CPCU 552, CP&L FINAL EXAM QUESTIONS +
ANSWERS
Railroad owners commonly require contractors to purchase a Railroad Protective
Liability Coverage Form. Which one of the following statements about this form is true?
- Answer -One of the coverage limits applies to physical damage to property owned by
or leased or entrusted to the railroad
Which one of the following statements about the general aggregate limit under a
Commercial General Liability (CGL) Coverage Form is true? - Answer -It is reduced by
an claims paid for medical payments under Coverage C.
Tom often runs errands for his boss at XYZ Company, using the boss' car. On one of
these errands, Tom is involved in a serious auto accident. He spends a couple of weeks
in the hospital; misses four weeks of work; and must undergo physical therapy. Does
XYZ's Workers Compensation and Employers Liability Insurance (WC&EL) Policy cover
Tom's injuries, lost income, and rehabilitation expenses? - Answer -Yes, the workers
compensation policy would pay all of Tom's expenses, because his injuries arose out of
his employment at XYZ Company.
Aircraft have a significant exposure to catastrophe losses. Of the many reasons for the
catastrophic loss potential of aircraft, the most significant is - Answer -The physical
properties of aircraft.
A security guard is employed at a pier where shipping containers are loaded and
unloaded from barges. There is also a small marina for pleasure craft at the pier. The
security guard trips over equipment left on a dock alongside a pleasure craft and is
injured. The pier only has insurance coverage that provides benefits under the
Longshore and Harbor Workers Compensation Act (LHWCA). Is the guard's injury
covered under LHWCA? - Answer -The injury is covered by LHWCA because the guard
is not covered under a state's workers compensation law.
ABC Plumbing entered into a contract with Bill to install a commercial grade septic
system on his property. The installation of the septic septic was time sensitive because
the rest of Bill's construction project could not go forward until the septic system was in
place. The contract required that the work be done within 30 days of contract signing, or
ABC would have to pay a penalty of $1,000 per day. Which one of the following
categories of damages does the $1,000 per day penalty specified in the contract fall
into? - Answer -Liquidated damages
Many states have funds from which employers may purchase workers compensation
insurance. Such funds may be either - Answer -Competitive or monopolistic
,Section II—Who Is an Insured identifies the persons and organizations that qualify as
insureds under the Commercial General Liability (CGL) Coverage Form. Which one of
the following statements regarding who is considered an insured is most accurate? -
Answer -When a CGL policy covers one or more individuals as named insureds, any
person or organization having proper temporary custody of the named insured's
property following the named insured's death is an insured.
What is the name given to a claim by an employee who says that he or she was fired
because of the filing of a workers compensation claim? - Answer -Retaliation claim
Javier's business auto policy contains a personal injury protection (PIP) endorsement.
He is involved in an auto accident in the covered auto, resulting in $30,000 in property
damage, $5,000 in third-party bodily injury, and $10,000 in personal medical expenses.
If Javier's business auto policy has a general aggregate limit of $100,000 and a PIP limit
of $15,000 and he is at fault for the accident, how much will his insurer pay under the
PIP coverage - Answer -PIP provides first-party benefits for medical expenses, loss of
income, loss of services, and funeral expenses resulting from bodily injury to occupants
of a covered auto because of an auto accident. It pays regardless of which party was at
fault in the accident. Therefore, Javier's insurer will pay him $10,000 in medical
expenses from the PIP coverage. The other damages will be payable under different
coverages available on his policy.
Matthew Jones, the named insured under an unendorsed Business Auto Coverage
Form (BACF), requires his employees to use their own cars for business purposes. One
of Matthew's employees, Paul, causes an accident while driving his own truck for the
business. Matthew's BACF shows symbol 1 for liability coverage. Which one of the
following correctly indicates whether Paul is an insured under the policy for the
accident? - Answer -Paul is not covered because employees are not insured while
using their own autos in the named insured's business.
ABC Corporation is insured under a standard unendorsed workers compensation policy
for only the state of Florida. Three months before the present policy began, ABC
opened a sales office in Georgia due to business volume growing in that state. ABC
failed to report the new location and new state at policy inception. The manager of the
Georgia office fell and was injured and missed work for three weeks after the inception
of the ABC policy. The manager made claim for Georgia benefits. Which one of the
following is true regarding ABC's coverage for Georgia benefits? - Answer -Coverage
for this claim would not be covered by ABC's insurance.
The claims-made trigger in a site specific environmental impairment liability policy
differs in three ways from the trigger in other claims-made liability policies. Which one of
the following best describes one of those three ways? - Answer -A site-specific
environmental impairment liability policy typically does not have a retroactive date.
