Commercial & Business Insurance Flashcards
6 cards from real Insurance practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Commercial & Business Insurance flashcards as text
What is a 'surety bond' and how does it differ from insurance?
Answer: A surety bond is a three-party agreement guaranteeing a principal will fulfill an obligation; unlike insurance, the principal is expected to reimburse the surety for any losses paid
A surety bond involves the principal (who must perform), the obligee (who requires the bond), and the surety (who guarantees performance), and the principal is liable to repay the surety if a claim is paid.
What is 'key person' life insurance used for in a business?
Answer: Compensating a business for financial losses caused by the death or incapacity of a critical employee or owner
Key person insurance pays a death benefit to the business when a vital employee—such as a founder, top salesperson, or specialist—dies, helping the company survive the financial disruption.
What does 'trade credit' insurance cover for businesses?
Answer: Losses arising from a buyer's failure to pay for goods or services delivered on credit terms
Trade credit insurance protects businesses that sell goods or services on credit terms from losses when their customers become insolvent or default on payment.
In commercial property insurance, what is 'extra expense' coverage?
Answer: Coverage for additional costs a business incurs to continue operations following a covered loss
Extra expense coverage pays for costs above normal operating expenses that a business must incur to continue or resume operations as quickly as possible after a covered loss.
What is 'pollution liability' insurance designed to cover for businesses?
Answer: Third-party claims and cleanup costs arising from pollution incidents caused by the business's operations
Pollution liability insurance covers claims for bodily injury, property damage, and cleanup costs resulting from pollution events connected to the insured's operations, products, or sites.
What is 'contingent business interruption' (CBI) coverage?
Answer: Coverage for income loss a business suffers when a key supplier or customer experiences a covered loss that disrupts the insured's operations
CBI insurance compensates a business for lost income when a critical supplier or customer suffers a covered physical loss that in turn disrupts the insured's ability to operate.