EXAMFX - Exam FX Insurance Commercial General Liability Questions and Answers 1 — Questions and Answers
Question 1: A customer in a retail store is injured when an employee accidentally drops a box on the customer's foot. The customer requires medical attention and threatens to sue for pain and suffering. Which coverage part of the store's Commercial General Liability (CGL) policy will primarily respond to this claim?
- Coverage B - Personal and Advertising Injury
- Coverage A - Bodily Injury and Property Damage (Correct answer)
- Coverage C - Medical Payments
- Products-Completed Operations Hazard
Correct answer: Coverage A - Bodily Injury and Property Damage
Coverage A - Bodily Injury and Property Damage Liability is the core of the CGL policy, covering sums the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' to a third party arising out of the insured's premises or operations.
Question 2: A small marketing firm is sued by a competitor for using a slogan in a new advertising campaign that is nearly identical to the competitor's trademarked slogan. Which section of the firm's CGL policy would provide defense and potential coverage for this type of lawsuit?
- Coverage A - Bodily Injury and Property Damage
- Supplementary Payments
- Coverage B - Personal and Advertising Injury (Correct answer)
- Errors and Omissions Coverage
Correct answer: Coverage B - Personal and Advertising Injury
Coverage B - Personal and Advertising Injury covers non-physical injuries, including those arising from infringing upon another's copyright, slogan, or trade dress in an 'advertisement'.
Question 3: What is the primary function of the 'retroactive date' found in a claims-made Commercial General Liability policy?
- It is the date after which a claim must be reported to the insurer.
- It specifies the earliest date an injury or damage can occur for a claim to be potentially covered. (Correct answer)
- It marks the final day of the Extended Reporting Period (tail coverage).
- It is the effective date of the policy's cancellation.
Correct answer: It specifies the earliest date an injury or damage can occur for a claim to be potentially covered.
The retroactive date in a claims-made policy is a crucial provision that establishes the beginning of the coverage period. An incident that occurs before this specified date will not be covered, even if the claim is made during the active policy period.
Question 4: A visitor to an office building trips on a crack in the sidewalk and incurs minor medical expenses. To avoid a lawsuit and maintain goodwill, the building owner wants to pay for the visitor's emergency room visit promptly. Which CGL coverage is designed to pay these types of small, third-party medical claims without the need to establish legal fault?
- Coverage C - Medical Payments (Correct answer)
- Coverage A - Bodily Injury and Property Damage
- Supplementary Payments
- The General Aggregate Limit
Correct answer: Coverage C - Medical Payments
Coverage C - Medical Payments is designed to cover the medical expenses of others injured on the insured's premises or due to their operations, regardless of fault. It is often called 'goodwill' coverage because it allows for prompt payment of smaller claims to avoid larger liability lawsuits.
Question 5: A CGL policy has a General Aggregate Limit of $2,000,000 and a Per Occurrence Limit of $1,000,000. During the policy year, the insurer pays $500,000 for one covered claim and $800,000 for a second, unrelated covered claim. How much is still available under the General Aggregate Limit for any future claims during that policy period?
- $1,200,000
- $1,000,000
- $700,000 (Correct answer)
- $2,000,000
Correct answer: $700,000
The General Aggregate Limit is the maximum total amount the insurer will pay for all covered claims during the policy period. Each claim payment reduces this total. In this scenario, the initial $2,000,000 is reduced by the two payments ($2,000,000 - $500,000 - $800,000), leaving $700,000 available.
Question 6: All of the following are typically excluded from coverage under a standard Commercial General Liability (CGL) policy EXCEPT:
- Property damage to the insured's own work or product.
- Bodily injury to a customer who slips and falls on the insured's premises. (Correct answer)
- Bodily injury to an employee of the insured.
- Liability resulting from the discharge of pollutants.
Correct answer: Bodily injury to a customer who slips and falls on the insured's premises.
The core purpose of a CGL policy is to cover liability for bodily injury or property damage to third parties, such as a customer slipping and falling. Injuries to employees are covered by Workers' Compensation, damage to the insured's own work is a business risk exclusion, and pollution is a standard exclusion that requires separate coverage.
EXAMFX - Exam FX Insurance Commercial General Liability Questions and Answers 1
A customer in a retail store is injured when an employee accidentally drops a box on the customer's foot.
The customer requires medical attention and threatens to sue for pain and suffering.
Which coverage part of the store's Commercial General Liability (CGL) policy will primarily respond to this claim?