NASCLA Insurance, Bonding, and Risk Management 1

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

Commercial general liability (CGL) insurance protects contractors from third-party claims for bodily injury, property damage, and personal injury arising from their operations.

Question 2

Workers' compensation insurance is designed to cover:

Accepted Answer

Medical expenses and lost wages for employees injured on the job

Answer

Workers' compensation insurance provides medical treatment and wage replacement for employees who suffer work-related injuries or illnesses, regardless of fault.

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 performance bond is a three-party guarantee by a surety company that the contractor will perform all contract obligations, protecting the owner if the contractor defaults.

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

A payment bond guarantees that subcontractors and material suppliers will be paid for their work and materials, even if the general contractor fails to pay them.

Question 5

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

Accepted Answer

Damage to the structure and materials during the construction period

Answer

Builder's risk insurance covers physical loss or damage to a structure under construction and materials on site, protecting against fire, theft, vandalism, and weather damage.

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 1