Deck 11: Risk Management and Commercial Liability Risk

Question 1

Liability contracts will reimburse the insured for loss of earnings for time lost in the defense of liability suits.

Answer 1

True

Question 2

Under traditional malpractice liability policies, coverage exists even if a claim is presented 20 years after the act giving rise to the claim, as long as the act was performed during the policy term.

Answer 2

True

Question 3

Under the liability contract the insurer will pay claims for which the insured is legally liable, plus those paid voluntarily as a moral obligation.

Answer 3

False

Question 4

Defense payments are in excess of the stated limits of liability in the liability contract.

Question 5

If a liability case is appealed and lost, the insurer will pay the interest on the judgment accruing during the appeal.

Question 6

It is generally not possible to insure more than one person in a typical liability contract.

Question 7

The aggregate limit of liability in a liability contract applies to each person in a single accident.

Question 8

The term "accident" is legally narrower in scope than the term "occurrence."

Question 9

Under products liability, if a customer is injured by a faulty product on the premises, the products liability coverage applies.

Question 10

Professional liability contracts do not contain a limit per accident, instead there is a limit per claim.

Question 11

Most liability insurance contracts have an insuring clause, supplementary benefits, and a definition of the insured.

Question 12

In almost all liability contracts, the act causing injury must be accidental.

Question 13

Liability arising out of manufacturing or other business activities may be insured under the CGL.

Question 14

In a liability contract, an insured can perform a deliberate act and have the policy defend if the results are neither expected nor intended.

Question 15

Under a medical professional liability policy, libel and slander are covered.

Question 16

In order for an agent to collect under an errors-and-omissions contract, the agent must show that the mistake occurred during the policy year.

Question 17

Pollution is covered by the CGL.

Question 18

In the CGL program, employee injuries should be covered under a workers' compensation policy.

Question 19

Business auto coverage may be purchased within the SCLP.

Question 20

Match the descriptions with their terms:

-The _________________ policy is one that permits the commercial insureds to combine many types of liability coverage into one contract.

A) accident
B) claims-made policy
C) commercial general liability
D) defense insurance
E) dram shop exclusion
F) exposure doctrine
G) manifestation doctrine
H) Occurrence
I) SCLP
J) sistership exclusion
K) vendor's endorsement

Question 21

Match the descriptions with their terms:

-The _________________ provides that distributors of alcoholic beverages can be held liable for damages caused by their customers.

A) accident
B) claims-made policy
C) commercial general liability
D) defense insurance
E) dram shop exclusion
F) exposure doctrine
G) manifestation doctrine
H) Occurrence
I) SCLP
J) sistership exclusion
K) vendor's endorsement

Question 22

Match the descriptions with their terms:

-Retailers may ask for a/an _________________ to be added to a manufacturer's product liability policy for the retailer's benefit.

A) accident
B) claims-made policy
C) commercial general liability
D) defense insurance
E) dram shop exclusion
F) exposure doctrine
G) manifestation doctrine
H) Occurrence
I) SCLP
J) sistership exclusion
K) vendor's endorsement

Question 23

Match the descriptions with their terms:

-The _________________ is the primary commercial insurance policy.

A) accident
B) claims-made policy
C) commercial general liability
D) defense insurance
E) dram shop exclusion
F) exposure doctrine
G) manifestation doctrine
H) Occurrence
I) SCLP
J) sistership exclusion
K) vendor's endorsement

Question 24

Match the descriptions with their terms:

-The cost of product recall is excluded by the _________________ in the CGL.

A) accident
B) claims-made policy
C) commercial general liability
D) defense insurance
E) dram shop exclusion
F) exposure doctrine
G) manifestation doctrine
H) Occurrence
I) SCLP
J) sistership exclusion
K) vendor's endorsement

Question 25

Match the descriptions with their terms:

-The _________________ will probably become the major type of policy for "long-tail" liability.

A) accident
B) claims-made policy
C) commercial general liability
D) defense insurance
E) dram shop exclusion
F) exposure doctrine
G) manifestation doctrine
H) Occurrence
I) SCLP
J) sistership exclusion
K) vendor's endorsement

Question 26

Match the descriptions with their terms:

-Under the _________________ a liability policy provides coverage when a claimant's disease is discovered.

