CAS1501 Assignment TEST EXAM WITH
ACTUAL QUESTION AND CORRECT
ANSWERS TOP RANKED A+.
excess liability policy - ANSWER-a policy that covers liability claims in excess of the limits on an
underlying policy or a stated retention amount. may be a "following form" subject to the same terms as
the underlying policy, a self-contained policy subject to its own terms only, a combination of the two.
umbrella liability policy - ANSWER-a liability policy that provides excess coverage above underlying
policies and may also provide coverage not available in the underlying policies, subject to a self-insured
retention. It almost always provide excess coverage over several primary policies (eg CGL auto liability
and employers liability). It provides additional limits above the each occurrence limits of the insured's
primary policies and takes the place of the primary insurance when primary aggregate limits are reduced
or exhausted. It may also cover some claims that are not covered by the insured's primary policies.
When they were first introduced, the distinguishing feature of these policies was broader coverage, in at
least some respects, than that of the underlying policies. More recently, there has been a reduction in
the scope of coverage so that most are not much broader than the primary policies and may even
contain more restrictive exclusions than those found in the primary policies. contain drop down
coverage, required underlying coverages, aggregate limits, insuring agreement, exclusions, and
conditions
drop down coverage - ANSWER-provided by many umbrella liability policies for (1) claims that are not
covered by an underlying policy because the underlying policy's aggregate limits have been depleted and
(2) claims for which the underlying policies do not provide any coverage, regardless of aggregate limits.
When a claim covered by the umbrella policy is not covered at all by any primary policy, the WHAT is
usually subject to a self-insured retention (SIR) (an amount that is deducted from claims that are payable
under an umbrella liability policy and that are not covered at all by any primary policy)
required underlying coverages - ANSWER-Each insurer writing umbrella liability policies has its own
requirements for the types and amounts of WHAT that the insured must have.
,aggregate limits - ANSWER-Almost all umbrella policies contain aWHAT that operate like those in the
primary insurance. In some cases, the WHAT applies to all claims under the umbrella; in other cases, it
applies only to coverages that are subject to an aggregate in the underlying policies.
insuring agreement - ANSWER-Many umbrella liability policies contain one comprehensive WHAT instead
of several specific ones. A common approach is for the insurer to promise to pay the amount in excess of
the underlying limit that the insured becomes legally obligated to pay as damages for bodily injury,
property damage, personal injury, or advertising injury arising out of an occurrence to which the policy
applies, subject to the umbrella policy's limit. Other umbrella policies use two WHAT, often referred to as
"A" and "B." In effect, these policies combine an excess policy and an umbrella policy in one policy.
WHAT A is an excess coverage applying over the underlying policies. WHAT B applies to occurrences for
which coverage is available under the umbrella but not in the underlying policies.
exclusions - ANSWER-Although the WHAT contained in umbrella policies resemble those found in
underlying policies, some variation usually exists. When an umbrella policy provides broadened
coverage, it is typically achieved by using WHAT in the umbrella policy that have narrower application
than the WHAT in the underlying policies. Another possibility is that the umbrella policy contains an
WHAT that does not exist in any of the underlying policies and may provide narrower coverage than the
underlying insurance for the particular exposure.
conditions - ANSWER-The maintenance of underlying insurance WHAT obligates the insured to maintain
all required underlying coverages in full force and effect during the policy period. The insured further
agrees to notify the insurer promptly if any underlying policy is changed or replaced by a policy issued by
another insurer. If the underlying insurance is not maintained, the umbrella policy will apply as though
the underlying insurance had been maintained. That is, a claim that would have been covered by an
underlying policy, had it been kept in force, will only be covered for the amount that exceeds the limit of
the underlying policy. The umbrella policy will not drop down to pay claims that would have been
covered by the required underlying policy. Most umbrella policies provide worldwide coverage, in
contrast with the more limited coverage territories ordinarily found in primary policies. However, some
umbrella policies require that suit be brought in the U.S. or Canada for coverage to apply.
professional liability insurance - ANSWER-insurance that covers persons engaged in various occupations
against liability resulting from their rendering or failing to render professional services. also known as
malpractice or errors and omissions (E&O) liability. "Malpractice" is the term commonly used to describe
liability associated with occupations that involve contact with the human body, ranging from beauticians
to physicians. "Errors and omissions" is the term more likely to be used to describe professional liability
for occupations such as accounting, insurance, law, and engineering.