The Grey Corporation has a Commercial General Liability Coverage Form with the
following limits:
, Each Occurrence $1,000,000
Damage to rented premises $100,000 each occurrence
Medical expense $5,000 any one person
Personal and advertising injury $1,000,000 any one person or organization
General aggregate limit $2,000,000
Product/completed operations aggregate limit $2,000,000
Assuming the policy is written on an occurrence basis, how much of the general
aggregate limit, if any, remains if the following claims have been paid under the policy?
a premises/operations liability claim of $600,000
a products liability claim of $1,200,000
$3,000 of medical expenses to a customer injured on the premises.
a personal and advertising injury liability claim of $300,000 - Answer -The general
aggregate is reduced by any amounts paid under Coverages A, B, and C, except for
those that arise out of products/completed operations. Therefore, the general aggregate
limit is reduced by $600,000 + $3,000 + $300,000 = $903,000. This leaves $1,097,000
of the general aggregate limit remaining.
An example of liability imposed by statute is - Answer -Workers compensation.
n July of 2010 the Dodd-Frank Act was passed in response to the public's demand for
improvements in financial systems and to curb abusive Wall Street practices. A
significant provision of the Dodd-Frank Act was the - Answer -Abolishment of the
Troubled Asset Relief Program (TARP).
The supplemental payments section of the Commercial General Liability coverage form
is most correctly defined as - Answer -The supplemental payments section of the
Commercial General Liability coverage form is most correctly defined as specified costs
the insurer will pay as part of any claim the insurer investigates or defends under
Coverage A or B
Excess liability policies - Answer -Do not provide coverage for exposures not covered
in primary policies.
Part Two of the Workers Compensation and Employers Liability Policy (WC&EL) is the
employers liability portion of the policy. Under this portion of the policy the insurer would
pay for - Answer -Common law liability for occupational injury to employees,
Some state no-fault laws preserve the tort system but require insurers to offer personal
injury protection (PIP) insurance that provides specified first-party benefits. This is
referred to as - Answer -An add-on no-fault law.
Loss reduction techniques are intended to reduce the - Answer -Severity of losses.
Tom and Jerry own a General Motors vehicle dealership, and they have purchased an
Auto Dealers Coverage Form (ADCF) with the False Pretense Coverage endorsement.
In January, Chuck (one of their salespeople) makes a deal with Max for a new car.
ANSWERS
Railroad owners commonly require contractors to purchase a Railroad Protective
Liability Coverage Form. Which one of the following statements about this form is true?
- Answer -One of the coverage limits applies to physical damage to property owned by
or leased or entrusted to the railroad
Which one of the following statements about the general aggregate limit under a
Commercial General Liability (CGL) Coverage Form is true? - Answer -It is reduced by
an claims paid for medical payments under Coverage C.
Tom often runs errands for his boss at XYZ Company, using the boss' car. On one of
these errands, Tom is involved in a serious auto accident. He spends a couple of weeks
in the hospital; misses four weeks of work; and must undergo physical therapy. Does
XYZ's Workers Compensation and Employers Liability Insurance (WC&EL) Policy cover
Tom's injuries, lost income, and rehabilitation expenses? - Answer -Yes, the workers
compensation policy would pay all of Tom's expenses, because his injuries arose out of
his employment at XYZ Company.
Aircraft have a significant exposure to catastrophe losses. Of the many reasons for the
catastrophic loss potential of aircraft, the most significant is - Answer -The physical
properties of aircraft.
A security guard is employed at a pier where shipping containers are loaded and
unloaded from barges. There is also a small marina for pleasure craft at the pier. The
security guard trips over equipment left on a dock alongside a pleasure craft and is
injured. The pier only has insurance coverage that provides benefits under the
Longshore and Harbor Workers Compensation Act (LHWCA). Is the guard's injury
covered under LHWCA? - Answer -The injury is covered by LHWCA because the guard
is not covered under a state's workers compensation law.
ABC Plumbing entered into a contract with Bill to install a commercial grade septic
system on his property. The installation of the septic septic was time sensitive because
the rest of Bill's construction project could not go forward until the septic system was in
place. The contract required that the work be done within 30 days of contract signing, or
ABC would have to pay a penalty of $1,000 per day. Which one of the following
categories of damages does the $1,000 per day penalty specified in the contract fall
into? - Answer -Liquidated damages
Many states have funds from which employers may purchase workers compensation
insurance. Such funds may be either - Answer -Competitive or monopolistic
,Section II—Who Is an Insured identifies the persons and organizations that qualify as
insureds under the Commercial General Liability (CGL) Coverage Form. Which one of
the following statements regarding who is considered an insured is most accurate? -
Answer -When a CGL policy covers one or more individuals as named insureds, any
person or organization having proper temporary custody of the named insured's
property following the named insured's death is an insured.