A) accident
B) claims-made policy
C) commercial general liability
D) defense insurance
E) dram shop exclusion
F) exposure doctrine
G) manifestation doctrine
H) Occurrence
I) SCLP
J) sistership exclusion
K) vendor's endorsement

Question 27

Match the descriptions with their terms:

-The _________________ states the liability coverage applies when the claimant comes into contact with the loss causing element.

A) accident
B) claims-made policy
C) commercial general liability
D) defense insurance
E) dram shop exclusion
F) exposure doctrine
G) manifestation doctrine
H) Occurrence
I) SCLP
J) sistership exclusion
K) vendor's endorsement

Question 28

Match the descriptions with their terms:

-"_________________" suggests a sudden, unexpected, abnormal event.

A) accident
B) claims-made policy
C) commercial general liability
D) defense insurance
E) dram shop exclusion
F) exposure doctrine
G) manifestation doctrine
H) Occurrence
I) SCLP
J) sistership exclusion
K) vendor's endorsement

Question 29

Match the descriptions with their terms:

-"_________________" connotes unexpected and abnormal but not necessarily sudden events.

A) accident
B) claims-made policy
C) commercial general liability
D) defense insurance
E) dram shop exclusion
F) exposure doctrine
G) manifestation doctrine
H) Occurrence
I) SCLP
J) sistership exclusion
K) vendor's endorsement

Question 30

Match the descriptions with their terms:

-Liability insurance has sometimes been termed _________________ because the majority of liability suits are settled out of court by negotiation between attorneys.

A) accident
B) claims-made policy
C) commercial general liability
D) defense insurance
E) dram shop exclusion
F) exposure doctrine
G) manifestation doctrine
H) Occurrence
I) SCLP
J) sistership exclusion
K) vendor's endorsement

Question 31

A subcontractor is engaged in constructing a steel framework for a building. Due to the negligence of a worker, a steel beam becomes loose and falls on three other beams already set in place, causing a complete loss of these beams. The beam on which the worker was working is also a total loss. The subcontractor will pay for

A) only the steel beam on which the employee was working,
B) the loss of all four beams,
C) the loss of the three beams set in place, but not the falling beam,
D) none of the loss.

Question 32

All but one of the following classes of liability are insurable under the commercial general liability policy:

A) premises liability,
B) elevator liability,
C) independent contractor liability,
D) comprehensive personal liability,
E) products liability.

Question 33

A customer purchases a ladder in a hardware store. While trying out the ladder in the store, the customer falls due to a defective step, and suffers severe injury. The resulting liability is covered under which portion of the CGL?

A) premises liability,
B) products liability,
C) elevator liability,
D) malpractice liability,
E) contingent liability.

Question 34

A physician purchases a malpractice liability coverage. He treats a patient for three months, stating, "There is no doubt that I can cure you if you will just give me time." The patient does not get well and brings an action for malpractice after one year. The contract

A) must pay,
B) excludes this type of loss,
C) covers this loss only if properly endorsed,
D) requires that the insurer defend this suit but will not pay any resulting damages,
E) none of these.

Question 35

A universal exclusion in most liability contracts is

A) a care, custody, and control exclusion,
B) an employee exclusion,
C) a lease agreement exclusion.

Question 36

The policy that gives the insured the best liability coverage is the

A) claims-made policy,
B) business income policy,
C) occurrence policy.

Question 37

The commercial general liability policy covers

A) products liability,
B) aircraft liability,
C) automobile liability.

Question 38

A liability policy is

A) commercial aviation,
B) commercial general,
C) commercial physical damage.

Question 39

The 60-days' coverage after the policy period in the claims-made policy is called the

A) extended period of indemnity,
B) basic extended reporting period,
C) supplemental tail.

Question 40

The five-year coverage after the policy period ends in the claims-made policy is called the

A) SCLP,
B) supplemental tail,
C) extended period of indemnity.

Question 41

A unique feature of professional liability insurance is

A) the insurer must have the insured's consent to settle a claim,
B) the persons involved,
C) the low cost of the policy.

Question 42

The CGL does not cover

A) host liquor,
B) product recall,
C) libel.

Question 43

Commercial umbrellas are used to

A) provide high limits of coverage,
B) give insureds high limits and load coverage,
C) reduce primary coverage.

Question 44

The CGL has

A) a general annual aggregate,
B) owned watercraft,
C) no coverage for any autos.