EXAMFX Commercial General Liability 3 — Questions and Answers
Question 1: A products liability claim is filed after a consumer is injured by a defective product the insured manufactured and sold. Which section of the CGL covers this claim?
- Coverage A – Products-Completed Operations Hazard (Correct answer)
- Coverage B – Personal and Advertising Injury
- Coverage C – Medical Payments
- Coverage A – Premises and Operations Hazard
Correct answer: Coverage A – Products-Completed Operations Hazard
Products liability falls under the Products-Completed Operations Hazard within Coverage A, which applies after the product leaves the insured's control.
Question 2: Under the CGL, which condition requires the insured to notify the insurer as soon as practicable after an occurrence?
- Subrogation condition
- Duties in the event of occurrence, offense, claim, or suit (Correct answer)
- Premium audit condition
- Separation of insureds condition
Correct answer: Duties in the event of occurrence, offense, claim, or suit
The 'Duties in the Event of Occurrence, Offense, Claim, or Suit' condition obligates the insured to promptly notify the insurer of any covered occurrence.
Question 3: Which CGL exclusion eliminates coverage for bodily injury or property damage expected or intended from the standpoint of the insured?
- War exclusion
- Expected or Intended Injury exclusion (Correct answer)
- Pollution exclusion
- Employer's Liability exclusion
Correct answer: Expected or Intended Injury exclusion
The Expected or Intended Injury exclusion removes coverage for harm that the insured deliberately caused or knew was substantially certain to result.
Question 4: An insured's employee is injured on the job. The employee files a claim against the insured employer under the CGL. How does the standard CGL respond?
- Covers the claim under Coverage A
- Covers the claim under Coverage C – Medical Payments only
- Excludes the claim under the Employer's Liability exclusion (Correct answer)
- Covers the claim under Coverage B
Correct answer: Excludes the claim under the Employer's Liability exclusion
The Employer's Liability exclusion bars CGL coverage for bodily injury to employees arising out of and in the course of employment.
Question 5: A CGL policy has a $1,000,000 per occurrence limit and a $2,000,000 general aggregate limit. Three separate covered occurrences each result in $900,000 in losses. What is the total the insurer pays?
- $2,700,000
- $3,000,000
- $2,000,000 (Correct answer)
- $1,000,000
Correct answer: $2,000,000
The general aggregate acts as the overall cap; after paying $900,000 + $900,000 = $1,800,000 for two occurrences, only $200,000 remains, so the insurer pays $2,000,000 total.
Question 6: Under the CGL's 'separation of insureds' condition, how does coverage apply when one insured sues another insured?
- Coverage is denied because both are insureds
- Coverage applies separately to each insured as if each were the only insured (Correct answer)
- The policy pays only 50% of the claim
- The insured who files suit forfeits coverage
Correct answer: Coverage applies separately to each insured as if each were the only insured
The separation of insureds condition treats each insured independently, so the policy can respond to a claim by one insured against another.
Question 7: A CGL policy's 'fire legal liability' provision specifically addresses which situation?
- Fire damage to the insured's own building
- Insured's legal liability for fire damage to premises they rent from others (Correct answer)
- Employee injury caused by a fire on the premises
- Fire damage to goods in the insured's care, custody, or control
Correct answer: Insured's legal liability for fire damage to premises they rent from others
Fire Legal Liability is a sublimit within Coverage A that covers the insured's legal liability for fire damage to rented premises.
EXAMFX Commercial General Liability 3
A products liability claim is filed after a consumer is injured by a defective product the insured manufactured and sold.
Which section of the CGL covers this claim?