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

An occurrence-based policy covers losses arising from incidents that happen during the policy period, regardless of when the claim is made. A claims-made policy only covers claims first notified during the policy period, regardless of when the incident occurred.

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

Contingent liability arises when the insured is held legally responsible for the acts or omissions of another party (e.g., independent contractors, subsidiaries) over whom they have some degree of control or responsibility.

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 retroactive date in a claims-made policy is the earliest date from which an incident must have occurred for the resulting claim to be covered. Claims arising from incidents before this date are excluded.

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

Extended reporting period allows the insured, after policy expiry, to report claims for incidents that occurred during the policy period. This is critical when switching from claims-made to occurrence coverage or when a business closes.

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

Products completed operations coverage applies after a product has been sold and delivered, or an operation has been completed. It covers liability for injury or damage caused by the product or completed work away from the insured's premises.

PGI Insurance Practice Test

PGI Insurance Practice Test

PGI Advanced General Insurance Principles 1