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Commercial Insurance

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Licensure Insurance (Quizzes) Quiz on Commercial Insurance, created by Heather Donaldson on 28/07/2016.
Heather Donaldson
Quiz by Heather Donaldson, updated more than 1 year ago
Heather Donaldson
Created by Heather Donaldson over 8 years ago
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Resource summary

Question 1

Question
Under the commercial property coverage part of the CPP, the causes of loss -- broad form insures against:
Answer
  • Risks of direct physical loss unless specifically excluded.
  • A list of basic named perils.
  • A list of basic and extended coverage perils.
  • Earthquake only

Question 2

Question
A builders risk coverage form can be written to provide an amount of insurance:
Answer
  • (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

Question 3

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

Question 4

Question
Which one of the following is a coverage extension under the building and personal property forms?
Answer
  • Debris removal
  • Business personal property
  • Property off-premises
  • Fire department service charge

Question 5

Question
The purpose of extra expense coverage is to provide:
Answer
  • 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.

Question 6

Question
Under the commercial property coverage form, breakage of glass is covered under what form?
Answer
  • Basic, broad, and special.
  • Broad and special.
  • All forms.
  • Not covered under any form.

Question 7

Question
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?
Answer
  • 25%
  • 50%
  • 75%
  • Nothing

Question 8

Question
A building that had been vacant for 60 consecutive days burned. How much will be paid by the fire policy?
Answer
  • Entire loss
  • 50%
  • 85%
  • Nothing

Question 9

Question
Builder's risk insurance is to cover:
Answer
  • 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.

Question 10

Question
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.
Answer
  • True
  • False

Question 11

Question
Business income insurance covers:
Answer
  • Net income, continuing expenses, and payroll.
  • Gross income
  • Net income, continuing expenses minus payroll expenses.
  • Net income minus taxes.

Question 12

Question
Which of the following is a correct definition of coinsurance?
Answer
  • 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.

Question 13

Question
What is the function of the coinsurance clause in fire policies?
Answer
  • 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.

Question 14

Question
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?
Answer
  • 100,000
  • 150,000
  • 200,000
  • 500,000

Question 15

Question
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.
Answer
  • Cause of loss form
  • Inventory
  • Obligations
  • Audit

Question 16

Question
On commercial property policies, basic coverage insures against loss by all of the following perils except:
Answer
  • Falling objects
  • Vandalism
  • Windstorm
  • Sprinkler leakage

Question 17

Question
Under the commercial property basic form, what would be covered?
Answer
  • Falling objects
  • Flood
  • Earth movement
  • Sprinkler leakage

Question 18

Question
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?
Answer
  • Coverage for contributing locations
  • Coverage for recipient locations
  • Coverage for leader locations
  • Coverage for manufacturing locations

Question 19

Question
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.
Answer
  • True
  • False

Question 20

Question
Who may cancel a commercial property policy as long as it is not contrary to law?
Answer
  • The insured
  • The insurer
  • First named insured
  • First named insured or the insurer

Question 21

Question
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?
Answer
  • Improvement or betterment
  • Building ordinance
  • Consequential losses
  • Extra expense

Question 22

Question
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?
Answer
  • Nothing
  • The entire loss
  • 50%
  • 85%

Question 23

Question
A commercial plan designed expressly to protect against losses during construction is:
Answer
  • Builder's Risk
  • Leasehold interest
  • Legal liability
  • Extra expense coverage

Question 24

Question
A policy that has a single limit of insurance for all property at multiple locations is known as?
Answer
  • Schedule coverage
  • Blanket coverage
  • Specific coverage
  • Reporting form

Question 25

Question
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?
Answer
  • 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

Question 26

Question
A policy which provides an amount of insurance for specific types of property at a specific location is known as:
Answer
  • Blanket coverage
  • Scheduled coverage
  • Specific coverage
  • Named peril coverage

