DC Business Insurance 3

Question 1

What is 'key person' (key man) life insurance purchased by a DC business designed to do?

Accepted Answer

Protect the business from financial loss due to the death or disability of a critical employee

Answer

Provide a death benefit to the key employee's family

Answer

Fund the buyout of a deceased partner's interest

Answer

Replace the salary of any employee who dies while employed

Question 2

A DC partnership wants insurance to fund a buy-sell agreement if a partner dies. What type of life insurance is typically used?

Accepted Answer

Cross-purchase or entity-purchase life insurance to fund a buy-sell agreement

Answer

Group term life insurance

Answer

Key person whole life

Answer

Variable universal life with an investment component

Question 3

What does 'hired and non-owned auto liability' (HNOA) cover for a DC business?

Accepted Answer

Liability arising from employees using rented vehicles or personal vehicles for business purposes

Answer

Liability for accidents in company-owned vehicles

Answer

Collision coverage for all vehicles used by employees

Answer

Comprehensive coverage for company fleet vehicles

Question 4

A DC staffing agency provides temporary workers to client businesses. Which of the following insurance considerations is most critical?

Accepted Answer

Workers' compensation coverage for temporary workers while on assignment

Answer

Product liability insurance for goods produced by temporary workers

Answer

Commercial general liability for the client business's operations

Answer

Directors and officers insurance for the staffing agency's board

Question 5

What is the purpose of 'umbrella' versus 'excess' liability coverage for DC businesses?

Accepted Answer

Umbrella provides broader coverage (can 'drop down' to fill gaps in underlying policies); excess liability only adds limits above the underlying policy

Answer

They are identical products with different names

Answer

Excess coverage is broader; umbrella only adds limits

Answer

Umbrella covers property; excess covers liability only

Question 6

Under DC insurance law, what is an 'insuring agreement' in a commercial policy?

Accepted Answer

The core clause in which the insurer promises to pay for covered losses in exchange for premium

Answer

The section listing all policy exclusions

Answer

The endorsements modifying the base policy

Answer

The conditions section outlining policyholder duties after a loss