What is the name given to a claim by an employee who says that he or she was fired
because of the filing of a workers compensation claim? - Answer -Retaliation claim
Javier's business auto policy contains a personal injury protection (PIP) endorsement.
He is involved in an auto accident in the covered auto, resulting in $30,000 in property
damage, $5,000 in third-party bodily injury, and $10,000 in personal medical expenses.
If Javier's business auto policy has a general aggregate limit of $100,000 and a PIP limit
of $15,000 and he is at fault for the accident, how much will his insurer pay under the
PIP coverage - Answer -PIP provides first-party benefits for medical expenses, loss of
income, loss of services, and funeral expenses resulting from bodily injury to occupants
of a covered auto because of an auto accident. It pays regardless of which party was at
fault in the accident. Therefore, Javier's insurer will pay him $10,000 in medical
expenses from the PIP coverage. The other damages will be payable under different
coverages available on his policy.
Matthew Jones, the named insured under an unendorsed Business Auto Coverage
Form (BACF), requires his employees to use their own cars for business purposes. One
of Matthew's employees, Paul, causes an accident while driving his own truck for the
business. Matthew's BACF shows symbol 1 for liability coverage. Which one of the
following correctly indicates whether Paul is an insured under the policy for the
accident? - Answer -Paul is not covered because employees are not insured while
using their own autos in the named insured's business.
ABC Corporation is insured under a standard unendorsed workers compensation policy
for only the state of Florida. Three months before the present policy began, ABC
opened a sales office in Georgia due to business volume growing in that state. ABC
failed to report the new location and new state at policy inception. The manager of the
Georgia office fell and was injured and missed work for three weeks after the inception
of the ABC policy. The manager made claim for Georgia benefits. Which one of the
following is true regarding ABC's coverage for Georgia benefits? - Answer -Coverage
for this claim would not be covered by ABC's insurance.
The claims-made trigger in a site specific environmental impairment liability policy
differs in three ways from the trigger in other claims-made liability policies. Which one of
the following best describes one of those three ways? - Answer -A site-specific
environmental impairment liability policy typically does not have a retroactive date.
The Grey Corporation has a Commercial General Liability Coverage Form with the
following limits:
, Each Occurrence $1,000,000
Damage to rented premises $100,000 each occurrence
Medical expense $5,000 any one person
Personal and advertising injury $1,000,000 any one person or organization
General aggregate limit $2,000,000
Product/completed operations aggregate limit $2,000,000
Assuming the policy is written on an occurrence basis, how much of the general
aggregate limit, if any, remains if the following claims have been paid under the policy?
a premises/operations liability claim of $600,000
a products liability claim of $1,200,000
$3,000 of medical expenses to a customer injured on the premises.
a personal and advertising injury liability claim of $300,000 - Answer -The general
aggregate is reduced by any amounts paid under Coverages A, B, and C, except for
those that arise out of products/completed operations. Therefore, the general aggregate
limit is reduced by $600,000 + $3,000 + $300,000 = $903,000. This leaves $1,097,000
of the general aggregate limit remaining.
An example of liability imposed by statute is - Answer -Workers compensation.
n July of 2010 the Dodd-Frank Act was passed in response to the public's demand for
improvements in financial systems and to curb abusive Wall Street practices. A
significant provision of the Dodd-Frank Act was the - Answer -Abolishment of the
Troubled Asset Relief Program (TARP).
The supplemental payments section of the Commercial General Liability coverage form
is most correctly defined as - Answer -The supplemental payments section of the
Commercial General Liability coverage form is most correctly defined as specified costs
the insurer will pay as part of any claim the insurer investigates or defends under
Coverage A or B
Excess liability policies - Answer -Do not provide coverage for exposures not covered
in primary policies.
Part Two of the Workers Compensation and Employers Liability Policy (WC&EL) is the
employers liability portion of the policy. Under this portion of the policy the insurer would
pay for - Answer -Common law liability for occupational injury to employees,
Some state no-fault laws preserve the tort system but require insurers to offer personal
injury protection (PIP) insurance that provides specified first-party benefits. This is
referred to as - Answer -An add-on no-fault law.
Loss reduction techniques are intended to reduce the - Answer -Severity of losses.
Tom and Jerry own a General Motors vehicle dealership, and they have purchased an
Auto Dealers Coverage Form (ADCF) with the False Pretense Coverage endorsement.
In January, Chuck (one of their salespeople) makes a deal with Max for a new car.
