PGI Commercial Lines Underwriting 2

Question 1

What is 'construction all risks' (CAR) insurance and who typically purchases it?

Accepted Answer

CAR covers accidental physical damage to construction works; typically purchased by contractors or project owners for building projects

Answer

Construction All Risks (CAR) insurance covers accidental physical damage to the contract works, temporary works, and third-party liability during construction. It is typically arranged by the main contractor, project owner, or both under a joint names policy.

Question 2

What underwriting information is most critical for a commercial general liability (CGL) risk?

Accepted Answer

Nature and scale of operations, annual turnover, number of employees, claims history, and contractual liabilities assumed

Answer

For CGL underwriting, critical information includes the nature of operations (what activities create liability exposure), scale (turnover, employee count), contractual liabilities assumed, and claims history — all determining the likelihood and severity of liability claims.

Question 3

What is 'umbrella liability' insurance and how does it work with underlying policies?

Accepted Answer

A policy providing additional limits above the underlying liability policy limits, dropping down to cover gaps in underlying coverage

Answer

Umbrella liability provides additional limits above those of underlying policies (CGL, auto, employers' liability). It also 'drops down' to cover certain gaps where underlying policies have exhausted or do not respond, providing broader and deeper coverage.

Question 4

What is 'trade credit insurance' and what risk does it address for Singapore businesses?

Accepted Answer

Insurance protecting businesses against the risk of non-payment by their customers due to insolvency or protracted default

Answer

Trade credit insurance protects sellers against the risk that buyers fail to pay for goods or services delivered, typically due to insolvency or protracted default. It is particularly relevant for Singapore exporters selling on credit terms.

Question 5

What is 'political risk insurance' for companies operating in Singapore and regionally?

Accepted Answer

Coverage for financial losses arising from political events such as expropriation, political violence, or currency inconvertibility in foreign markets

Answer

Political risk insurance covers financial losses arising from political events in foreign markets — including government expropriation of assets, political violence, contract frustration by foreign governments, or currency inconvertibility — relevant for Singapore companies investing regionally.

PGI Insurance Practice Test

PGI Insurance Practice Test

PGI Commercial Lines Underwriting 2