DC DC Commercial Insurance 2 — Questions and Answers
Question 1: A DC contractor's commercial general liability policy includes 'completed operations' coverage. This covers claims arising from:
- Damage to the contractor's tools and equipment
- Injuries or damage that occur after a project is finished and the contractor has left the site (Correct answer)
- Employee injuries during construction work
- Disputes over the contract price
Correct answer: Injuries or damage that occur after a project is finished and the contractor has left the site
Completed operations coverage protects contractors from liability for injury or damage that arises after a job is done and the contractor has left the premises.
Question 2: Which DC commercial policy would cover a business's loss of income and ongoing expenses if a covered peril forces it to temporarily close?
- Commercial crime insurance
- Business interruption insurance (Correct answer)
- Inland marine insurance
- Commercial umbrella insurance
Correct answer: Business interruption insurance
Business interruption insurance replaces lost revenue and pays continuing expenses (like rent and payroll) when a covered loss forces a business to shut down temporarily.
Question 3: A DC employer purchases a fidelity bond to protect the business from:
- Customer lawsuits for product defects
- Employee dishonesty, theft, or fraud (Correct answer)
- Building damage from fire or vandalism
- Vehicle accidents involving company cars
Correct answer: Employee dishonesty, theft, or fraud
A fidelity bond (commercial crime coverage) reimburses an employer for financial losses caused by dishonest acts of employees.
Question 4: In DC, professional liability insurance (errors and omissions) is designed to protect:
- Businesses from property losses
- Professionals from claims of negligence or mistakes in rendering professional services (Correct answer)
- Businesses from employee workplace injuries
- Directors from stockholder lawsuits
Correct answer: Professionals from claims of negligence or mistakes in rendering professional services
E&O insurance covers claims alleging that a professional caused financial harm to a client through errors, omissions, or negligent advice.
Question 5: A DC property insurer uses a 'coinsurance clause' in a commercial policy. What does this clause require of the insured?
- Sharing the premium cost with a co-insured party
- Maintaining insurance coverage equal to a specified percentage of the property's value (Correct answer)
- Purchasing coverage from at least two different insurers
- Reporting all property values to the DC Insurance Commissioner annually
Correct answer: Maintaining insurance coverage equal to a specified percentage of the property's value
A coinsurance clause requires the insured to carry coverage equal to a set percentage (commonly 80%) of the property's replacement value or face a penalty at claim time.
Question 6: Which of the following is typically EXCLUDED from a DC commercial general liability policy?
- Third-party bodily injury on business premises
- Property damage caused by business operations
- Intentional acts by the insured (Correct answer)
- Advertising injury claims
Correct answer: Intentional acts by the insured
CGL policies exclude coverage for intentional or deliberate acts by the insured because insurance is meant to cover accidental, not purposeful, harm.
DC DC Commercial Insurance 2
A DC contractor's commercial general liability policy includes 'completed operations' coverage.
This covers claims arising from: