CIC- Commercial Multiline EXAM NEWEST EXAM
100% COMPLETE QUESTIONS AND CORRECT
DETAILED ANSWERS (VERIFIED ANSWERS) |ALREADY
GRADED A+ | CERTIFIED
3 purposes of excess liability and commercial umbrella policies - Answer-1.) provide
additional limits that are excess over those provided in the underlying policies of
insurance
2.)respond to losses when the aggregate limit of an underlying policy is reduced or
exhausted
3) provide broader coverage than the underlying policies (only if it is a commercial
umbrella policy!)
/.3 types of excess liability policies - Answer-1. Follow form excess liability policy
2. Stand alone excess liability policy
3. Commercial umbrella liability policy
/.follow form excess liability policy - Answer--excess liability policies that mirror the
terms and
conditions of the underlying coverage form or forms
-provide additional limits excess over one or more underlying policies
-they do not provide broader coverage
-could provide less coverage (i.e. commercial auto and pollution exclusion example)
/.stand alone excess liability policy - Answer--excess liability policies that have their own
insuring agreements and terms and conditions which are separate from those of the
underlying policies
-coverage could be broader, narrower, or similar to the underlying
broader- could be worldwide
narrower- absolute pollution exclusion
/.commercial umbrella liability policy - Answer--excess liability policy that has its own
insuring agreements/terms/conditions that will vary from those in the underlying policies
-coverage will always be equal to or greater than what's "underneath it"
-will never be more restrictive
-only excess liability policy that can drop down to become primary coverage when there
is no coverage on the underlying (subject to SIR)
/.******LIKELY NOT ON EXAM***Provide a few examples of when coverage on CUMB
is broader - Answer--Non-owned watercraft: Coverage in the commercial
umbrella may be expanded to include vessels less than 50 or 55 feet.
,-Coverage territory: The commercial umbrella may provide coverage worldwide or
anywhere in the universe
-Expected or intended injury exclusion: The reasonable force
exception may be expanded to apply to property damage losses and/or may apply to
auto losses
-Definition of bodily injury: Some commercial umbrellas include mental anguish and
mental injury.
-Non-owned aircraft: Coverage may be expanded to include
non-owned aircraft chartered with a crew.
/.explain the term self insured retention (SIR) - Answer--a listed dollar amount on the
CUMB dec page
-the amount the named insured is responsible for when the commercial umbrella
provides coverage that is broader than the underlying policies and responds as primary
coverage
/.what does concurrent dates mean - Answer--when policies have same effective dates
and expiration dates
/.what does nonconcurrent dates mean - Answer--when policies have different effective
dates and expiration dates
-may create a potential gap in coverage
/.explain the issues caused by nonconcurrent policy dates - Answer--insured could have
to pay some portion of the claim before the excess/umb kicks in
-unimpaired aggregate issue: some policy language requires the limits of the underlying
policies to be unimpaired as of the effective date of the excess liability policy (requires
full limits be available at the inception of the excess liability policy)
/.how to solve non-concurrency issues - Answer-1) underlying policies can be cancelled
and rewritten so all policies have concurrent dates
2) there are non-concurrency endorsements that can be added
3) non-concurrency language can be added that would remove concurrency
requirements
3a.) excess liability can be written to short term expire with the underlying
/.define dual insuring agreements - Answer--coverage is divided into two parts with
separate (two) insuring agreements and exclusions
-bifurcated forms
i.e in ISO #1 BI/PD #2 personal injury and advertising injury
-each
/.bailment - Answer--a relationship where one party (the bailee) accepts property of
another (the bailor) for a particular purpose
-expectation that the property will be returned by the bailee to the bailor in the same or
better condition
,-creates an obligation for the bailee to act in good faith to ensure the "contract" terms
are met
/.gratuitous bailment for the benefit of the bailor - Answer--bailment where.... the bailee
owes the bailor a low duty of care
-no true benefit to the bailee
EX: a restaurant coat check service
/.gratuitous bailment for the benefit of the bailee - Answer--bailment where... the bailee
owes the bailor a much higher duty of care
EX: bailee borrows a piece of equipment from neighbor (bailor), must exercise great
care
/.bailment for mutual benefit of the bailor and bailee - Answer--bailment where.... the
bailee exercises a reasonably duty of care
-this duty of care can be clarified, expanded, or limited in an oral or written contract
EX: . An appliance repair shop (the bailee) gets paid, and the owner of the appliance
(the bailor) gets back a working piece of equipment
