Insurance Commercial & Business Insurance 1 — Questions and Answers
Question 1: What does 'general liability' (GL) insurance cover for a business?
- Damage to the business's own property
- Third-party claims for bodily injury, property damage, and personal injury caused by the business's operations (Correct answer)
- Employee injuries on the job
- Directors' and officers' professional mistakes
Correct answer: Third-party claims for bodily injury, property damage, and personal injury caused by the business's operations
Commercial general liability insurance protects businesses from third-party claims alleging bodily injury or property damage arising from their products, operations, or premises.
Question 2: What is 'workers' compensation' insurance and who does it protect?
- It protects customers injured by defective products
- It provides medical and wage-replacement benefits to employees injured during the course of their employment (Correct answer)
- It covers the employer's property against theft by employees
- It protects business owners from shareholder lawsuits
Correct answer: It provides medical and wage-replacement benefits to employees injured during the course of their employment
Workers' compensation is a state-mandated insurance program that pays for medical treatment and lost wages for employees who are injured or become ill as a result of their job.
Question 3: What type of insurance covers a business's loss of income after a covered property loss forces it to temporarily close?
- Product liability insurance
- Business interruption (BI) insurance (Correct answer)
- Commercial auto insurance
- Directors and officers insurance
Correct answer: Business interruption (BI) insurance
Business interruption insurance compensates a business for lost revenue and continuing expenses during the period it must suspend operations due to a covered physical loss.
Question 4: What is a 'Business Owner's Policy' (BOP)?
- A policy covering only the business owner's personal assets
- A package policy combining commercial property and general liability coverage at a discounted rate for small to mid-sized businesses (Correct answer)
- A surety bond required to open a business
- A key-person life insurance policy
Correct answer: A package policy combining commercial property and general liability coverage at a discounted rate for small to mid-sized businesses
A BOP bundles commercial property insurance and general liability coverage into one convenient, cost-effective policy designed for small and medium-sized businesses.
Question 5: What does 'errors and omissions' (E&O) insurance cover?
- Physical damage to office equipment
- Claims against a professional for negligent acts, mistakes, or failure to perform professional services (Correct answer)
- Employee theft and embezzlement
- Damage caused by natural disasters to business premises
Correct answer: Claims against a professional for negligent acts, mistakes, or failure to perform professional services
E&O insurance, also called professional liability insurance, protects professionals and businesses from claims alleging that negligent advice or services caused a client financial harm.
Question 6: What is 'cyber liability' insurance primarily designed to cover?
- Physical damage to computer hardware
- Losses and liabilities arising from data breaches, ransomware attacks, and other cyber incidents (Correct answer)
- Employee use of social media during work hours
- Intellectual property infringement disputes
Correct answer: Losses and liabilities arising from data breaches, ransomware attacks, and other cyber incidents
Cyber liability insurance covers costs associated with data breaches and cyberattacks, including notification costs, credit monitoring, legal fees, regulatory fines, and business interruption losses.
Insurance Commercial & Business Insurance 1
What does 'general liability' (GL) insurance cover for a business?