CPCU 552 CP AND L FINAL EXAM 2026
QUESTION COMMERCIAL LIABILITY MODULE
SOLVED ITEMS AND RESPONSE KEY
◉ An endorsement that eliminates the liquor liability exclusion and
provides coverage for organizations in the business of selling or
serving alcoholic beverages is an example of which type of
endorsement? Answer: Miscellaneous coverage amendment
endorsement (
◉ Which one of the following is true regarding the Commercial
General Liability's (CGL's) unmanned aircraft coverage
endorsements? Answer: Premium for these endorsements is on a
"refer to company" basis.
◉ Jill, who is the named insured on an unendorsed Business Auto
Coverage Form (BACF), hired Jimmy to assist in her business. Jill
asked Jimmy to purchase some business supplies. While he was
driving his own car, Jimmy's vehicle was hit by an uninsured
motorist. Jimmy's medical expenses were $2,000, and the damage to
his car was $4,000. Which one of the following correctly indicates
how much Jill's auto insurer will pay Jimmy for his losses? Answer:
$0 (An employee of the insured is not an insured if the covered auto
is owned by the employee.
,◉ An auto dealer advertises that a new vehicle is available for
$18,000 with no down payment and an interest rate of 1 percent. A
customer attempts to purchase the vehicle, but is told that the price
is now $21,000 and the interest rate is 9 percent. The customer files
suit, alleging false advertisement of prices and failure to comply with
the Truth in Lending Act. Which one of the following correctly
describes coverage for this claim under the Auto Dealers Coverage
Form? Answer: There will be coverage for the failure to comply with
the Truth in Lending Act, but not for the false advertisement of
prices. (There will be coverage for the failure to comply with the
Truth in Lending Act, but not for the false advertisement of prices.
◉ A claim representative is handling a claim for an auto dealership
insured under the Auto Dealers Coverage Form (ADCF). Several new
autos and autos left for service by customers were damaged when a
fire started in the service building. The representative has verified
that the loss occurred to the named insured at an insured location
during the policy period; that Sections I and II of the ADCF apply to
the losses and that the autos qualify as covered autos. The next step
that the representative should take in determining whether
coverage applies is to Answer: Review the policy conditions to
determine whether they preclude coverage at the time of loss. (The
next step that the representative should take in determining
whether coverage applies is to review the policy conditions to
determine whether they preclude coverage at the time of loss.
◉ The Motor Carrier Coverage Form (MCCF) covers owners and
lessors of autos hired by the named insured, subject to conditions.
,When the hired auto is a trailer, the owner, or anyone else from
whom the named insured hires or borrows a covered trailer, is an
insured while the trailer is connected to a power unit that is a
covered auto or while the trailer is Answer: Not connected to a
power unit but is being used exclusively in the named insured's
business. (The owner is an insured while the trailer is connected to a
power unit that is a covered auto or while the trailer is not
connected to a power unit but is being used exclusively in the named
insured's business.
◉ Which one of the following would always be excluded under
employers liability insurance? Answer: An employee files a claim for
depression resulting from harassment at work.
◉ Bill's Premium Packing (BPP) operates a fruit and vegetable
canning operation. It purchases its produce from growers in three
states in the Northeast. As a result, its operations are seasonal and
during peak periods it depends on large numbers of casual laborers
who are exempt from coverage under the applicable state workers
compensation laws. Therefore, the company has purchased a
Voluntary Compensation and Employers Liability Endorsement for
its Workers Compensation and Employers Liability Insurance
(WC&EL) Policy. When a casual laborer is badly injured on the job,
the worker launches a lawsuit against BPP, alleging negligence.
Which one of the following best describes how BPP's WC&EL insurer
would respond? Answer: The insurer would defend the insured
against the employee's suit and pay any settlement awarded, subject
to the stipulated limits of liability.
, ◉ Some organizations such as school boards, municipalities, and
non-profit organizations carry a special type of directors and
officers (D&O) liability policy. What is the name given to this type of
D&O coverage? Answer: Occupation-specific
◉ An unendorsed securities brokers professional liability policy will
insure the firm and registered representatives for claims alleging
negligence committed on the firm's behalf in which one of the
following capacities? Answer: Selling life insurance products (An
unendorsed securities brokers professional liability policy will
insure the firm and registered representatives for claims alleging
negligence committed on the firm's behalf while selling life
insurance products.
◉ Concerning environmental liability, any organization can cause an
intentional tort by Answer: Making loud noises. (Concerning
environmental liability, any organization can cause an intentional
tort by making loud noises.
◉ A vessel valued at $40 million is carrying cargo for two customers.