Question 27

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

Question 28

Question
The coverages under a dwelling form policy as compared to a homeowner's policy is similar to comparing a commercial property policy to a:
Answer
  • Business income policy
  • Businessowners Policy
  • Business personal property
  • Commercial general liability

Question 29

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

Question 30

Question
All of the following are categories of inland marine insurance except:
Answer
  • Domestic shipments
  • Personal property floater risk
  • Furniture and fixtures
  • Instrumentalities of transportation and communication

Question 31

Question
Inland marine insurance commonly provides _______ coverage
Answer
  • Basic
  • Open peril
  • Broad
  • Standard

Question 32

Question
In a commercial package inland marine policy, which of the following would not be covered:
Answer
  • Accounts receivable from customers
  • An automobile being kept for an individual in a parking lot
  • Jewelry and watches

Question 33

Question
A provision commonly found in liability insurance, thus creating a need for inland marine would be?
Answer
  • A valuation provision
  • Debris removal
  • A care, control, and custody exclusion
  • A coinsurance requirement

Question 34

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

Question 35

Question
The majority of the premium paid for boiler and machinery coverage is used for:
Answer
  • Anticipated losses
  • Inspection
  • Company overhead
  • Underwriting

Question 36

Question
An important loss control feature of the boiler and machinery insurance program is:
Answer
  • The audit function
  • Inspection
  • A disappearing deductible
  • Retention

Question 37

Question
A boiler and machinery policy would exclude all of the following except:
Answer
  • Interruption of business
  • Lack of power, light, heat, steam, or refrigeration
  • Boiler explosion
  • Flood

Question 38

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

Question 39

Question
Under a farm property coverage plan, what would be covered?
Answer
  • Liability
  • Property
  • Property but not liability
  • Liability and property

Question 40

Question
Under the commercial general liability policy, a separate aggregate limit applies to the:
Answer
  • Products-completed operations hazard.
  • Premises and operation hazard.
  • Owners and contractors protective hazard.
  • Contractual liability hazard.

Question 41

Question
Under the commercial general liability coverage form, liability assumed under contract is:
Answer
  • Excluded
  • Excluded, except for contracts specifically defined as insured.
  • Covered, except for incidental contracts.
  • Covered, except for property leases.

Question 42

Question
Under the commercial general liability coverage form, personal injury is:
Answer
  • 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.

Question 43

Question
Under the commercial general liability coverage form, the term personal injury is defined as: "bodily injury such as the injury caused by wrongful eviction"
Answer
  • True
  • False

Question 44

Question
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:
Answer
  • Retroactive date
  • Policy expiration date
  • Extended reporting period inception date
  • Policy inception date

Question 45

Question
Commercial general liabilty would cover an injury to:
Answer
  • The insured
  • The insureds employee
  • A customer on the premises
  • An employee while not working

Question 46

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

Question 47

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

Question 48

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

Question 49

Question
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?
Answer
  • There are no differences in coverage
  • There may be a gap in coverage
  • There may be additional benefits
  • None of the above

Question 50

Question
Which is true about the CGL general aggregate limit?
Answer
  • 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.

Question 51

Question
The liability exposure arising out of a business location or activities is known as:
Answer
  • Premises and operations hazard
  • Completed operations hazard
  • Products completed operations hazard
  • Exposure hazard

Question 52

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

Question 53

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

Question 54

Question
In a commercial general liability, what do coverages A, B, and C represent?
Answer
  • (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

Question 55

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

Question 56

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

Question 57

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

Question 58

Question
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
Answer
  • 1 only
  • 1 & 2
  • 1, 2, & 3
  • 1, 2, 3, & 4

Question 59

Question
Under commercial crime, the loss sustained during prior insurance clause covers the crime loss subject to:
Answer
  • 6 months
  • 9 months
  • 1 year
  • 2 years

Question 60

Question
Which of the following offers the broadest crime coverage?
Answer
  • Theft
  • Burglary
  • Robbery
  • Larceny

