racial or gender discrimination,or sexual harassment.What type of liability insurance can Ted purchase to cover these types of claims?

Accepted Answer

A)  workers compensation insurance
B)  employer liability insurance
C)  employment-related practices liability insurance
D)  directors and officers liability insurance

Question 7

The auto dealers coverage form pays for damages that the insured is legally obligated to pay because of damage to a customer's auto left in the insured's car while it is being serviced or repaired.This coverage is called

Accepted Answer

A)  garagekeepers coverage.
B)  general liability coverage.
C)  other-than-collision loss coverage.
D)  acts,errors or omissions liability coverage.

Question 8

Holiday DeCor Company is insured by a commercial general liability policy (CGL).Holiday DeCor rented a storage facility for one month to store some excess inventory.While visiting the storage facility,a Holiday DeCor employee discarded a cigarette.The resulting fire severely damaged the storage facility.Which statement is true regarding coverage of this damage under the CGL?

Accepted Answer

A)  There is no coverage as the damage occurred at a rented premises.
B)  There is no coverage because property damage liability is excluded.
C)  The damage is covered under the fire legal liability coverage.
D)  There is no coverage because an employee of Holiday DeCor caused the loss.

Question 9

Which of the following statements about workers compensation insurance is (are)true?
I.Under the workers compensation part of the policy,the insurer agrees to pay the benefits required by the workers compensation law of any state listed in the policy declarations.
II.The employers liability part of the policy provides workers compensation benefits when employees are working in states other than those listed in the policy declarations.

Accepted Answer

A)  I only
B)  II only
C)  both I and II
D)  neither I nor II

Question 10

Which of the following statements regarding employer liability insurance under the workers compensation insurance coverage form is (are)true?
I.Employer liability insurance covers an employee injury that occurs on the job but may not be considered work-related.
II.If an injured employee sues a negligent third-party,and the third-party sues the employer for contributory negligence,the lawsuit is covered under employer liability insurance.

Accepted Answer

A)  I only
B)  II only
C)  both I and II
D)  neither I nor II

Question 11

Some directors and officers (D&O)liability policies include an insuring agreement that covers the legal liability of a corporation arising out of the wrongful acts of directors and officers.This coverage for the corporation is called

Accepted Answer

A)  blanket coverage.
B)  corporate reimbursement coverage.
C)  personal liability of directors and officers coverage.
D)  entity coverage.

Question 12

In addition to the named insured,all of the following are insureds under the Commercial General Liability Policy EXCEPT

Accepted Answer

A)  suppliers of products to the named insured's business.
B)  the insured's employees while acting within the scope of their employment.
C)  the manager of the insured's real estate.
D)  partners of the named insured.

Question 13

Jennifer was just asked to serve on the Board of an insurance company.Jennifer is concerned that if the company is mismanaged,the policyowners,stockholders,and employees might sue the management team.What type of liability insurance will protect Jennifer from such claims if she accepts a position on the insurance company's Board?

Accepted Answer

A)  commercial general liability insurance
B)  employment-related practices liability insurance
C)  workers compensation and employer liability insurance
D)  directors and officers liability insurance

Question 14

Which of the following statements concerning directors and officers liability insurance (D&O)is (are)true?
I.D&O policies usually cover the personal liability of directors and officers.
II.D&O policies exclude coverage for claims brought by employees and by stockholders.

Accepted Answer

A)  I only
B)  II only
C)  both I and II
D)  neither I nor II

Question 15

Medical malpractice insurance written on a claims-made basis can leave a surgeon vulnerable to malpractice claims if the surgeon retires,changes insurers,or drops coverage.A provision can be added to the claims-made form that protects the surgeon for future claims arising from incidents that occurred while the claims-made policy was in force.This provision is called a(n)

Accepted Answer

A)  cut-through endorsement.
B)  drop-down endorsement.
C)  agreed amount endorsement.
D)  extended reporting period endorsement.

Question 16

The employees of an industrial heating and cooling company spent four days installing a large gas furnace in a newly-constructed building.While testing the furnace one week later,an explosion occurred,damaging the building.Damage to the building was covered under the heating and cooling company's general liability insurance.When the heating and cooling company also sought reimbursement for the time its employees spent installing the furnace,the insurer denied coverage and noted a specific applicable exclusion.What exclusion denies coverage for such reimbursement?

Accepted Answer

A)  damage to the insured's product
B)  damage to the insured's work
C)  damage to impaired property
D)  damage to the insured's reputation.

Question 17

The Commercial General Liability (CGL)Policy covers liability for which of the following loss exposures?
I.Bodily injury of an employee of the insured arising out of and in the course of employment
II.Bodily injury of a customer injured by a defective product manufactured by the insured

Accepted Answer

A)  I only
B)  II only
C)  both I and II
D)  neither I nor II

Question 18

Which of the following losses is generally covered under a commercial umbrella policy?

Accepted Answer

A)  liability arising out of workers compensation laws
B)  liability arising out of pollution
C)  liability arising out of use of a business auto
D)  the cost of recalling defective products

Question 19

Which of the following statements about the typical commercial umbrella policy is (are)true?
I.The policy is designed to cover only those loss exposures specifically excluded by the underlying insurance contracts.
II.The policy is excess over the required underlying coverages.

Accepted Answer

A)  I only
B)  II only
C)  both I and II
D)  neither I nor II

Question 20

Liability arising out of work performed by independent contractors is referred to as

Accepted Answer

A)  contractual liability.
B)  contingent liability.
C)  care,custody,and control liability.
D)  customer's liability.

Exam 26: Commercial Liability Insurance

A customer was injured when a furnace exploded following its faulty installation by a heating and cooling business.For the heating and cooling business,this is an example of

The auto dealers coverage form includes coverage for violating odometer (mileage) disclosure laws and selling a vehicle where there was a title defect.Which coverage under the auto dealers coverage form would respond to such claims?

Which of the following exposures is covered under a Commercial General Liability Policy with no endorsements?

Ted is risk manager of XYZ Company.He is concerned his company might be sued by current or former employees alleging wrongful termination,failure to promote,racial or gender discrimination,or sexual harassment.What type of liability insurance can Ted purchase to cover these types of claims?

The auto dealers coverage form pays for damages that the insured is legally obligated to pay because of damage to a customer's auto left in the insured's car while it is being serviced or repaired.This coverage is called

Some directors and officers (D&O) liability policies include an insuring agreement that covers the legal liability of a corporation arising out of the wrongful acts of directors and officers.This coverage for the corporation is called

In addition to the named insured,all of the following are insureds under the Commercial General Liability Policy EXCEPT

Which of the following statements concerning directors and officers liability insurance (D&O) is (are) true? I.D&O policies usually cover the personal liability of directors and officers. II.D&O policies exclude coverage for claims brought by employees and by stockholders.

The Commercial General Liability (CGL) Policy covers liability for which of the following loss exposures? I.Bodily injury of an employee of the insured arising out of and in the course of employment II.Bodily injury of a customer injured by a defective product manufactured by the insured

Which of the following losses is generally covered under a commercial umbrella policy?

Which of the following statements about the typical commercial umbrella policy is (are) true? I.The policy is designed to cover only those loss exposures specifically excluded by the underlying insurance contracts. II.The policy is excess over the required underlying coverages.

Liability arising out of work performed by independent contractors is referred to as