/.standard of care in a bailment relationship - Answer-low duty of care (coat check at a
restaurant)
higher duty of care (borrow a piece of equipment from a neighbor)
reasonable duty of care (an appliance repair shop working on a customer's equipment)
/.two common basis bailee is written on - Answer-1.) legal liability basis
2.) direct damage basis
/.legal liability basis (bailee) - Answer--coverage applies only if the bailee is legally liable
for the damage
-pays for damages to the property and any charges the bailee earned from the work
performed
example: tv repair shop breaks TV that was dropped off. legal liability basis means we
pay for damages to the TV, and the time/money you spent doing the repairs
/.direct damage basis (bailee) - Answer--coverage applies no matter if the bailee is
legally liable for the loss/damage
-typically pays for damages to the property and any charges the bailee earned from the
work performed
-usually purchased to maintain customer goodwill and avoid disputes over the bailee is
legally liable
/.Property Not Coverage (Bailee Coverage) - Answer-• Aircraft/watercraft
• Contraband or property in the course of illegal transportation or trade
• Furs/fur-trimmed garments
• Jewelry, precious or semi-precious stones, and precious metals
, • Money and securities
• Property accepted by a processor without a charge for services
• Self-propelled vehicles designed for highway use
• Waterborne property except while in transit in the custody of a carrier for hire
/.Property Covered
Miscellaneous Bailee - Processor Floater (IM 7501 04 04) - Answer--covers property in
the insured's care, custody, AND control for processing
-"and" means that all three elements are necessary
-Coverage territory: United States, its territories and possessions, Canada, and Puerto
Rico
/.4 supplemental coverages of bailee coverage (miscellaneous bailee processor floater)
- Answer-1.)Property In Storage
1a) after processing, must be at described location, and receipt
2.) Off-Site Property
2a) $5K in coverage, property temporarily off site, that a premise that isn't described
3.) Transit.
3a) $5K while property is in transit
4.)Pollutant Cleanup And Removal
4a) $10K, expenses to extract pollutants
/.Debris Removal: miscellaneous bailee processor floater - Answer-pay to remove the
debris of covered property caused by a covered peril
sublimit- 25% of the amount paid for direct physical loss +$5000 in additional to use
/.Excluded Causes of Loss in Miscellaneous Bailee - Processor Floater (IM 7501 04 04)
- Answer--Civil authority (RD)
-Earth movement or volcanic eruption (RD)
-Flood (RD)
-Nuclear Hazard (RD)
-Sewer Backup and Water Below the Surface (RD)
-War and military action
-Contamination or deterioration
100% COMPLETE QUESTIONS AND CORRECT
DETAILED ANSWERS (VERIFIED ANSWERS) |ALREADY
GRADED A+ | CERTIFIED
3 purposes of excess liability and commercial umbrella policies - Answer-1.) provide
additional limits that are excess over those provided in the underlying policies of
insurance
2.)respond to losses when the aggregate limit of an underlying policy is reduced or
exhausted
3) provide broader coverage than the underlying policies (only if it is a commercial
umbrella policy!)
/.3 types of excess liability policies - Answer-1. Follow form excess liability policy
2. Stand alone excess liability policy
3. Commercial umbrella liability policy
/.follow form excess liability policy - Answer--excess liability policies that mirror the
terms and
conditions of the underlying coverage form or forms
-provide additional limits excess over one or more underlying policies
-they do not provide broader coverage
-could provide less coverage (i.e. commercial auto and pollution exclusion example)
/.stand alone excess liability policy - Answer--excess liability policies that have their own
insuring agreements and terms and conditions which are separate from those of the
underlying policies
-coverage could be broader, narrower, or similar to the underlying
broader- could be worldwide
narrower- absolute pollution exclusion
/.commercial umbrella liability policy - Answer--excess liability policy that has its own
insuring agreements/terms/conditions that will vary from those in the underlying policies
-coverage will always be equal to or greater than what's "underneath it"
-will never be more restrictive
-only excess liability policy that can drop down to become primary coverage when there
is no coverage on the underlying (subject to SIR)
/.******LIKELY NOT ON EXAM***Provide a few examples of when coverage on CUMB
is broader - Answer--Non-owned watercraft: Coverage in the commercial
umbrella may be expanded to include vessels less than 50 or 55 feet.
,-Coverage territory: The commercial umbrella may provide coverage worldwide or
anywhere in the universe
-Expected or intended injury exclusion: The reasonable force
exception may be expanded to apply to property damage losses and/or may apply to
auto losses
-Definition of bodily injury: Some commercial umbrellas include mental anguish and
mental injury.
-Non-owned aircraft: Coverage may be expanded to include
non-owned aircraft chartered with a crew.