One customer's cargo consists of $6 million of handheld electronic
games. The other customer's cargo consists of $4 million of designer
shoes. During a storm, the crew throws overboard $1.5 million in
cargo to prevent the vessel from sinking. What is the contribution to
general average for the customer who owns the shoes? Answer:
$120,000 (The contribution to general average for the customer who
QUESTION COMMERCIAL LIABILITY MODULE
SOLVED ITEMS AND RESPONSE KEY
◉ An endorsement that eliminates the liquor liability exclusion and
provides coverage for organizations in the business of selling or
serving alcoholic beverages is an example of which type of
endorsement? Answer: Miscellaneous coverage amendment
endorsement (
◉ Which one of the following is true regarding the Commercial
General Liability's (CGL's) unmanned aircraft coverage
endorsements? Answer: Premium for these endorsements is on a
"refer to company" basis.
◉ Jill, who is the named insured on an unendorsed Business Auto
Coverage Form (BACF), hired Jimmy to assist in her business. Jill
asked Jimmy to purchase some business supplies. While he was
driving his own car, Jimmy's vehicle was hit by an uninsured
motorist. Jimmy's medical expenses were $2,000, and the damage to
his car was $4,000. Which one of the following correctly indicates
how much Jill's auto insurer will pay Jimmy for his losses? Answer:
$0 (An employee of the insured is not an insured if the covered auto
is owned by the employee.
,◉ An auto dealer advertises that a new vehicle is available for
$18,000 with no down payment and an interest rate of 1 percent. A
customer attempts to purchase the vehicle, but is told that the price
is now $21,000 and the interest rate is 9 percent. The customer files
suit, alleging false advertisement of prices and failure to comply with
the Truth in Lending Act. Which one of the following correctly
describes coverage for this claim under the Auto Dealers Coverage
Form? Answer: There will be coverage for the failure to comply with
the Truth in Lending Act, but not for the false advertisement of
prices. (There will be coverage for the failure to comply with the
Truth in Lending Act, but not for the false advertisement of prices.
◉ A claim representative is handling a claim for an auto dealership
insured under the Auto Dealers Coverage Form (ADCF). Several new
autos and autos left for service by customers were damaged when a
fire started in the service building. The representative has verified
that the loss occurred to the named insured at an insured location
during the policy period; that Sections I and II of the ADCF apply to
the losses and that the autos qualify as covered autos. The next step
that the representative should take in determining whether
coverage applies is to Answer: Review the policy conditions to
determine whether they preclude coverage at the time of loss. (The
next step that the representative should take in determining
whether coverage applies is to review the policy conditions to
determine whether they preclude coverage at the time of loss.
◉ The Motor Carrier Coverage Form (MCCF) covers owners and
lessors of autos hired by the named insured, subject to conditions.
,When the hired auto is a trailer, the owner, or anyone else from
whom the named insured hires or borrows a covered trailer, is an
insured while the trailer is connected to a power unit that is a
covered auto or while the trailer is Answer: Not connected to a
power unit but is being used exclusively in the named insured's
business. (The owner is an insured while the trailer is connected to a
power unit that is a covered auto or while the trailer is not
connected to a power unit but is being used exclusively in the named
insured's business.
◉ Which one of the following would always be excluded under
employers liability insurance? Answer: An employee files a claim for
depression resulting from harassment at work.
◉ Bill's Premium Packing (BPP) operates a fruit and vegetable
canning operation. It purchases its produce from growers in three
states in the Northeast. As a result, its operations are seasonal and
during peak periods it depends on large numbers of casual laborers
who are exempt from coverage under the applicable state workers
compensation laws. Therefore, the company has purchased a
Voluntary Compensation and Employers Liability Endorsement for
its Workers Compensation and Employers Liability Insurance
(WC&EL) Policy. When a casual laborer is badly injured on the job,
the worker launches a lawsuit against BPP, alleging negligence.
Which one of the following best describes how BPP's WC&EL insurer
would respond? Answer: The insurer would defend the insured
against the employee's suit and pay any settlement awarded, subject
to the stipulated limits of liability.
, ◉ Some organizations such as school boards, municipalities, and
non-profit organizations carry a special type of directors and
officers (D&O) liability policy. What is the name given to this type of
D&O coverage? Answer: Occupation-specific
◉ An unendorsed securities brokers professional liability policy will
insure the firm and registered representatives for claims alleging
negligence committed on the firm's behalf in which one of the
following capacities? Answer: Selling life insurance products (An
unendorsed securities brokers professional liability policy will
insure the firm and registered representatives for claims alleging
negligence committed on the firm's behalf while selling life
insurance products.
◉ Concerning environmental liability, any organization can cause an
intentional tort by Answer: Making loud noises. (Concerning
environmental liability, any organization can cause an intentional
tort by making loud noises.
◉ A vessel valued at $40 million is carrying cargo for two customers.
One customer's cargo consists of $6 million of handheld electronic
games. The other customer's cargo consists of $4 million of designer
shoes. During a storm, the crew throws overboard $1.5 million in
cargo to prevent the vessel from sinking. What is the contribution to
general average for the customer who owns the shoes? Answer:
$120,000 (The contribution to general average for the customer who
