Heather Donaldson
Quiz by , created more than 1 year ago

Licensure Insurance (Quizzes) Quiz on Commercial Insurance, created by Heather Donaldson on 28/07/2016.

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Heather Donaldson
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Commercial Insurance

Question 1 of 90

1

Under the commercial property coverage part of the CPP, the causes of loss -- broad form insures against:

Select one of the following:

  • Risks of direct physical loss unless specifically excluded.

  • A list of basic named perils.

  • A list of basic and extended coverage perils.

  • Earthquake only

Explanation

Question 2 of 90

1

A builders risk coverage form can be written to provide an amount of insurance:

Select one of the following:

  • (A) Based on the anticipated completed value of the building.

  • (B) Which increases gradually as the value of the building under construction increases

  • Based on either A or B

  • Equal 50% of anticipated value during the entire construction period

Explanation

Question 3 of 90

1

The primary purpose of business income coverage is to reimburse the insured for:

Select one of the following:

  • Expenses incurred to prevent a suspension of business following a loss caused by a peril insured against.

  • The costs of debris removal following loss from a peril insured against.

  • Loss of income resulting from property damage at the insured's property.

  • Loss due to employees work related injuries

Explanation

Question 4 of 90

1

Which one of the following is a coverage extension under the building and personal property forms?

Select one of the following:

  • Debris removal

  • Business personal property

  • Property off-premises

  • Fire department service charge

Explanation

Question 5 of 90

1

The purpose of extra expense coverage is to provide:

Select one of the following:

  • Additional money to pay for property damage losses at a covered location.

  • Payment for unforeseen expenses an insured may incur while the business is shut down following a property loss.

  • Coverage which will permit the insured to continue in business without interruption following a property damage loss.

  • Extra money for an insured whose accounts receivable records have been damaged.

Explanation

Question 6 of 90

1

Under the commercial property coverage form, breakage of glass is covered under what form?

Select one of the following:

  • Basic, broad, and special.

  • Broad and special.

  • All forms.

  • Not covered under any form.

Explanation

Question 7 of 90

1

A building was covered by Insurance for such perils as fire and loss due to vehicles, but not for earthquake damage. The commercial property form had a provision in it which excluded concurrent losses. A man who had auto insurance lost control of his car due to an earthquake and collided with a building. Two hours later gas leaking from the car caused a fire that burned the building. It was determined that the damage was 25% due to the earthquake, 25% due to the car, and 50% due to the fire. What percent of the building would be covered by the fire policy?

Select one of the following:

  • 25%

  • 50%

  • 75%

  • Nothing

Explanation

Question 8 of 90

1

A building that had been vacant for 60 consecutive days burned. How much will be paid by the fire policy?

Select one of the following:

  • Entire loss

  • 50%

  • 85%

  • Nothing

Explanation

Question 9 of 90

1

Builder's risk insurance is to cover:

Select one of the following:

  • Loss of earnings

  • Loss to building under construction, temporary structures, and building materials and supplies.

  • Injury to an employee on the job.

  • Loss of personal possessions from business premises.

Explanation

Question 10 of 90

1

In a business income coverage form, business interruption is covered only if the loss is due to a peril insured against in the cause of loss form.

Select one of the following:

  • True
  • False

Explanation

Question 11 of 90

1

Business income insurance covers:

Select one of the following:

  • Net income, continuing expenses, and payroll.

  • Gross income

  • Net income, continuing expenses minus payroll expenses.

  • Net income minus taxes.

Explanation

Question 12 of 90

1

Which of the following is a correct definition of coinsurance?

Select one of the following:

  • Two or more policies which apply to the same property

  • A requirement that the insured carry insurance equal to a specified percentage of property value, to be fully indemnified under the policy.

  • Two or more buildings which are covered under a single policy.

  • A clause which allows the insurer to take action against a third party for reimbursement of loss settlements made with the insured.

Explanation

Question 13 of 90

1

What is the function of the coinsurance clause in fire policies?

Select one of the following:

  • To require the insured to carry insurance to value.

  • To discourage the insured from insuring to value.

  • When more than one company is insuring the same subject of insurance, the coinsurance clause apportions the loss among them.

