RMIN 5540 final questions and answers
graded A+ updated
issues in use of liability insurance - correct answer ✔✔difficulty in estimating max possible loss
for liability loss exposures, layering of liability coverages, effect of aggregate limits; these are
why there is s need for excess/umbrella
underlying insurance - correct answer ✔✔Insurance that applies below an excess or umbrella
liability policy.
excess liability policy - correct answer ✔✔designed to provide excess limits of coverages above
the limits of the underlying coverage; offers no broader protection than what underlying covg
does
umbrella liability policy - correct answer ✔✔type of excess policy that not only provides
additional limits, but also provides covg not available in the underlying covgs; subject to
insured's assumption of self insured retention or retained limit; most provide defense covg
forms of excess liability - correct answer ✔✔follows form policy--> subject to the same
provisions as the underlying policy; self contained --> subject to its own provisions only; or a
combo of the 2
retention is used for primary insurance - correct answer ✔✔specific excess and aggregate
excess are often used when...
following form - correct answer ✔✔excess liability policy that will only pay above the limits of
the underlying insurance if the loss is covered by the underlying insurance; can state that it
follows whatever the underlying says, or the terms are different but don't conflict with
underlying
,self contained - correct answer ✔✔excess liability policy; does not depend on primary layer
with scope of covg--> gaps can occur; applies to loss that exceeds limits of the underlying policy
only if the loss is also covered under this layer's terms
combination excess liability - correct answer ✔✔aspects of following form & self contained;
incorporates provisions from the underlying policy and modifies these provisions w/ addtl
conditions or exclusions; may not always "drop down" aka provide covg if claim is excluded by
primary
true umbrella policy provision - correct answer ✔✔states that the policy applies over a self
insured retention, if the underlying layer does not cover a loss that is covered by the umbrella
self insured workers compensation plans - correct answer ✔✔specific excess liability insurance
and aggregate excess liability insurance are commonly used in connection with...
specific excess liability insurance - correct answer ✔✔requires the insured to retain a stipulated
amount of loss from the first dollar for all losses resulting from each single occurrence; insurer
then pays losses from that occurrence in excess of the retention, up to the policy limit
aggregate excess liability - correct answer ✔✔aka stop loss excess liability; requires the insured
to retain a specified amount of loss from the first dollar during a specified period of time,
usually 1 year; insurer then pays up to the policy limit, all losses for that period that exceed the
retention
drop down coverage - correct answer ✔✔in umbrella liability policies; means covg will take the
place of underlying insurance when underlying aggregate limits are reduced and exhausted &
will also cover some claims that are not covered by underlying liability policies, subject to self
insured retention
, first dollar defense coverage - correct answer ✔✔provision that states self insured retention
does not apply to defense costs
aggregate umbrella limits - correct answer ✔✔can act like an agg. limit for underlying; can apply
to all claims under the umbrella or only covgs that are subject to agg limit in underlying
occurrence covg trigger - correct answer ✔✔umbrella policies usually have an...
maintenance of underlying insurance condition - correct answer ✔✔umbrella liability policy
condition that obligates the insured to maintain all required underlying coverages in full force
and effect during the policy period; if underlying is not maintained, umbrella will not drop down
for claims that would have been covered by the underlying--only covers those claims that
underlying wouldn't have covered
working layer - correct answer ✔✔many orgs only have one of these; typically an umbrella
liability policy above its primary cgl, commercial auto, and employer's liability covg; called this
b/c most often called on to pay claims
buffer layer - correct answer ✔✔excess insurance; b/t primary layer and umbrella policy; used
when the umbrella insurer will not provide covg unless insured has underlying covg limits higher
than the primary insurer is willing to provide
directors - correct answer ✔✔run corporations; may be major stockholders & execs of the
corp., but they usually include outside business or social leaders who often have little financial
stake; elected by stockholders; establishes corp policy, makes major biz & financial decisions,
appoints corp's exec officers
fiduciary duty - correct answer ✔✔includes duty of care, duty of loyalty, duty of disclosure, duty
of obedience
graded A+ updated
issues in use of liability insurance - correct answer ✔✔difficulty in estimating max possible loss
for liability loss exposures, layering of liability coverages, effect of aggregate limits; these are
why there is s need for excess/umbrella
underlying insurance - correct answer ✔✔Insurance that applies below an excess or umbrella
liability policy.
