CPCU 552 CH. #2, CPCU 552 CH. #3 EXAM QUESTIONS
AND ANSWERS WITH COMPLETE SOLUTIONS GRADED
A++ LATEST UPDATE
The term "you" is used throughout the Commercial General Liability Coverage
Form. "You" is defined to include:
A) The named insured shown in the declarations.
B) The named insured shown in the declarations and any employees of the
named insured.
C) The named insured and any officers or directors of the named insured's
organization.
D) All persons or entities who have any type of liability protection under the
policy.
A
Smart Endeavors, a retail clothing store, hired ABC Contractors to install a new
air conditioning system in one of its stores. ABC misrouted some wires during
the installation process, which caused the wires to overheat and caused a fire.
The air conditioning unit had to be rewired, which cost $1,000. Smart Endeavors'
building sustained $30,000 worth of damage and $40,000 worth of inventory was
damaged by smoke. Smart Endeavors was closed for two weeks and lost $10,000
,in profits during that period. ABC has liability insurance under a standard
Commercial General Liability (CGL) Coverage Form with $1,000,000 per
occurrence limits. Which one of the following statements concerning coverage
for damages under Coverage A of the CGL is most accurate?
A) ABC will pay $81,000 for all of the physical damage to the building and
inventory, the air conditioning rewiring costs, and Smart Endeavors' lost profits.
B) ABC will pay $30,000 for the damage to the building as well as $1,000 for the
air conditioner rewiring and $10,000 for the lost profits, but will not pay for the
smoke damage to the inventory because smoke pollution is excluded by the
Pollution Liability Exclusion.
C) ABC will pay $80,000 for the fire damage to the building and inventory as well
as the lost profits, but the CGL excludes the cost of work that was incorrectly
performed, which means the $1,000 rewiring costs are excluded.
D) ABC will pay $71,000 for the damage to the physical property, but Coverage A
of the CGL excludes coverage for intangible property such as lost profits.
C
EXPLANATION: ABC will pay $80,000 for the fire damage to the building and inventory
as well as the lost profits, but the CGL excludes the cost of work that was incorrectly
performed, so the $1,000 rewiring costs are excluded.
Which one of the following statements concerning the Damage to Your Product
and Damage to Your Work exclusions in Coverage A of the Commercial General
,Liability Coverage Form is most correct?
A) These exclusions only apply to products or work that are in the care, custody
and control of the named insured at the premises location listed in the
declarations page.
B) There are two exceptions to this exclusion which are meant to provide limited
property damage coverage for minor claims that would fall below the deductible
of the named insured's property insurance policy.
C) The exclusions only apply to work or products that were damaged by
subcontractors or outside parties who are expected to have their own insurance
coverage, but the exclusions do not apply to damage done by the named insured.
D) These exclusions only apply to damage to the work or product itself, but do
not apply to any subsequent damage or injury that was caused by the product.
D
A plumbing contractor has a commercial general liability (CGL) policy that
contains no endorsements. Which one of the following claims would be covered
by the CGL?
A) An improperly installed pipe was damaged when tested for leaks by an
employee of the plumbing contractor.
B) An employee of the plumbing contractor damaged a building while installing a
waterline.
C) An employee of the plumbing contractor was injured while installing a hot
, water heater.
D) An employee of the plumbing contractor damaged a building with the
contractor's auto
B
For which one of these would the Damage to Your Product and Damage to Your
Work exclusion eliminate coverage?
A) A product that the insured incorrectly designed
B) Property damage caused by an insured's defectively produced product
C) Property damage caused by work performed on behalf of the insured by a
subcontractor
D) Property damage caused by an insured's incorrectly designed product
A
Bodily injury was caused to customers by fumes that escaped from heating
equipment belonging to the Reynolds Corporation. Which one of the following
statements describes the reason there would or would not be liability coverage
for these injuries under the corporation's unendorsed Commercial General
Liability Coverage Form?
A) Coverage would be excluded because of the pollution exclusion.
B) There would be coverage because the pollution exclusion has an exception
that applies to bodily injury caused by fumes from heating equipment.