  • When a policy covers several buildings under one amount of insurance, the coinsurance clause distributes the amount of coverage on the buildings.

Explanation

Question 14 of 90

1

Property valued at $500,000. It is insured for $300,000 with an 80% coinsurance clause. If there is a $200,000 loss, the insurer will pay how much?

Select one of the following:

  • 100,000

  • 150,000

  • 200,000

  • 500,000

Explanation

Question 15 of 90

1

The insurer will pay a reduced amount on the loss, the insured becomes a coinsurer by the amount of the penalty and must pay that amount himself.

Select one of the following:

  • Cause of loss form

  • Inventory

  • Obligations

  • Audit

Explanation

Question 16 of 90

1

On commercial property policies, basic coverage insures against loss by all of the following perils except:

Select one of the following:

  • Falling objects

  • Vandalism

  • Windstorm

  • Sprinkler leakage

Explanation

Question 17 of 90

1

Under the commercial property basic form, what would be covered?

Select one of the following:

  • Falling objects

  • Flood

  • Earth movement

  • Sprinkler leakage

Explanation

Question 18 of 90

1

Operations at ABC company depend on a steady flow of supplies from XYZ Inc. What coverage would protect ABC against income losses due to damage at XYZ which prevents shipments of supplies?

Select one of the following:

  • Coverage for contributing locations

  • Coverage for recipient locations

  • Coverage for leader locations

  • Coverage for manufacturing locations

Explanation

Question 19 of 90

1

In a business income coverage form, loss of income is covered while repairs are being made and for the subsequent 30 days after the business is resumed.

Select one of the following:

  • True
  • False

Explanation

Question 20 of 90

1

Who may cancel a commercial property policy as long as it is not contrary to law?

Select one of the following:

  • The insured

  • The insurer

  • First named insured

  • First named insured or the insurer

Explanation

Question 21 of 90

1

A tenant is in the middle of a ten-year lease. He has spent $50,000 in improvements for such things as lighting fixtures, shelves, and carpeting. Which of the following types of coverage would best suit his needs in the event of a claim?

Select one of the following:

  • Improvement or betterment

  • Building ordinance

  • Consequential losses

  • Extra expense

Explanation

Question 22 of 90

1

A building insured under a commercial property policy was left vacant for a period of 90 days. The owner notified the insurer of this prior to the vacancy. In the event of a 50% loss, how much will the insurer pay?

Select one of the following:

  • Nothing

  • The entire loss

  • 50%

  • 85%

Explanation

Question 23 of 90

1

A commercial plan designed expressly to protect against losses during construction is:

Select one of the following:

  • Builder's Risk

  • Leasehold interest

  • Legal liability

  • Extra expense coverage

Explanation

Question 24 of 90

1

A policy that has a single limit of insurance for all property at multiple locations is known as?

Select one of the following:

  • Schedule coverage

  • Blanket coverage

  • Specific coverage

  • Reporting form

Explanation

Question 25 of 90

1

Under a commercial property policy if there are two or more policies covering the same property under the same plan, terms, and conditions, how will the claim be handled?

Select one of the following:

  • Each policy shall contribute pro rata to the payment of such whole or partial loss.

  • Only the first policy issued will be responsible for the payment

  • Secondary carriers will only pay losses in excess of amounts due from the primary carrier

  • No benefits will be paid as it is illegal to carry insurance with more than one carrier

Explanation

Question 26 of 90

1

A policy which provides an amount of insurance for specific types of property at a specific location is known as:

Select one of the following:

  • Blanket coverage

  • Scheduled coverage

  • Specific coverage

  • Named peril coverage

Explanation

Question 27 of 90

1

In commercial property in the building and personal property coverage form, coverages a, b, and c refer to:

Select one of the following:

  • Building, business personal property of the insured, and personal property of others.

  • Business personal property of the insured, building and personal property of others.

  • Building, property off premises, and business personal property of the insured.

