NPPE Professional Liability 5

Question 1

A professional is named in a lawsuit that is ultimately dismissed. Who typically bears the legal defense costs incurred during the litigation?

Accepted Answer

The professional, unless the policy or contract provides otherwise

Answer

Defense costs are generally the professional's responsibility unless a professional liability policy with defense coverage or a contract indemnity clause shifts those costs.

Question 2

Which scenario best illustrates a 'claims-made' professional liability policy trigger?

Accepted Answer

The claim is filed during the policy period, regardless of when the act occurred

Answer

A claims-made policy is triggered by when the claim is reported to the insurer, not when the underlying act occurred.

Question 3

An engineering firm sub-contracts structural analysis to a specialist who makes an error. The client sues the prime engineering firm. The prime firm is most likely:

Accepted Answer

Liable to the client since it is responsible for the overall project deliverable

Answer

The prime firm retains responsibility to the client for the entire scope of services, including work delegated to sub-consultants.

Question 4

A professional's certificate of insurance (COI) is best described as:

Accepted Answer

A summary document confirming active insurance coverage at a point in time

Answer

A COI is an informational summary confirming coverage exists as of the issue date; it does not alter policy terms or create obligations to the certificate holder.

Question 5

Under most professional liability frameworks, the statute of limitations for a latent defect claim typically begins to run from:

Accepted Answer

The date the defect is discovered or reasonably should have been discovered

Answer

The discovery rule tolls the statute of limitations until the plaintiff discovers, or with reasonable diligence should discover, the defect.

NPPE - National Professional Practice Examination Practice Test

NPPE - National Professional Practice Examination Practice Test

NPPE Professional Liability 5