PGI Advanced General Insurance Principles 1

Question 1

What is the difference between 'occurrence-based' and 'claims-made' liability policies?

Accepted Answer

Occurrence-based covers incidents happening during the policy period regardless of when claimed; claims-made covers claims first made during the policy period

Answer

There is no practical difference between the two

Answer

Claims-made policies are cheaper but provide less coverage

Answer

Occurrence-based applies only to property insurance

Question 2

What is 'contingent liability' in commercial general liability insurance?

Accepted Answer

Liability that arises from the actions of independent contractors or subsidiaries rather than the insured directly

Answer

Liability that is certain to occur

Answer

Liability that exceeds the policy limit

Answer

Liability for environmental pollution

Question 3

What does 'retroactive date' mean in a claims-made liability policy?

Accepted Answer

The earliest date from which incidents will be covered under the claims-made policy

Answer

The date the policy is renewed

Answer

The date the previous insurer's coverage ended

Answer

The date the insured first became liable

Question 4

What is 'extended reporting period' (tail coverage) in a claims-made policy?

Accepted Answer

A period after policy expiry during which claims can be reported for incidents that occurred during the policy period

Answer

An extension of the policy period for new incidents

Answer

An automatic renewal of the policy for a shorter period

Answer

Coverage for incidents during the extended period only

Question 5

What is 'products completed operations' coverage and when does it apply?

Accepted Answer

Coverage for bodily injury or property damage arising from completed products or finished operations away from the insured's premises

Answer

Coverage during the manufacturing process only

Answer

Coverage for raw materials before they become products

Answer

Coverage only while products are in transit

Question 6

What is 'professional indemnity' (PI) insurance and what gap does it fill?

Accepted Answer

PI covers financial loss caused to clients due to negligent professional advice or services, a gap not covered by standard liability policies

Answer

PI covers physical injury to professionals at work

Answer

PI covers the professional's own legal fees only

Answer

PI is identical to general liability insurance