CCS Business Insurance & Liability 2 — Questions and Answers
Question 1: A chimney sweep's customer files a claim alleging that soot contamination from an incomplete cleaning damaged their furniture. Which coverage would respond to this claim?
- Workers' compensation
- General liability insurance (Correct answer)
- Commercial auto insurance
- Business interruption insurance
Correct answer: General liability insurance
General liability insurance covers third-party property damage claims, including damage to a customer's belongings caused by the sweep's operations.
Question 2: What is a 'certificate of insurance' and why might a chimney sweep need to provide one?
- A document proving a sweep passed their certification exam
- A summary of coverage provided to clients or contractors as proof of insurance (Correct answer)
- A government-issued permit to operate a chimney business
- An insurance company's internal record of claims history
Correct answer: A summary of coverage provided to clients or contractors as proof of insurance
A certificate of insurance is a document issued by an insurer that summarizes the policyholder's coverage, often required by clients or general contractors before work begins.
Question 3: Which type of liability policy covers claims made during the policy period regardless of when the incident occurred?
- Occurrence-based policy
- Claims-made policy (Correct answer)
- Umbrella policy
- Blanket liability policy
Correct answer: Claims-made policy
A claims-made policy covers claims filed during the active policy period, even if the triggering event happened before the policy started (subject to retroactive date).
Question 4: A chimney sweep hires a part-time assistant. What is the primary reason this change requires immediate notification to the insurer?
- The insurer must verify the assistant's certification
- Adding employees may affect workers' compensation premiums and general liability exposure (Correct answer)
- The insurer must approve all new hires before they can work
- Part-time employees are never covered under existing policies
Correct answer: Adding employees may affect workers' compensation premiums and general liability exposure
Adding employees changes the business's exposure profile, potentially affecting workers' compensation requirements and general liability premiums.
Question 5: What does 'subrogation' mean in the context of business insurance?
- The process of canceling a policy mid-term
- The insurer's right to recover costs from a negligent third party after paying a claim (Correct answer)
- A penalty clause for underreporting revenue
- A rider that adds coverage for subcontractors
Correct answer: The insurer's right to recover costs from a negligent third party after paying a claim
Subrogation allows an insurer that has paid a claim to pursue the responsible third party to recover the amount paid on behalf of the insured.
Question 6: A chimney sweep works on a historic home and accidentally cracks a century-old decorative firebox tile. The homeowner seeks compensation. Which factor most determines the claim's value?
- The age of the chimney sweep's business
- The replacement or repair cost of the damaged item, including potential antique value (Correct answer)
- The sweep's years of experience
- The original purchase price of the home
Correct answer: The replacement or repair cost of the damaged item, including potential antique value
Property damage claims are typically valued based on the cost to repair or replace the damaged item, which for antiques may include appraised or market value.
Question 7: Why is 'completed operations' coverage important for chimney sweeps?
- It covers injuries that happen while actively cleaning
- It covers liability for damage or injury that occurs after the job is finished and the sweep has left (Correct answer)
- It provides coverage for equipment left on the jobsite
- It replaces workers' compensation for finished projects
Correct answer: It covers liability for damage or injury that occurs after the job is finished and the sweep has left
Completed operations coverage extends liability protection to incidents that arise after the work is done, such as a fire caused by a flue the sweep certified as safe.
CCS Business Insurance & Liability 2
A chimney sweep's customer files a claim alleging that soot contamination from an incomplete cleaning damaged their furniture.
Which coverage would respond to this claim?