/.explain the term self insured retention (SIR) - Answer--a listed dollar amount on the
CUMB dec page
-the amount the named insured is responsible for when the commercial umbrella
provides coverage that is broader than the underlying policies and responds as primary
coverage
/.what does concurrent dates mean - Answer--when policies have same effective dates
and expiration dates
/.what does nonconcurrent dates mean - Answer--when policies have different effective
dates and expiration dates
-may create a potential gap in coverage
/.explain the issues caused by nonconcurrent policy dates - Answer--insured could have
to pay some portion of the claim before the excess/umb kicks in
-unimpaired aggregate issue: some policy language requires the limits of the underlying
policies to be unimpaired as of the effective date of the excess liability policy (requires
full limits be available at the inception of the excess liability policy)
/.how to solve non-concurrency issues - Answer-1) underlying policies can be cancelled
and rewritten so all policies have concurrent dates
2) there are non-concurrency endorsements that can be added
3) non-concurrency language can be added that would remove concurrency
requirements
3a.) excess liability can be written to short term expire with the underlying
/.define dual insuring agreements - Answer--coverage is divided into two parts with
separate (two) insuring agreements and exclusions
-bifurcated forms
i.e in ISO #1 BI/PD #2 personal injury and advertising injury
-each
/.bailment - Answer--a relationship where one party (the bailee) accepts property of
another (the bailor) for a particular purpose
-expectation that the property will be returned by the bailee to the bailor in the same or
better condition
,-creates an obligation for the bailee to act in good faith to ensure the "contract" terms
are met
/.gratuitous bailment for the benefit of the bailor - Answer--bailment where.... the bailee
owes the bailor a low duty of care
-no true benefit to the bailee
EX: a restaurant coat check service
/.gratuitous bailment for the benefit of the bailee - Answer--bailment where... the bailee
owes the bailor a much higher duty of care
EX: bailee borrows a piece of equipment from neighbor (bailor), must exercise great
care
/.bailment for mutual benefit of the bailor and bailee - Answer--bailment where.... the
bailee exercises a reasonably duty of care
-this duty of care can be clarified, expanded, or limited in an oral or written contract
EX: . An appliance repair shop (the bailee) gets paid, and the owner of the appliance
(the bailor) gets back a working piece of equipment
/.standard of care in a bailment relationship - Answer-low duty of care (coat check at a
restaurant)
higher duty of care (borrow a piece of equipment from a neighbor)
reasonable duty of care (an appliance repair shop working on a customer's equipment)
/.two common basis bailee is written on - Answer-1.) legal liability basis
2.) direct damage basis
/.legal liability basis (bailee) - Answer--coverage applies only if the bailee is legally liable
for the damage
-pays for damages to the property and any charges the bailee earned from the work
performed
example: tv repair shop breaks TV that was dropped off. legal liability basis means we
pay for damages to the TV, and the time/money you spent doing the repairs
/.direct damage basis (bailee) - Answer--coverage applies no matter if the bailee is
legally liable for the loss/damage
-typically pays for damages to the property and any charges the bailee earned from the
work performed
-usually purchased to maintain customer goodwill and avoid disputes over the bailee is
legally liable
/.Property Not Coverage (Bailee Coverage) - Answer-• Aircraft/watercraft
• Contraband or property in the course of illegal transportation or trade
• Furs/fur-trimmed garments
• Jewelry, precious or semi-precious stones, and precious metals
, • Money and securities
• Property accepted by a processor without a charge for services
• Self-propelled vehicles designed for highway use
• Waterborne property except while in transit in the custody of a carrier for hire
/.Property Covered
Miscellaneous Bailee - Processor Floater (IM 7501 04 04) - Answer--covers property in
the insured's care, custody, AND control for processing
-"and" means that all three elements are necessary
-Coverage territory: United States, its territories and possessions, Canada, and Puerto
Rico
/.4 supplemental coverages of bailee coverage (miscellaneous bailee processor floater)
- Answer-1.)Property In Storage
1a) after processing, must be at described location, and receipt
2.) Off-Site Property
2a) $5K in coverage, property temporarily off site, that a premise that isn't described
3.) Transit.
3a) $5K while property is in transit
4.)Pollutant Cleanup And Removal
4a) $10K, expenses to extract pollutants
/.Debris Removal: miscellaneous bailee processor floater - Answer-pay to remove the
debris of covered property caused by a covered peril
sublimit- 25% of the amount paid for direct physical loss +$5000 in additional to use
/.Excluded Causes of Loss in Miscellaneous Bailee - Processor Floater (IM 7501 04 04)
- Answer--Civil authority (RD)
-Earth movement or volcanic eruption (RD)
-Flood (RD)
-Nuclear Hazard (RD)
-Sewer Backup and Water Below the Surface (RD)
-War and military action
-Contamination or deterioration
