Property & Casualty Insurance License Test Property & Casualty Insurance License Test Commercial Lines Insurance Questions and Answers 2 — Questions and Answers
Question 1: A commercial umbrella policy is best described as which of the following?
- Excess liability coverage that sits above underlying policies and fills coverage gaps (Correct answer)
- A replacement for the primary CGL policy when limits are exhausted
- A property policy that covers catastrophic losses only
- A workers' compensation excess policy
Correct answer: Excess liability coverage that sits above underlying policies and fills coverage gaps
A commercial umbrella provides higher liability limits above the underlying CGL, auto, and employers' liability policies and may drop down to fill coverage gaps not covered by those underlying policies.
Question 2: Which commercial fidelity bond covers an employer for losses caused by dishonest acts of employees who handle money or securities?
- Employee dishonesty bond (Correct answer)
- Performance bond
- License and permit bond
- Judicial bond
Correct answer: Employee dishonesty bond
An employee dishonesty bond (fidelity bond) protects an employer against theft, embezzlement, or fraud committed by its own employees.
Question 3: Under a claims-made Commercial General Liability (CGL) form, a claim is covered only if which condition is met?
- The claim is first made during the policy period, regardless of when the occurrence happened (Correct answer)
- The occurrence and the claim both happen during the policy period
- The occurrence happens before the policy inception date
- The claim is reported within 30 days of the occurrence
Correct answer: The claim is first made during the policy period, regardless of when the occurrence happened
A claims-made form triggers coverage when the claim is first made against the insured during the policy period, not necessarily when the underlying injury or damage occurred.
Question 4: Employment Practices Liability Insurance (EPLI) protects employers against claims arising from which of the following?
- Wrongful termination, discrimination, and sexual harassment by employees (Correct answer)
- On-the-job physical injuries sustained by workers
- Property damage caused by employee negligence
- Automobile accidents during employee commutes
Correct answer: Wrongful termination, discrimination, and sexual harassment by employees
EPLI covers employers against employment-related claims such as wrongful termination, workplace discrimination, sexual harassment, and retaliation lawsuits filed by current, former, or prospective employees.
Question 5: Workers' Compensation insurance is primarily designed to provide which benefit to injured employees?
- Medical expenses and lost wages regardless of fault (Correct answer)
- Pain and suffering damages after a negligence determination
- Property replacement for tools damaged on the job
- Unemployment benefits after a work-related layoff
Correct answer: Medical expenses and lost wages regardless of fault
Workers' compensation provides a no-fault system that pays an injured employee's medical expenses and a portion of lost wages without requiring proof of employer negligence.
Question 6: Which commercial policy form is specifically designed to cover the legal liability of automobile dealers, service stations, and parking garages for customer vehicles in their care?
- Garage liability policy with garagekeepers coverage (Correct answer)
- Commercial auto policy with hired and non-owned coverage
- Business auto policy with symbol 7 designation
- Commercial general liability policy with auto endorsement
Correct answer: Garage liability policy with garagekeepers coverage
A garage liability policy includes garagekeepers coverage, which protects auto dealers and service facilities from liability for damage to customers' vehicles left in their custody.
Property & Casualty Insurance License Test Property & Casualty Insurance License Test Commercial Lines Insurance Questions and Answers 2
A commercial umbrella policy is best described as which of the following?