Insurance Commercial & Business Insurance 2

Question 1

What is 'directors and officers' (D&O) liability insurance designed to protect?

Accepted Answer

Corporate directors and officers against personal liability for management decisions made on behalf of the organization

Answer

D&O insurance protects the personal assets of corporate directors and officers when they are sued by shareholders, employees, or regulators for alleged wrongful acts in their management roles.

Question 2

In commercial insurance, what is 'product liability' coverage?

Accepted Answer

Coverage for third-party claims that a product manufactured or sold by the business caused bodily injury or property damage

Answer

Product liability coverage protects manufacturers, distributors, and retailers from claims alleging that their product caused injury or damage to a consumer or their property.

Question 3

What is 'commercial auto' insurance and why do businesses need it separately from personal auto coverage?

Accepted Answer

Commercial auto covers vehicles owned or used by a business, providing higher limits and coverage that personal auto policies exclude for business use

Answer

Personal auto policies typically exclude or limit coverage for vehicles used for business purposes, making a separate commercial auto policy essential for business-owned or regularly business-used vehicles.

Question 4

What is 'fidelity bond' insurance used for in a business context?

Accepted Answer

Protecting a business against financial losses caused by employee theft or dishonesty

Answer

A fidelity bond (employee dishonesty bond) protects businesses from losses due to fraudulent or dishonest acts committed by employees, such as theft, embezzlement, or forgery.

Question 5

What is 'employment practices liability' (EPL) insurance?

Accepted Answer

Coverage protecting an employer from claims by employees alleging discrimination, harassment, wrongful termination, or other employment-related violations

Answer

EPL insurance covers the costs of defending and settling claims made by current, former, or prospective employees alleging wrongful employment acts such as discrimination or harassment.

Insurance Practice Test

Insurance Practice Test

Insurance Commercial & Business Insurance 2