P&C Casualty Insurance and Liability 3

Question 1

What is the primary purpose of an umbrella liability policy?

Accepted Answer

To provide additional limits above the underlying policies and fill certain coverage gaps

Answer

Umbrella policies provide excess limits above primary policies and may also 'drop down' to cover certain losses excluded by underlying policies, subject to a self-insured retention.

Question 2

Which of the following is covered under the personal and advertising injury portion (Coverage B) of a CGL policy?

Accepted Answer

Libel or slander published by the insured

Answer

Coverage B (Personal and Advertising Injury) of the CGL includes offenses such as libel, slander, false arrest, malicious prosecution, and copyright infringement in advertisements.

Question 3

In casualty insurance, 'aggregate limit' refers to:

Accepted Answer

The maximum the insurer will pay for all covered losses during the policy period

Answer

The aggregate limit is the total amount the insurer will pay for all covered claims during the policy period, regardless of the number of occurrences.

Question 4

An employer's liability policy typically provides coverage for:

Accepted Answer

Employee lawsuits against the employer alleging negligence beyond the workers comp system

Answer

Employer's liability (Part Two of a workers comp policy) covers an employer's legal liability to employees for work-related injuries not fully addressed by the workers comp statute, such as consequential bodily injury suits.

Question 5

Which party has the right to defend a claim under a standard liability policy?

Accepted Answer

The insurer, who has the duty and right to select defense counsel and control the defense

Answer

Standard liability policies grant the insurer both the duty and the right to defend covered claims, including selecting defense counsel, without being limited by the policy's liability limits.

Property & Casualty Insurance License Test Practice Test

Property & Casualty Insurance License Test Practice Test

P&C Casualty Insurance and Liability 3