, management liability insurance - ANSWER-Insurance that covers organizations and in some cases their
directors, officers, and other employees against liability claims for damages resulting from various
wrongful acts that are not covered under other commercial liability policies; common examples are
directors and officers liability insurance, employment practices liability insurance, employee benefits
liability insurance, and fiduciary liability insurance. it is less about individuals in occupations rendering or
failing to render professional services and more about the wrongful acts of an organization or of
individuals in their roles managing the operations of an organization.
does not - ANSWER-The CGL coverage form WHAT include a professional liability exclusion, so many
professional liability exposures would be covered unless an exclusion endorsement is attached to the
policy. Because professional liability requires different underwriting, rating, and claim handling skills,
most insurers do not want to provide it as part of CGL coverage. Accordingly, for several professional
classifications, insurers routinely attach a professional liability exclusion that eliminates coverage for
bodily injury, property damage, or personal and advertising injury resulting from the rendering or failure
to render any professional services listed in the endorsement. it differs from professional liability and
management liability policies by the claims-made trigger, consent to settle, duty to defend and selection
of defense counsel, and deductibles
claims made trigger - ANSWER-Professional and Management Liability Contrasted With CGL: Although
Insurance Services Office, Inc. (ISO), maintains a claims-made CGL form, it is seldom used. Most
businesses are insured under the occurrence version of the CGL. In contrast, most professional liability
policies and management liability policies have a WHAT instead of an occurrence trigger. The reason for
using a claims-made policy is that professional and management liability claims are sometimes not
settled until long after the policy has expired. With a claims-made policy, the policy in effect when the
claim is first made against the insured is the policy that covers the claim. In contrast, a liability policy
with an occurrence trigger can cover a claim that is made many years after the policy has expired, as long
as the injury occurred during the policy period. Insurers prefer to cover claims under current policies
rather than under policies that expired many years previously. Key features of claims-made policies
include retroactive dates (the date on or after which the injury, damage, or other insured event must
occur in order to be covered in a claims-made liability policy, shown in declarations. if it doesn't exist,
policies will cover claims first made during the policy period, regardless of when the injury, damage, or
other insured event occurred) and extended reporting periods (an additional period/"tail" following the
expiration of a claims-made policy, during which the expired policy will cover claims first made for injury
or damage that occurred on or after the policy's retroactive date, if any, and before policy expiration)
Some claims-made professional and management liability policies have a built-in ERP that applies
automatically, for no additional premium. Typically, this basic ERP only lasts for thirty to sixty days. Some
claims-made
consent to settle - ANSWER-Professional and Management Liability Contrasted With CGL: The CGL policy
provides that the insurer may, at its discretion, settle any claim or suit. The insured is seldom involved in
that decision and has no policy-given right to prevent a settlement that the insurer wants to make. In
ACTUAL QUESTION AND CORRECT
ANSWERS TOP RANKED A+.
excess liability policy - ANSWER-a policy that covers liability claims in excess of the limits on an
underlying policy or a stated retention amount. may be a "following form" subject to the same terms as
the underlying policy, a self-contained policy subject to its own terms only, a combination of the two.
umbrella liability policy - ANSWER-a liability policy that provides excess coverage above underlying
policies and may also provide coverage not available in the underlying policies, subject to a self-insured
retention. It almost always provide excess coverage over several primary policies (eg CGL auto liability
and employers liability). It provides additional limits above the each occurrence limits of the insured's
primary policies and takes the place of the primary insurance when primary aggregate limits are reduced
or exhausted. It may also cover some claims that are not covered by the insured's primary policies.
When they were first introduced, the distinguishing feature of these policies was broader coverage, in at
least some respects, than that of the underlying policies. More recently, there has been a reduction in
the scope of coverage so that most are not much broader than the primary policies and may even
contain more restrictive exclusions than those found in the primary policies. contain drop down
coverage, required underlying coverages, aggregate limits, insuring agreement, exclusions, and
conditions
drop down coverage - ANSWER-provided by many umbrella liability policies for (1) claims that are not
covered by an underlying policy because the underlying policy's aggregate limits have been depleted and
(2) claims for which the underlying policies do not provide any coverage, regardless of aggregate limits.
When a claim covered by the umbrella policy is not covered at all by any primary policy, the WHAT is
usually subject to a self-insured retention (SIR) (an amount that is deducted from claims that are payable
under an umbrella liability policy and that are not covered at all by any primary policy)
required underlying coverages - ANSWER-Each insurer writing umbrella liability policies has its own
requirements for the types and amounts of WHAT that the insured must have.
,aggregate limits - ANSWER-Almost all umbrella policies contain aWHAT that operate like those in the
primary insurance. In some cases, the WHAT applies to all claims under the umbrella; in other cases, it
applies only to coverages that are subject to an aggregate in the underlying policies.
insuring agreement - ANSWER-Many umbrella liability policies contain one comprehensive WHAT instead
of several specific ones. A common approach is for the insurer to promise to pay the amount in excess of
the underlying limit that the insured becomes legally obligated to pay as damages for bodily injury,
property damage, personal injury, or advertising injury arising out of an occurrence to which the policy
applies, subject to the umbrella policy's limit. Other umbrella policies use two WHAT, often referred to as
"A" and "B." In effect, these policies combine an excess policy and an umbrella policy in one policy.
