Business Insurance & Liability Flashcards

A chimney sweep's van is used to transport equipment to job sites. Which policy is required to cover an accident while driving to a customer's home?

Answer: Commercial auto insurance

Commercial auto insurance is required for vehicles used for business purposes; a personal auto policy typically excludes coverage during business use.

What is an 'additional insured' endorsement on a liability policy?

Answer: A provision extending liability coverage to another party, such as a property management company

An additional insured endorsement extends the named insured's liability coverage to another specified party, often required by property managers or general contractors.

If a chimney sweep causes a house fire due to negligent work, and the homeowner's insurance pays the claim, what legal doctrine may allow the homeowner's insurer to sue the sweep?

Answer: Subrogation

Through subrogation, the homeowner's insurer steps into the homeowner's shoes and can sue the negligent chimney sweep to recover the amount paid on the claim.

A chimney sweep uses a drone to inspect tall chimneys. What coverage gap might exist in a standard chimney sweep liability policy?

Answer: Standard policies may not cover drone-related liability; a separate unmanned aircraft endorsement may be needed

Standard general liability policies often exclude or have limited coverage for unmanned aircraft (drones), requiring a specific endorsement or separate policy.

What is the purpose of a 'waiver of subrogation' clause that a property owner might ask a chimney sweep to sign?

Answer: It prevents the sweep's insurer from suing the property owner if the insurer pays a claim on the sweep's behalf

A waiver of subrogation prevents the sweep's insurer from pursuing the property owner in a recovery action, protecting the owner from being sued by the sweep's insurance company.

How does a Business Owner's Policy (BOP) benefit a small chimney sweep business compared to buying policies separately?

Answer: A BOP bundles general liability and commercial property coverage at a lower combined premium

A BOP combines general liability and commercial property insurance into one package, typically at a cost savings compared to purchasing each policy individually.

A chimney sweep discovers during a job that a gas fireplace has a dangerous defect unrelated to their work. What is the sweep's professional obligation?

Answer: Notify the homeowner immediately and document the finding in writing

Documenting and disclosing discovered hazards protects the sweep from liability for pre-existing conditions and fulfills a professional duty to warn the homeowner.