excess liability policy - correct answer ✔✔designed to provide excess limits of coverages above
the limits of the underlying coverage; offers no broader protection than what underlying covg
does
umbrella liability policy - correct answer ✔✔type of excess policy that not only provides
additional limits, but also provides covg not available in the underlying covgs; subject to
insured's assumption of self insured retention or retained limit; most provide defense covg
forms of excess liability - correct answer ✔✔follows form policy--> subject to the same
provisions as the underlying policy; self contained --> subject to its own provisions only; or a
combo of the 2
retention is used for primary insurance - correct answer ✔✔specific excess and aggregate
excess are often used when...
following form - correct answer ✔✔excess liability policy that will only pay above the limits of
the underlying insurance if the loss is covered by the underlying insurance; can state that it
follows whatever the underlying says, or the terms are different but don't conflict with
underlying
,self contained - correct answer ✔✔excess liability policy; does not depend on primary layer
with scope of covg--> gaps can occur; applies to loss that exceeds limits of the underlying policy
only if the loss is also covered under this layer's terms
combination excess liability - correct answer ✔✔aspects of following form & self contained;
incorporates provisions from the underlying policy and modifies these provisions w/ addtl
conditions or exclusions; may not always "drop down" aka provide covg if claim is excluded by
primary
true umbrella policy provision - correct answer ✔✔states that the policy applies over a self
insured retention, if the underlying layer does not cover a loss that is covered by the umbrella
self insured workers compensation plans - correct answer ✔✔specific excess liability insurance
and aggregate excess liability insurance are commonly used in connection with...
specific excess liability insurance - correct answer ✔✔requires the insured to retain a stipulated
amount of loss from the first dollar for all losses resulting from each single occurrence; insurer
then pays losses from that occurrence in excess of the retention, up to the policy limit
aggregate excess liability - correct answer ✔✔aka stop loss excess liability; requires the insured
to retain a specified amount of loss from the first dollar during a specified period of time,
usually 1 year; insurer then pays up to the policy limit, all losses for that period that exceed the
retention
drop down coverage - correct answer ✔✔in umbrella liability policies; means covg will take the
place of underlying insurance when underlying aggregate limits are reduced and exhausted &
will also cover some claims that are not covered by underlying liability policies, subject to self
insured retention
, first dollar defense coverage - correct answer ✔✔provision that states self insured retention
does not apply to defense costs
aggregate umbrella limits - correct answer ✔✔can act like an agg. limit for underlying; can apply
to all claims under the umbrella or only covgs that are subject to agg limit in underlying
occurrence covg trigger - correct answer ✔✔umbrella policies usually have an...
maintenance of underlying insurance condition - correct answer ✔✔umbrella liability policy
condition that obligates the insured to maintain all required underlying coverages in full force
and effect during the policy period; if underlying is not maintained, umbrella will not drop down
for claims that would have been covered by the underlying--only covers those claims that
underlying wouldn't have covered
working layer - correct answer ✔✔many orgs only have one of these; typically an umbrella
liability policy above its primary cgl, commercial auto, and employer's liability covg; called this
b/c most often called on to pay claims
buffer layer - correct answer ✔✔excess insurance; b/t primary layer and umbrella policy; used
when the umbrella insurer will not provide covg unless insured has underlying covg limits higher
than the primary insurer is willing to provide
directors - correct answer ✔✔run corporations; may be major stockholders & execs of the
corp., but they usually include outside business or social leaders who often have little financial
stake; elected by stockholders; establishes corp policy, makes major biz & financial decisions,
appoints corp's exec officers
fiduciary duty - correct answer ✔✔includes duty of care, duty of loyalty, duty of disclosure, duty
of obedience
