Property And Casualty Insurance License Commercial Lines Insurance 1 — Questions and Answers
Question 1: Which commercial package policy (CPP) component provides coverage for physical damage to a business's own building and contents?
- Commercial General Liability
- Commercial Property Coverage (Correct answer)
- Commercial Auto Physical Damage
- Business Income Coverage
Correct answer: Commercial Property Coverage
Commercial Property Coverage within a CPP covers direct physical loss to a business's buildings and business personal property.
Question 2: Under a Commercial General Liability (CGL) policy, 'occurrence' coverage is triggered by:
- When the claim is first reported to the insurer
- When the policy is purchased
- When the bodily injury or property damage occurs (Correct answer)
- When the lawsuit is filed in court
Correct answer: When the bodily injury or property damage occurs
An occurrence-based CGL policy is triggered when the actual bodily injury or property damage takes place, regardless of when the claim is filed.
Question 3: A business income coverage form is designed primarily to protect against:
- Theft of business inventory
- Loss of net income when operations are suspended due to a covered peril (Correct answer)
- Employee dishonesty
- Product liability claims
Correct answer: Loss of net income when operations are suspended due to a covered peril
Business income coverage reimburses a business for lost net income and continuing operating expenses when a covered peril forces a suspension of operations.
Question 4: Which of the following best describes 'claims-made' coverage under a CGL policy?
- Coverage applies only if the injury occurs and the claim is filed in the same policy year
- Coverage applies when the claim is first made during the policy period, regardless of when the injury occurred (Correct answer)
- Coverage applies only to claims arising from products the business has sold
- Coverage applies when the insurer pays the claim
Correct answer: Coverage applies when the claim is first made during the policy period, regardless of when the injury occurred
A claims-made CGL policy is triggered when the claim is first made against the insured during the active policy period, not necessarily when the incident occurred.
Question 5: Under a commercial auto policy, 'hired and non-owned auto' coverage protects the business from liability arising from:
- Only vehicles owned and titled to the business
- Vehicles rented or borrowed by the business, and employee-owned vehicles used for company business (Correct answer)
- Only newly acquired company vehicles
- Vehicles owned by company officers exclusively
Correct answer: Vehicles rented or borrowed by the business, and employee-owned vehicles used for company business
Hired and non-owned auto (HNOA) coverage extends liability protection to rented, leased, or borrowed vehicles as well as employee vehicles used on company business.
Question 6: The 'each occurrence' limit in a CGL policy represents:
- The maximum the insurer will pay for all claims during the policy period
- The maximum the insurer will pay for any single occurrence of bodily injury or property damage (Correct answer)
- The deductible the insured must pay before coverage applies
- The aggregate amount available for products liability only
Correct answer: The maximum the insurer will pay for any single occurrence of bodily injury or property damage
The each occurrence limit caps the insurer's payment for all bodily injury and property damage arising from a single occurrence or event.
Question 7: Which commercial coverage is specifically designed to cover losses caused by an employee stealing money or property from the employer?
- Commercial Property Coverage
- Commercial Crime Coverage / Employee Dishonesty Bond (Correct answer)
- Commercial Umbrella Policy
- Employment Practices Liability
Correct answer: Commercial Crime Coverage / Employee Dishonesty Bond
Commercial crime coverage, including employee dishonesty bonds (fidelity bonds), specifically addresses losses caused by employee theft or fraud against the employer.
Property And Casualty Insurance License Commercial Lines Insurance 1
Which commercial package policy (CPP) component provides coverage for physical damage to a business's own building and contents?