  • Building, newly acquired or constructed property, personal property of others

Explanation

Question 28 of 90

1

The coverages under a dwelling form policy as compared to a homeowner's policy is similar to comparing a commercial property policy to a:

Select one of the following:

  • Business income policy

  • Businessowners Policy

  • Business personal property

  • Commercial general liability

Explanation

Question 29 of 90

1

In making sure client has the proper coverage on a commercial property, there are three loss exposures to be considered. The loss exposures are:

Select one of the following:

  • The building to be covered / the perils to be covered / potential financial loss.

  • The building to be covered / fire prevention / maximum financial loss.

  • The building to be covered / the hazards to consider / maximum loss per occurrence.

  • The building to be covered / fire protection / financial loss.

Explanation

Question 30 of 90

1

All of the following are categories of inland marine insurance except:

Select one of the following:

  • Domestic shipments

  • Personal property floater risk

  • Furniture and fixtures

  • Instrumentalities of transportation and communication

Explanation

Question 31 of 90

1

Inland marine insurance commonly provides _______ coverage

Select one of the following:

  • Basic

  • Open peril

  • Broad

  • Standard

Explanation

Question 32 of 90

1

In a commercial package inland marine policy, which of the following would not be covered:

Select one of the following:

  • Accounts receivable from customers

  • An automobile being kept for an individual in a parking lot

  • Jewelry and watches

Explanation

Question 33 of 90

1

A provision commonly found in liability insurance, thus creating a need for inland marine would be?

Select one of the following:

  • A valuation provision

  • Debris removal

  • A care, control, and custody exclusion

  • A coinsurance requirement

Explanation

Question 34 of 90

1

Why would someone be in need of adding a boiler and machinery coverage part to a commercial package policy?

Select one of the following:

  • A separate coverage form is needed as most lines of insurance exclude boiler and machinery risks.

  • There is no need to add boiler and machinery as it is included in all commercial coverage forms.

  • Boiler and machinery offers loss protection, but not loss prevention.

  • Boiler and machinery can be written only as a monoline policy and never part of a commercial package policy.

Explanation

Question 35 of 90

1

The majority of the premium paid for boiler and machinery coverage is used for:

Select one of the following:

  • Anticipated losses

  • Inspection

  • Company overhead

  • Underwriting

Explanation

Question 36 of 90

1

An important loss control feature of the boiler and machinery insurance program is:

Select one of the following:

  • The audit function

  • Inspection

  • A disappearing deductible

  • Retention

Explanation

Question 37 of 90

1

A boiler and machinery policy would exclude all of the following except:

Select one of the following:

  • Interruption of business

  • Lack of power, light, heat, steam, or refrigeration

  • Boiler explosion

  • Flood

Explanation

Question 38 of 90

1

All of the following are true about boiler and machinery except:

Select one of the following:

  • They can be either monoline or part of a commercial package policy.

  • The property must be owned by the insured.

  • It is written on a replacement cost basis except if changed to ACV (Actual Cash Value)

  • Supplemental payments provided with additional policy limits

Explanation

Question 39 of 90

1

Under a farm property coverage plan, what would be covered?

Select one of the following:

  • Liability

  • Property

  • Property but not liability

  • Liability and property

Explanation

Question 40 of 90

1

Under the commercial general liability policy, a separate aggregate limit applies to the:

Select one of the following:

  • Products-completed operations hazard.

  • Premises and operation hazard.

  • Owners and contractors protective hazard.

  • Contractual liability hazard.

Explanation

Question 41 of 90

1

Under the commercial general liability coverage form, liability assumed under contract is:

Select one of the following:

  • Excluded

  • Excluded, except for contracts specifically defined as insured.

  • Covered, except for incidental contracts.

  • Covered, except for property leases.

Explanation

Question 42 of 90

1

Under the commercial general liability coverage form, personal injury is:

Select one of the following:

  • Bodily injury suffered by the named insured.

  • Bodily injury for which the named insured is liable.

  • Injury, other than bodily injury, arising out of such things as slander, libel, and invasion of privacy.

  • Injury arising out of the misappropriation of advertising ideas.

