NASCLA Insurance, Bonding, and Risk Management

Question 1

Which type of insurance covers bodily injury and property damage claims made by third parties against a contractor?

Accepted Answer

Commercial general liability (CGL) insurance

Answer

Workers' compensation insurance

Answer

Builder's risk insurance

Answer

Errors and omissions insurance

Question 2

Workers' compensation insurance is designed to cover:

Accepted Answer

Medical expenses and lost wages for employees injured on the job

Answer

Damage to the contractor's tools and equipment

Answer

Third-party property damage

Answer

The contractor's vehicles in accidents

Question 3

What is a 'performance bond' in construction?

Accepted Answer

A surety guarantee that the contractor will complete the project according to contract terms

Answer

A contractor's promise to perform work at the lowest price

Answer

An insurance policy covering equipment performance

Answer

A bond posted to guarantee employee performance reviews

Question 4

A 'payment bond' on a construction project primarily protects which parties?

Accepted Answer

Subcontractors and material suppliers who may not be paid by the contractor

Answer

The project owner only

Answer

The contractor's insurance company

Answer

The state licensing board

Question 5

'Builder's risk insurance' covers which type of loss?

Accepted Answer

Damage to the structure and materials during the construction period

Answer

Injuries to construction workers on the job site

Answer

Third-party liability for property damage

Answer

The contractor's tools and equipment off-site

Question 6

What is the purpose of an 'additional insured' endorsement on a contractor's general liability policy?

Accepted Answer

To extend liability coverage to another party (such as the project owner) for claims arising from the contractor's work

Answer

To add more coverage limits to the base policy

Answer

To add additional contractors to the same policy

Answer

To cover additional job sites automatically