150 questions · 180 min · 70% to pass
Question 1
What is a 'maintenance of underlying insurance' requirement in an umbrella policy?
Answer: An umbrella policy typically requires the insured to maintain specific underlying policies (such as CGL, commercial auto, and employers liability) at minimum required limits as a condition of coverage. If the insured fails to maintain those underlying policies, the umbrella insurer will treat the claim as if the required underlying coverage were in force, leaving the insured to cover that gap personally.
Question 2
When does an umbrella policy 'drop down'?
Answer: When loss has no underlying coverage
Question 3
When does the products-completed operations hazard apply?
Answer: After product leaves insured's possession
Question 4
What is covered under the liability section of a Commercial Auto policy?
Answer: The liability section of a commercial auto policy covers bodily injury and property damage for which the insured becomes legally responsible due to the ownership, maintenance, or use of covered autos. The insurer also provides a legal defense against covered claims and pays related defense costs.
Question 5
What does business income coverage replace?
Answer: Lost income during restoration period
Question 6
How does Coverage C (medical payments) under the CGL differ from Coverage A bodily injury liability?
Answer: Coverage C pays medical expenses for injuries sustained by third parties on the insured's premises regardless of fault or legal liability, making it a no-fault coverage with relatively low limits typically around $5,000. Coverage A requires legal liability to be established before damages are paid and carries much higher limits.
Question 7
What triggers coverage under an occurrence-based CGL policy?
Answer: When the injury or damage occurs
Question 8
Which key exclusion under Coverage A of the CGL eliminates coverage for damage to the insured's own work?
Answer: The 'your work' exclusion eliminates Coverage A coverage for property damage to work performed by the insured if the damage arises out of that work or any part of it. However, the exclusion does not apply if the damaged work was performed by a subcontractor on the insured's behalf.
Question 9
What is 'tail coverage' (Extended Reporting Period) in a claims-made professional liability policy?
Answer: Tail coverage, formally called an Extended Reporting Period (ERP), allows an insured to report claims after a claims-made policy has expired, as long as the underlying incident occurred during the original policy period. It is critical when a professional retires, switches insurers, or a business closes, as professional liability claims often arise years after the work was performed.
Question 10
What is the difference between 'per occurrence' and 'general aggregate' limits in a CGL policy?
Answer: The per-occurrence limit is the maximum the insurer will pay for all damages arising out of a single occurrence, while the general aggregate limit is the maximum the insurer will pay for all covered claims during the entire policy period. Once the aggregate is exhausted, no further covered claims are paid until the policy renews.