Explanation

Question 43 of 90

1

Under the commercial general liability coverage form, the term personal injury is defined as:

"bodily injury such as the injury caused by wrongful eviction"

Select one of the following:

  • True
  • False

Explanation

Question 44 of 90

1

Under the claims made commercial general liability coverage form, the first date that an event may occur and still be covered under the policy is the:

Select one of the following:

  • Retroactive date

  • Policy expiration date

  • Extended reporting period inception date

  • Policy inception date

Explanation

Question 45 of 90

1

Commercial general liabilty would cover an injury to:

Select one of the following:

  • The insured

  • The insureds employee

  • A customer on the premises

  • An employee while not working

Explanation

Question 46 of 90

1

Who would be in need of purchasing a liquor liability form?

Select one of the following:

  • A company hosting a cocktail party on its premises

  • A company that deals in the illegal manufacturing and distribution of alcohol

  • A company that has a company sponsored picnic where alcohol will be served

  • A company whose business is selling and serving of alcohol beverages

Explanation

Question 47 of 90

1

In a commercial general liability form, the term YOUR means:

Select one of the following:

  • First named insured

  • Any insured

  • All property for which the business has care, custody, and control

  • Any person who can show an insurable interest in the property

Explanation

Question 48 of 90

1

A commercial general liability policy would cover which of the following situations?

Select one of the following:

  • An employee is hurt in the course of working

  • An employee working in a customer's home does damage to the customer's property (causes an injury to the customer)

  • Injury intended by the insured.

  • Liability of someone engaged in the alcoholic beverage business who serves alcohol to a minor

Explanation

Question 49 of 90

1

Which of the following would be true under a commercial general liability policy if you switched from the claims made form to the occurrence form?

Select one of the following:

  • There are no differences in coverage

  • There may be a gap in coverage

  • There may be additional benefits

  • None of the above

Explanation

Question 50 of 90

1

Which is true about the CGL general aggregate limit?

Select one of the following:

  • It applies to completed operations hazard.

  • It is the amount an insurer will pay for one loss.

  • It is the most an insurer will pay for an occurrence.

  • It does not apply to the products completed operations hazard.

Explanation

Question 51 of 90

1

The liability exposure arising out of a business location or activities is known as:

Select one of the following:

  • Premises and operations hazard

  • Completed operations hazard

  • Products completed operations hazard

  • Exposure hazard

Explanation

Question 52 of 90

1

The medical payments of a commercial general liability policy will cover:

Select one of the following:

  • A hired person who is hurt while fixing a broken window for a tenant

  • An employee while working

  • Injury caused by an employee while working

  • Injury to employee while engaged in the business' sports team

Explanation

Question 53 of 90

1

The retroactive date in a claims-made commercial general liability policy is:

Select one of the following:

  • The inception date of the policy

  • The last date a claim may be filed and covered by the policy

  • The first date that an event may occur and be covered by the policy.

  • The policy expiration date

Explanation

Question 54 of 90

1

In a commercial general liability, what do coverages A, B, and C represent?

Select one of the following:

  • (A) Bodily injury and property damage; (B) personal and advertising in jury; (C) medical payments

  • (A) Medical payments; (B) Personal liability; (C) Bodily injury

  • (A) Personal injury; (B) Bodily Injury; (C) Medical Payments

  • (A) Professional liability; (B) Property damage; (C) Personal Property

Explanation

Question 55 of 90

1

Under the commercial crime coverage part, loss resulting from employee dishonesty is:

Select one of the following:

  • Always excluded

  • Always covered, provided the employee has not been previously responsible for such a loss.

  • Excluded unless an employee dishonesty coverage form is attached

  • Always covered

Explanation

Question 56 of 90

1

Which of the following is a commercial crime coverage form that provides virtually all risk coverage for money and securities?

Select one of the following:

  • Robbery and safe burglary coverage form.

  • Premises theft and robbery outside the premises coverage form

  • Theft, disappearance, and destruction coverage form.

  • Premises burglary coverage form

Explanation

Question 57 of 90

1

A person has a commercial business policy with an employee dishonesty endorsement. Which of these is covered under the policy?

Select one of the following:

  • Robbery of an employee

  • Theft of inventory (theft of business stock)

  • Burglary of business stock

  • Employee who lost deposit on the way to the bank

Explanation

Question 58 of 90

1

When would the insured collect under the employee dishonesty section of the commercial crime policy?

