Insurance, Bonding, and Risk Management Flashcards

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

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

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.

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

Answer: Completed operations coverage (part of CGL)

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

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

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

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.

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

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

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

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

Answer: Additional liability coverage above the limits of underlying policies

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

Risk management in construction involves which of the following strategies?

Answer: Identifying, assessing, and responding to risks through avoidance, reduction, transfer, or acceptance

Effective risk management involves systematically identifying, assessing, and then responding to risks through avoidance, mitigation, transfer (via insurance/bonds), or acceptance.