NASCLA Insurance, Bonding, and Risk Management 2

Question 1

What is the difference between an 'occurrence' policy and a 'claims-made' policy in liability insurance?

Accepted Answer

An occurrence policy covers incidents that happen during the policy period; a claims-made policy covers claims filed during the policy period

Answer

An occurrence policy covers any incident that happens during the policy period, even if the claim is filed years later; a claims-made policy only covers claims reported while the policy is active.

Question 2

Which type of coverage protects a contractor if a past project causes injury or property damage after the project is completed?

Accepted Answer

Completed operations coverage (part of CGL)

Answer

Completed operations coverage, included in most CGL policies, protects contractors against liability for bodily injury or property damage arising from completed work.

Question 3

What is a 'certificate of insurance' and why is it required?

Accepted Answer

A document from an insurer verifying that coverage exists, required by owners before contractors can start work

Answer

A certificate of insurance is a summary document issued by an insurer that verifies coverage types, limits, and effective dates, typically required by project owners before work begins.

Question 4

Under workers' compensation law, which of the following is generally TRUE about independent contractors?

Accepted Answer

They are generally not covered by the hiring company's workers' comp but may need their own policy

Answer

Independent contractors are generally not covered under the hiring company's workers' compensation policy, but misclassification of employees as contractors creates significant legal liability.

Question 5

What does 'umbrella liability insurance' provide for a contractor?

Accepted Answer

Additional liability coverage above the limits of underlying policies

Answer

Umbrella liability insurance provides excess liability coverage above the limits of underlying policies (CGL, auto, employer's liability), protecting against catastrophic losses.

NASCLA - National Association of State Contractors Licensing Agencies Practice Test

NASCLA - National Association of State Contractors Licensing Agencies Practice Test

NASCLA Insurance, Bonding, and Risk Management 2