C) Coverage would be excluded because of the impaired property exclusion.
AND ANSWERS WITH COMPLETE SOLUTIONS GRADED
A++ LATEST UPDATE
The term "you" is used throughout the Commercial General Liability Coverage
Form. "You" is defined to include:
A) The named insured shown in the declarations.
B) The named insured shown in the declarations and any employees of the
named insured.
C) The named insured and any officers or directors of the named insured's
organization.
D) All persons or entities who have any type of liability protection under the
policy.
A
Smart Endeavors, a retail clothing store, hired ABC Contractors to install a new
air conditioning system in one of its stores. ABC misrouted some wires during
the installation process, which caused the wires to overheat and caused a fire.
The air conditioning unit had to be rewired, which cost $1,000. Smart Endeavors'
building sustained $30,000 worth of damage and $40,000 worth of inventory was
damaged by smoke. Smart Endeavors was closed for two weeks and lost $10,000
,in profits during that period. ABC has liability insurance under a standard
Commercial General Liability (CGL) Coverage Form with $1,000,000 per
occurrence limits. Which one of the following statements concerning coverage
for damages under Coverage A of the CGL is most accurate?
A) ABC will pay $81,000 for all of the physical damage to the building and
inventory, the air conditioning rewiring costs, and Smart Endeavors' lost profits.
B) ABC will pay $30,000 for the damage to the building as well as $1,000 for the
air conditioner rewiring and $10,000 for the lost profits, but will not pay for the
smoke damage to the inventory because smoke pollution is excluded by the
Pollution Liability Exclusion.
C) ABC will pay $80,000 for the fire damage to the building and inventory as well
as the lost profits, but the CGL excludes the cost of work that was incorrectly
performed, which means the $1,000 rewiring costs are excluded.
D) ABC will pay $71,000 for the damage to the physical property, but Coverage A
of the CGL excludes coverage for intangible property such as lost profits.
C
EXPLANATION: ABC will pay $80,000 for the fire damage to the building and inventory
as well as the lost profits, but the CGL excludes the cost of work that was incorrectly
performed, so the $1,000 rewiring costs are excluded.
Which one of the following statements concerning the Damage to Your Product
and Damage to Your Work exclusions in Coverage A of the Commercial General
,Liability Coverage Form is most correct?
A) These exclusions only apply to products or work that are in the care, custody
and control of the named insured at the premises location listed in the
declarations page.
B) There are two exceptions to this exclusion which are meant to provide limited
property damage coverage for minor claims that would fall below the deductible
of the named insured's property insurance policy.
C) The exclusions only apply to work or products that were damaged by
subcontractors or outside parties who are expected to have their own insurance
coverage, but the exclusions do not apply to damage done by the named insured.
D) These exclusions only apply to damage to the work or product itself, but do
not apply to any subsequent damage or injury that was caused by the product.
D
A plumbing contractor has a commercial general liability (CGL) policy that
contains no endorsements. Which one of the following claims would be covered
by the CGL?
A) An improperly installed pipe was damaged when tested for leaks by an
employee of the plumbing contractor.
B) An employee of the plumbing contractor damaged a building while installing a
waterline.
C) An employee of the plumbing contractor was injured while installing a hot
, water heater.
D) An employee of the plumbing contractor damaged a building with the
contractor's auto
B
For which one of these would the Damage to Your Product and Damage to Your
Work exclusion eliminate coverage?
A) A product that the insured incorrectly designed
B) Property damage caused by an insured's defectively produced product
C) Property damage caused by work performed on behalf of the insured by a
subcontractor
D) Property damage caused by an insured's incorrectly designed product
A
Bodily injury was caused to customers by fumes that escaped from heating
equipment belonging to the Reynolds Corporation. Which one of the following
statements describes the reason there would or would not be liability coverage
for these injuries under the corporation's unendorsed Commercial General
Liability Coverage Form?
A) Coverage would be excluded because of the pollution exclusion.
B) There would be coverage because the pollution exclusion has an exception
that applies to bodily injury caused by fumes from heating equipment.
C) Coverage would be excluded because of the impaired property exclusion.