WHAT A is an excess coverage applying over the underlying policies. WHAT B applies to occurrences for
which coverage is available under the umbrella but not in the underlying policies.
exclusions - ANSWER-Although the WHAT contained in umbrella policies resemble those found in
underlying policies, some variation usually exists. When an umbrella policy provides broadened
coverage, it is typically achieved by using WHAT in the umbrella policy that have narrower application
than the WHAT in the underlying policies. Another possibility is that the umbrella policy contains an
WHAT that does not exist in any of the underlying policies and may provide narrower coverage than the
underlying insurance for the particular exposure.
conditions - ANSWER-The maintenance of underlying insurance WHAT obligates the insured to maintain
all required underlying coverages in full force and effect during the policy period. The insured further
agrees to notify the insurer promptly if any underlying policy is changed or replaced by a policy issued by
another insurer. If the underlying insurance is not maintained, the umbrella policy will apply as though
the underlying insurance had been maintained. That is, a claim that would have been covered by an
underlying policy, had it been kept in force, will only be covered for the amount that exceeds the limit of
the underlying policy. The umbrella policy will not drop down to pay claims that would have been
covered by the required underlying policy. Most umbrella policies provide worldwide coverage, in
contrast with the more limited coverage territories ordinarily found in primary policies. However, some
umbrella policies require that suit be brought in the U.S. or Canada for coverage to apply.
professional liability insurance - ANSWER-insurance that covers persons engaged in various occupations
against liability resulting from their rendering or failing to render professional services. also known as
malpractice or errors and omissions (E&O) liability. "Malpractice" is the term commonly used to describe
liability associated with occupations that involve contact with the human body, ranging from beauticians
to physicians. "Errors and omissions" is the term more likely to be used to describe professional liability
for occupations such as accounting, insurance, law, and engineering.
, management liability insurance - ANSWER-Insurance that covers organizations and in some cases their
directors, officers, and other employees against liability claims for damages resulting from various
wrongful acts that are not covered under other commercial liability policies; common examples are
directors and officers liability insurance, employment practices liability insurance, employee benefits
liability insurance, and fiduciary liability insurance. it is less about individuals in occupations rendering or
failing to render professional services and more about the wrongful acts of an organization or of
individuals in their roles managing the operations of an organization.
does not - ANSWER-The CGL coverage form WHAT include a professional liability exclusion, so many
professional liability exposures would be covered unless an exclusion endorsement is attached to the
policy. Because professional liability requires different underwriting, rating, and claim handling skills,
most insurers do not want to provide it as part of CGL coverage. Accordingly, for several professional
classifications, insurers routinely attach a professional liability exclusion that eliminates coverage for
bodily injury, property damage, or personal and advertising injury resulting from the rendering or failure
to render any professional services listed in the endorsement. it differs from professional liability and
management liability policies by the claims-made trigger, consent to settle, duty to defend and selection
of defense counsel, and deductibles
claims made trigger - ANSWER-Professional and Management Liability Contrasted With CGL: Although
Insurance Services Office, Inc. (ISO), maintains a claims-made CGL form, it is seldom used. Most
businesses are insured under the occurrence version of the CGL. In contrast, most professional liability
policies and management liability policies have a WHAT instead of an occurrence trigger. The reason for
using a claims-made policy is that professional and management liability claims are sometimes not
settled until long after the policy has expired. With a claims-made policy, the policy in effect when the
claim is first made against the insured is the policy that covers the claim. In contrast, a liability policy
with an occurrence trigger can cover a claim that is made many years after the policy has expired, as long
as the injury occurred during the policy period. Insurers prefer to cover claims under current policies
rather than under policies that expired many years previously. Key features of claims-made policies
include retroactive dates (the date on or after which the injury, damage, or other insured event must
occur in order to be covered in a claims-made liability policy, shown in declarations. if it doesn't exist,
policies will cover claims first made during the policy period, regardless of when the injury, damage, or
other insured event occurred) and extended reporting periods (an additional period/"tail" following the
expiration of a claims-made policy, during which the expired policy will cover claims first made for injury
or damage that occurred on or after the policy's retroactive date, if any, and before policy expiration)
Some claims-made professional and management liability policies have a built-in ERP that applies
automatically, for no additional premium. Typically, this basic ERP only lasts for thirty to sixty days. Some
claims-made
consent to settle - ANSWER-Professional and Management Liability Contrasted With CGL: The CGL policy
provides that the insurer may, at its discretion, settle any claim or suit. The insured is seldom involved in
that decision and has no policy-given right to prevent a settlement that the insurer wants to make. In