Question 61

Question
Under commercial crime coverage, employee dishonesty does not cover:
Answer
  • Theft of business stock
  • Shortages of inventory
  • Theft of securities
  • Theft of cash

Question 62

Question
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?
Answer
  • Hired autos
  • Miscellaneous vehicles
  • Owned autos
  • Nonowned autos

Question 63

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

Question 64

Question
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:
Answer
  • Fixed property coverage
  • Floater coverage
  • Binder coverage
  • Short rate coverage

Question 65

Question
An owner of a parking lot wants coverage for her liability for damage to vehicles left in her custody. She needs:
Answer
  • Business auto coverage
  • Garage liability coverage
  • Garagekeepers coverage
  • Employers nonownership liability

Question 66

Question
The type of insurance that an auto repair shop should carry is:
Answer
  • Garage keepers insurance
  • Commercial auto insurance
  • Professional liability
  • None of these

Question 67

Question
General liability policies and business auto policies define the word "auto" and "mobile equipment":
Answer
  • 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.

Question 68

Question
Business autos are identified by nine symbols in the declarations. The symbol #4 refers to:
Answer
  • Owned autos only
  • Owned autos other than private passenger autos
  • Owned private passenger autos only
  • Non-owned autos only

Question 69

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

Question 70

Question
Commercial auto:
Answer
  • 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.

Question 71

Question
Which of the following would have a need for commercial automobile policy?
Answer
  • Owner of a trucking fleet
  • Homeowner
  • Individual with two autos
  • Farmer

Question 72

Question
All are mobile equipment under a commercial auto policy except:
Answer
  • Bulldozer
  • Forklift
  • Street sweeper which is self-propelled.
  • Tractor on crawlers.

Question 73

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

Question 74

Question
What cannot be covered under a commercial auto policy?
Answer
  • 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.

Question 75

Question
Under a commercial auto policy reimbursement for towing expenses:
Answer
  • Is not provided
  • Provided only for private passenger type autos
  • Provide only for a limit of $25
  • Provided for trucks only

Question 76

Question
Business autos are identified by nine symbols in the declarations. The symbol #7 refers to:
Answer
  • Owned autos only
  • Hired autos only
  • Specifically described autos only
  • Owned autos other than private passenger autos

Question 77

Question
Which of the following is not available under the commercial package policy?
Answer
  • Ocean marine
  • Crime
  • Boiler and machinery
  • Inland marine

Question 78

Question
Commercial package policies may have a number of coverage forms. Which would not be covered under a commercial package policy?
Answer
  • Commercial property
  • Dwelling property
  • Commercial crime
  • Boiler and machinery

Question 79

Question
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?
Answer
  • The first named insured.
  • The last named insured.
  • Any named insured.
  • Any insured.

Question 80

Question
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.
Answer
  • True
  • False

Question 81

Question
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.
Answer
  • True
  • False

Question 82

Question
All of the following are part of the common conditions in a commercial package policy except:
Answer
  • Inspections and surveys
  • Examination of books and records
  • Cancellation terms
  • Named perils

Question 83

Question
A monoline policy:
Answer
  • 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

Question 84

Question
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
Answer
  • 1 & 2
  • 3 & 4
  • 2, 3, & 4
  • All are correct

Question 85

Question
What is an advantage to having a commercial package policy instead of several monoline policies:
Answer
  • There are fewer exclusions.
  • Convenience of having coverage under one policy.
  • There are broader coverages
  • Claims are covered on an occurrence basis.

Question 86

Question
Commercial package policies must include:
Answer
  • Common declarations
  • Common conditions
  • Two or more coverage forms
  • All are correct.

Question 87

Question
Commercial package policies must include:
Answer
  • Cause of loss forms
  • Common conditions
  • Common exclusions
  • All are correct

Question 88

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

Question 89

Question
In commercial policies, the use of a value reporting form:
Answer
  • 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.

Question 90

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