Miscellaneous Commercial Test Flashcards
Which one of the following coverages is NOT included in the farm liability form?
BI and PD liability Medical payments Personal and advertising injury liability Liability arising out of injuries to farm employees
guess: Liabilities… farm employees
The farm liability coverage form includes BI and PD liability coverage, personal and advertising injury liability coverage, and medical payments coverage. Liability for injury to farm employees is excluded.
Aviation physical damage insurance covers all of the following parts of an airplane EXCEPT
personal effects in the plane the airframe the engines electronic navigation and communications equipment
personal effects
Aviation physical damage insurance is similar to the comprehensive and collision coverages provided by auto insurance. It covers the complete aircraft, including its airframe, engines, controls, and electronic navigation and communications equipment.
It does not cover personal effects.
A business that wants coverage for its liability for employment-related acts can obtain it by purchasing
workers' compensation and employers liability insurance commercial general liability insurance employment practices liability insurance businessowners insurance
guess: workers comp…WRONG
This coverage is provided by…employment practices liability insurance. The other policies listed specifically exclude losses arising out of employment-related practices.
A building contractor wants to provide protection for its suppliers indicating it will pay bills for materials shipped to a construction site. The contractor should purchase
a builders risk coverage form a surety bond a professional liability policy a fidelity bond
guess: surety bond
One purpose of a surety bond is to guarantee that someone will make a payment as agreed upon by that person and another party.
The newly elected treasurer of a certain state must post a bond to guarantee that she will handle money correctly and perform her duties honestly. What type of bond would she obtain?
Completion Public official Fiduciary Performance
Public official bonds guarantee that public officials will handle public money correctly and otherwise perform their duties faithfully and honestly.
A breakdown of equipment covered under the equipment breakdown protection coverage form results in the simultaneous breakdown of two other pieces of covered equipment. According to the form, how many breakdowns occurred in this loss?
2 1 3
One breakdown means that if an initial breakdown causes other breakdowns, all will be considered a single breakdown. All breakdowns at any one premises that manifest themselves at the same time and are the direct result of the same cause will be considered one breakdown.
Commercial insureds who need more liability coverage than that provided by a certain policy or want coverage for losses that are excluded by a certain policy should purchase
a fidelity bond a surety bond a commercial umbrella policy a difference in conditions policy
Commercial umbrella policies provide catastrophic liability coverage for business risks. Because the umbrella is not designed to handle usual or everyday exposures, the insured must have underlying liability coverage before an umbrella will be issued. The umbrella may cover certain losses that are excluded by the underlying insurance.
Under the terms of the suspension provision in the equipment breakdown protection coverage form, coverage on dangerous equipment can be suspended
immediately upon delivery of written notice to the insured on 30 days' advance notice to the insured on 10 days' advance notice to the insured at the end of the policy period
The insurer may immediately suspend coverage whenever covered equipment is found to be in or exposed to a dangerous condition. Suspension applies only to that particular equipment and takes effect as soon as written notice is delivered to the insured.
Which one of the following answer choices lists all of the parties to a surety bond?
Principal and obligee Surety and principal Principal, obligee, surety, and guarantor Principal, obligee, and surety
There are 3 parties to a surety bond: the principal, the obligee, and the surety
All of the following types of losses may be covered by the equipment breakdown protection coverage form EXCEPT
expediting expenses business income losses and/or extra expenses losses due to spoilage damage damage caused by fire or combustion explosion
Business income and/or extra expense losses, expediting expenses, and spoilage damage are all coverage options in the equipment breakdown protection coverage form. Damage caused by fire or combustion explosion is excluded because it is covered under commercial property insurance.
The Farm coverage part insures a farmer’s
commercial loss exposures personal loss exposures Both of these
Farmers’ businesses and homes are often at the same location, so they need insurance that will cover both their personal and business exposures to loss.
The Farm coverage part includes several Farm Property coverage forms that cover both the personal and business property of the farmer and a Farm Liability coverage form for the personal and business liability exposures of the farmer.
The Farm coverage part provides
property coverage only both Property and Liability coverage liability coverage only
The Farm coverage part includes both Property and Liability coverage.
The insured knows it may take several months for his damaged turbine to be fully repaired, so he authorizes $500 for temporary repairs so production can resume. This expenditure would be covered under which coverage in the Equipment Breakdown Protection coverage form?
Spoilage Errors or omissions Expediting Expense
3
This coverage extension covers the reasonable cost of temporary repairs and expedition (speeding up) of permanent repairs.
Under the Equipment Breakdown Protection coverage form, which of the following causes of damage to covered equipment would NOT be a covered breakdown?
Mechanical failure, including rupture or bursting caused by centrifugal force
Leakage at any valve, fitting, shaft seal, gland packing, joint, or connection
Failure of pressure or vacuum equipment
Electrical failure, including arcing
Under the Equipment Breakdown Protection coverage form, breakdown means the following types of direct physical loss that cause damage to covered equipment and necessitates its repair or replacement:
failure of pressure or vacuum equipment,
mechanical failure, including rupture or bursting caused by centrifugal force, and
electrical failure, including arcing.
Leakage at any valve, fitting, shaft seal, gland packing, joint, or connection is specifically excluded under this definition.
Of the following statements regarding Professional Liability policies, which is INCORRECT?
Professional Liability policies are referred to by several different names. Professional Liability policies are tailored to fit specific occupational needs. Professional Liability policies cover the insured’s liability arising from the rendering or failure to render services of a professional nature. Professional Liability policies duplicate the coverage provided by the Commercial General Liability policy.
Professional Liability policies provide coverage for liability arising out of rendering or failing to render sevices of a professional nature.
This type of coverage is excluded under Commercial General Liability (CGL), so having a Professional Liability policy and a CGL does not result in a duplication of coverage.
Tailored to fit specific occupational needs, Professional Liability policies are referred to by several names, including Malpractice, Errors and Omissions, Fiduciary Liability, and Directors and Officers Liability.