1. Theft of money
2. Theft of property
3. Theft of securities
4. Shortages of inventory

Select one of the following:

  • 1 only

  • 1 & 2

  • 1, 2, & 3

  • 1, 2, 3, & 4

Explanation

Question 59 of 90

1

Under commercial crime, the loss sustained during prior insurance clause covers the crime loss subject to:

Select one of the following:

  • 6 months

  • 9 months

  • 1 year

  • 2 years

Explanation

Question 60 of 90

1

Which of the following offers the broadest crime coverage?

Select one of the following:

  • Theft

  • Burglary

  • Robbery

  • Larceny

Explanation

Question 61 of 90

1

Under commercial crime coverage, employee dishonesty does not cover:

Select one of the following:

  • Theft of business stock

  • Shortages of inventory

  • Theft of securities

  • Theft of cash

Explanation

Question 62 of 90

1

Employers that wish to cover employees use of their own cars in the employer's business should opt to have business auto liability coverage apply to which of the following groups of autos?

Select one of the following:

  • Hired autos

  • Miscellaneous vehicles

  • Owned autos

  • Nonowned autos

Explanation

Question 63 of 90

1

Employees are using their own cars for business purposes. The employer is concerned about liability exposure. What should the agent advise?

Select one of the following:

  • Tell employees to have their employer added to their policies as an additional insured.

  • Tell employees not to use their own autos for business.

  • Have all employees insure their cars with the same insurer that the employer uses.

  • Have the employer add non-owned autos to his business auto coverage.

Explanation

Question 64 of 90

1

An insured whose business is earth moving wants to cover his equipment while it is being transferred from location to location. The insured would probably need:

Select one of the following:

  • Fixed property coverage

  • Floater coverage

  • Binder coverage

  • Short rate coverage

Explanation

Question 65 of 90

1

An owner of a parking lot wants coverage for her liability for damage to vehicles left in her custody. She needs:

Select one of the following:

  • Business auto coverage

  • Garage liability coverage

  • Garagekeepers coverage

  • Employers nonownership liability

Explanation

Question 66 of 90

1

The type of insurance that an auto repair shop should carry is:

Select one of the following:

  • Garage keepers insurance

  • Commercial auto insurance

  • Professional liability

  • None of these

Explanation

Question 67 of 90

1

General liability policies and business auto policies define the word "auto" and "mobile equipment":

Select one of the following:

  • The same, to avoid confusion.

  • The same as the policy writers lack imagination.

  • Differently, to avoid gaps in coverage.

  • Differently but it has nothing to do with gaps in coverage.

Explanation

Question 68 of 90

1

Business autos are identified by nine symbols in the declarations. The symbol #4 refers to:

Select one of the following:

  • Owned autos only

  • Owned autos other than private passenger autos

  • Owned private passenger autos only

  • Non-owned autos only

Explanation

Question 69 of 90

1

A business auto policy (BAP) has four coverages under physical damage. Which can be written together?

Select one of the following:

  • Comprehensive, specified cause of loss, and collision.

  • Comprehensive, specified cause of loss, and towing and labor.

  • Comprehensive, collision, towing and labor.

  • None of these answers.

Explanation

Question 70 of 90

1

Commercial auto:

Select one of the following:

  • Covers garage liability

  • Automatically includes uninsured motorist coverage

  • Automatically includes medical payments

  • Allows the insured to tailor the policy by deciding what coverages should be applied to different vehicles.

Explanation

Question 71 of 90

1

Which of the following would have a need for commercial automobile policy?

Select one of the following:

  • Owner of a trucking fleet

  • Homeowner

  • Individual with two autos

  • Farmer

Explanation

Question 72 of 90

1

All are mobile equipment under a commercial auto policy except:

Select one of the following:

  • Bulldozer

  • Forklift

  • Street sweeper which is self-propelled.

  • Tractor on crawlers.

Explanation

Question 73 of 90

1

An insurer cannot rate a commercial auto policy based on the personal driving record of a hired driver while using his own vehicle.

Select one of the following:

  • True
  • False

Explanation

Question 74 of 90

1

What cannot be covered under a commercial auto policy?

Select one of the following:

  • An owner of a parking lot who wishes to cover cards in her custody.

