Property & Casualty Practice Exam:
Commercial Lines
Who is responsible for damage to improvements in a leased building?
A) Tenant
B) Building owner
C) Improvements to a leased building are not covered
D) Both the tenant and the building owner - Answer-B
Equipment Breakdown insurance covers all of the following, EXCEPT:
A) Equipment powered by internal pressure
B) Mechanical equipment used to produce energy
C) Tools subject to regular replacement
D) Communications equipment - Answer-C
Hull coverage in an ocean marine policy covers which of the following?
A) the freight charged for the transportation of the cargo
B) the ship owners liability
c) cargo being transported on the ship
d) the vessel itself, including engines and fuel - Answer-D
all of the following are differences between surety bonds and insurance EXCEPT
a) reserves are not established
,b) the principle is responsible to the guarantor in the case of loss
c) 3 party contract
d) the surety should not suffer a loss - Answer-A
if a bartender allows a patron to leave the bar, and the patron is involved in a drunk driving accident,
what would the bar owner need to cover their liability?
A) professional liability
B) Host
C) commercial general liability
D) liquor liability - Answer-D
A commercial general liability (CGL) policy is quite broad in scope. However, there are substantial
number of exclusions. Three of the four following loss exposures are excluded. Identify the loss
exposure that is covered an unendorsed CGL- property damage of liability arising out of:
A) The ownership of an airplane
B) An employee being insured while working on the insured's premises
C) An employee accidentally injures a customer while working at the customers home
D) An accident while driving an owned automobile on a public highway - Answer-C
What causes of loss are covered under the business income coverage form?
A) Broad from perils only
B) Those included in business income form
C) All Perils
D) Those shown on the declarations - Answer-D
When an employer has a choice to purchase Workers compensation insurance from a state fund or
private carrier, the state fund would be called:
,A) A competitive state fund
B) A residual fund
C) A private fund
D) A Monopolistic fund - Answer-A
If an insured discovers an occurrence 75 days after the expiration of a claims-made commercial general
liability policy, what must the insured have in order for the loss to be covered?
A) Nothing; as long as the loss occurred during the policy period
B) The loss will not be covered because it was not reported during the policy period
C) Umbrella Policy
D) Basic extended reporting period endorsement - Answer-D
What is the purpose of the inspections and surveys condition of the commercial package policy?
A) To determine the rate to be charged
B) To determine if the premises comply with ADA requirements
C) To ascertain if the premises has maintained the required building codes
D) To specify if the premises comply with OSHA requirements - Answer-A
Why is the examination of books and records condition important in a commercial policy?
A) To ensure that the insurance business is profitable
B) To ensure that the proper amount of premium is charged
C) To ensure that the insured is using generally accepted accounting principles
D) To ensure that the insurance business is solvent - Answer-B
Under the commercial building and personal property coverage extensions, property off-premises is
covered while the property is located:
, A) At the trade show or a fair
B) In a building the named insured has leased for five years
C) In a delivery truck
D) At a salespersons home - Answer-A
All of the following are covered by protection and indemnity insurance, EXCEPT:
A) Injury to persons on other ships
B) Damages to piers
C) Injured passengers on the ship
D) The cost of reasonable measures that insured must take to prevent damage at the time of loss -
Answer-D
The inspections and surveys condition of a Commercial Package Policy is important to the insurer for all
of the following reasons, EXCEPT:
A) To determine the insurability of the insureds operations
B) To set proper insurance rates
C) Guarantee that the insured is in compliance with safety regulations
D) Make loss control recommendations - Answer-C
All of the following are typical exclusions in an Inland Marine Policy, EXCEPT:
A) Wear and tear
B) Electrical breakdown
C) Earth movement
D) Insects or vermin - Answer-C
If the vacancy permit endorsement is added to a building and personal property coverage form, the
vacancy conditions under the basic policy is:
Commercial Lines
Who is responsible for damage to improvements in a leased building?
A) Tenant
B) Building owner
C) Improvements to a leased building are not covered
D) Both the tenant and the building owner - Answer-B
Equipment Breakdown insurance covers all of the following, EXCEPT:
A) Equipment powered by internal pressure
B) Mechanical equipment used to produce energy
C) Tools subject to regular replacement
D) Communications equipment - Answer-C
Hull coverage in an ocean marine policy covers which of the following?
A) the freight charged for the transportation of the cargo
B) the ship owners liability
c) cargo being transported on the ship
d) the vessel itself, including engines and fuel - Answer-D
all of the following are differences between surety bonds and insurance EXCEPT
a) reserves are not established
,b) the principle is responsible to the guarantor in the case of loss
c) 3 party contract
d) the surety should not suffer a loss - Answer-A
if a bartender allows a patron to leave the bar, and the patron is involved in a drunk driving accident,
what would the bar owner need to cover their liability?
A) professional liability
B) Host
C) commercial general liability
D) liquor liability - Answer-D
A commercial general liability (CGL) policy is quite broad in scope. However, there are substantial
number of exclusions. Three of the four following loss exposures are excluded. Identify the loss
exposure that is covered an unendorsed CGL- property damage of liability arising out of:
A) The ownership of an airplane
B) An employee being insured while working on the insured's premises
C) An employee accidentally injures a customer while working at the customers home
D) An accident while driving an owned automobile on a public highway - Answer-C
What causes of loss are covered under the business income coverage form?
A) Broad from perils only
B) Those included in business income form
C) All Perils
D) Those shown on the declarations - Answer-D
When an employer has a choice to purchase Workers compensation insurance from a state fund or
private carrier, the state fund would be called:
,A) A competitive state fund
B) A residual fund
C) A private fund
D) A Monopolistic fund - Answer-A
If an insured discovers an occurrence 75 days after the expiration of a claims-made commercial general
liability policy, what must the insured have in order for the loss to be covered?
A) Nothing; as long as the loss occurred during the policy period
B) The loss will not be covered because it was not reported during the policy period
C) Umbrella Policy
D) Basic extended reporting period endorsement - Answer-D
What is the purpose of the inspections and surveys condition of the commercial package policy?
A) To determine the rate to be charged
B) To determine if the premises comply with ADA requirements
C) To ascertain if the premises has maintained the required building codes
D) To specify if the premises comply with OSHA requirements - Answer-A
Why is the examination of books and records condition important in a commercial policy?
A) To ensure that the insurance business is profitable
B) To ensure that the proper amount of premium is charged
C) To ensure that the insured is using generally accepted accounting principles
D) To ensure that the insurance business is solvent - Answer-B
Under the commercial building and personal property coverage extensions, property off-premises is
covered while the property is located:
, A) At the trade show or a fair
B) In a building the named insured has leased for five years
C) In a delivery truck
D) At a salespersons home - Answer-A
All of the following are covered by protection and indemnity insurance, EXCEPT:
A) Injury to persons on other ships
B) Damages to piers
C) Injured passengers on the ship
D) The cost of reasonable measures that insured must take to prevent damage at the time of loss -
Answer-D
The inspections and surveys condition of a Commercial Package Policy is important to the insurer for all
of the following reasons, EXCEPT:
A) To determine the insurability of the insureds operations
B) To set proper insurance rates
C) Guarantee that the insured is in compliance with safety regulations
D) Make loss control recommendations - Answer-C
All of the following are typical exclusions in an Inland Marine Policy, EXCEPT:
A) Wear and tear
B) Electrical breakdown
C) Earth movement
D) Insects or vermin - Answer-C
If the vacancy permit endorsement is added to a building and personal property coverage form, the
vacancy conditions under the basic policy is:
