APP Insurance and Indemnification Strategies Flashcards
6 cards from real APP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 APP Insurance and Indemnification Strategies flashcards as text
Which type of insurance policy provides the broadest personal liability coverage above existing underlying policies in an asset protection plan?
Answer: Umbrella liability policy
An umbrella liability policy provides broad excess liability coverage that sits above underlying homeowners, auto, and other policies, offering a critical layer of personal asset protection.
An indemnification clause in a business contract is primarily designed to:
Answer: Transfer the risk of loss from one party to another
An indemnification clause allocates risk by requiring one party to compensate the other for specified losses, claims, or damages arising from the contract.
What is the primary purpose of a 'hold harmless' agreement in the context of asset protection?
Answer: To prevent one party from seeking damages against another
A hold harmless agreement contractually prevents one party from suing another for specified losses, effectively shielding assets from certain legal claims.
Which coverage is most appropriate for protecting a business owner's personal assets against claims arising from professional negligence?
Answer: Professional liability (E&O) insurance
Professional liability (errors and omissions) insurance specifically covers claims of negligence or failure to perform professional duties, protecting personal assets from professional mistakes.
In a US asset protection plan, a captive insurance company is used primarily to:
Answer: Self-insure risks while keeping premiums within the owner's control
A captive insurance company allows a business owner to insure their own risks, retaining premium dollars within a controlled entity while potentially gaining tax advantages.
Directors and Officers (D&O) liability insurance protects against claims alleging:
Answer: Wrongful acts in the management of a company
D&O insurance covers executives and board members for claims alleging mismanagement, breach of fiduciary duty, or other wrongful acts in their corporate roles.