  • A garage that repairs cars.

  • Physical damage to mobile equipment.

  • The owner of a trucking fleet.

Explanation

Question 75 of 90

1

Under a commercial auto policy reimbursement for towing expenses:

Select one of the following:

  • Is not provided

  • Provided only for private passenger type autos

  • Provide only for a limit of $25

  • Provided for trucks only

Explanation

Question 76 of 90

1

Business autos are identified by nine symbols in the declarations. The symbol #7 refers to:

Select one of the following:

  • Owned autos only

  • Hired autos only

  • Specifically described autos only

  • Owned autos other than private passenger autos

Explanation

Question 77 of 90

1

Which of the following is not available under the commercial package policy?

Select one of the following:

  • Ocean marine

  • Crime

  • Boiler and machinery

  • Inland marine

Explanation

Question 78 of 90

1

Commercial package policies may have a number of coverage forms. Which would not be covered under a commercial package policy?

Select one of the following:

  • Commercial property

  • Dwelling property

  • Commercial crime

  • Boiler and machinery

Explanation

Question 79 of 90

1

Under the commercial package policy, who may cancel the policy in writing, is authorized to make changes to the policy with the consent of the insurer and is responsible for paying premiums?

Select one of the following:

  • The first named insured.

  • The last named insured.

  • Any named insured.

  • Any insured.

Explanation

Question 80 of 90

1

According to the common conditions of a commercial package policy, the insurer can do an audit of insured's books and records any time during the policy period and during the three months following expiration of the policy.

Select one of the following:

  • True
  • False

Explanation

Question 81 of 90

1

According to the common conditions of a commercial package policy, the insurer can do an audit of an insured's books and records any time during the policy period and for a specified amount of time after the policy expires.

Select one of the following:

  • True
  • False

Explanation

Question 82 of 90

1

All of the following are part of the common conditions in a commercial package policy except:

Select one of the following:

  • Inspections and surveys

  • Examination of books and records

  • Cancellation terms

  • Named perils

Explanation

Question 83 of 90

1

A monoline policy:

Select one of the following:

  • Is a policy that is written to cover property only

  • Is any insurance written as a single line policy

  • Is a policy that covers only lines of insurance which cannot be part of package policies

  • There is no such thing

Explanation

Question 84 of 90

1

What are the advantages of having a commercial package policy compared to having monoline policies?

1. Convenience of having coverage under one policy.
2. Cost.
3. No gap in coverage
4. No duplication of coverage

Select one of the following:

  • 1 & 2

  • 3 & 4

  • 2, 3, & 4

  • All are correct

Explanation

Question 85 of 90

1

What is an advantage to having a commercial package policy instead of several monoline policies:

Select one of the following:

  • There are fewer exclusions.

  • Convenience of having coverage under one policy.

  • There are broader coverages

  • Claims are covered on an occurrence basis.

Explanation

Question 86 of 90

1

Commercial package policies must include:

Select one of the following:

  • Common declarations

  • Common conditions

  • Two or more coverage forms

  • All are correct.

Explanation

Question 87 of 90

1

Commercial package policies must include:

Select one of the following:

  • Cause of loss forms

  • Common conditions

  • Common exclusions

  • All are correct

Explanation

Question 88 of 90

1

In a commercial package policy under common policy conditions "changes", it states that a policy can be amended or waived:

Select one of the following:

  • Only by endorsement from the insurer made part of the policy.

  • By endorsement in writing from an agent or the insured without consent of the insurer.

  • Only at renewal; never during a policy period.

  • None of these answers.

Explanation

Question 89 of 90

1

In commercial policies, the use of a value reporting form:

Select one of the following:

  • Allows values for commercial property policies to be modified.

  • Allows values on business income policies to be modified.

  • Applies to commercial auto policies.

  • States the specified amount the policy will pay for an entire loss.

Explanation

Question 90 of 90

1

According to the common conditions of a commercial package policy, the insurer can do an audit of an insured's books and records:

Select one of the following:

  • During the policy period and for three months after expiration of the policy.

  • Only during the policy period.

  • During the policy period and for three years after expiration of the policy.

  • Only with the consent of the insured.

Explanation

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