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A comprehensive set of questions and answers covering various aspects of casualty insurance, including general liability, auto liability, workers' compensation, umbrella and excess liability, professional liability, cyber liability, crime and fidelity, product liability, excess and surplus lines, environmental liability, property liability, risk management, liability limits, insurance policy endorsements, contractual liability, and more. It serves as a valuable resource for students and professionals seeking to understand the fundamentals of casualty insurance.
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What are the three main types of general liability coverage? Answer: Bodily Injury and Property Damage Liability, Personal and Advertising Injury, and Medical Payments. What is the purpose of an "occurrence-based" policy in liability insurance? Answer: It covers claims arising from incidents that occur during the policy period, regardless of when the claim is filed. Which exclusions are typically found in a Commercial General Liability (CGL) policy?
Answer: Expected or intended injury, contractual liability, liquor liability, workers' compensation, pollution, and damage to the insured’s property. Auto Liability Questions What is the difference between "symbol 1" and "symbol 7" in a business auto policy? Answer: Symbol 1 covers any auto, while Symbol 7 covers only specifically listed autos. What are the required liability limits for commercial auto insurance under federal regulations? Answer: The minimum required limits vary by vehicle type and cargo but generally range from $750,000 to $5 million. What does "hired and non-owned auto liability" cover? Answer: It covers liability for vehicles that a business rents, leases, or borrows (hired), as well as employees' personal vehicles used for business purposes (non- owned). Workers' Compensation Questions What are the four benefits provided under workers' compensation insurance? Answer: Medical expenses, disability benefits, rehabilitation costs, and death benefits. Which employees may be exempt from workers' compensation laws? Answer: Sole proprietors, independent contractors, and certain agricultural or domestic workers, depending on state laws.
Answer: Professional liability covers claims arising from errors, omissions, or negligence in professional services, while general liability covers bodily injury, property damage, and personal injury claims. Which professionals typically require Errors and Omissions (E&O) insurance? Answer: Lawyers, accountants, consultants, real estate agents, financial advisors, and medical professionals. What does a "claims-made" policy mean in professional liability insurance? Answer: It covers claims only if the incident occurs and the claim is reported during the active policy period. What is "tail coverage" in a claims-made policy? Answer: It extends coverage for claims made after the policy expires, as long as the incident occurred during the policy period. Cyber Liability Questions What are the two primary components of cyber liability insurance? Answer: First-party coverage (for expenses incurred by the insured, such as data breach response costs) and third-party coverage (for liability to affected customers or businesses). What types of incidents are typically covered under a cyber liability policy? Answer: Data breaches, ransomware attacks, cyber extortion, network security failures, and regulatory fines. Why is business interruption coverage important in cyber liability insurance?
Answer: It compensates businesses for lost income and extra expenses caused by a cyberattack that disrupts operations. Crime and Fidelity Insurance Questions What does a fidelity bond cover? Answer: It protects businesses against losses caused by employee dishonesty, theft, or fraud. What is the difference between a financial institution bond and an employee dishonesty bond? Answer: A financial institution bond is designed for banks and other financial entities, covering fraud and theft risks, while an employee dishonesty bond protects any business from internal theft. What does "computer fraud coverage" in a commercial crime policy protect against? Answer: Unauthorized access to company systems leading to theft, data breaches, or funds transfer fraud. Product Liability Questions Who can be held liable in a product liability claim? Answer: Manufacturers, distributors, and retailers. What are the three main types of product liability claims? Answer: Defective design, manufacturing defects, and failure to warn (inadequate labeling or instructions).
Answer: It provides coverage for contractors who may cause pollution during construction, remediation, or demolition projects. Property Liability Questions What is the difference between "all-risk" and "named-perils" property insurance? Answer: "All-risk" insurance covers all perils unless specifically excluded, while "named-perils" insurance only covers risks explicitly listed in the policy. What is "business income" coverage under a property policy? Answer: Coverage for lost income and extra expenses incurred due to property damage that interrupts business operations. How does a "coinsurance clause" affect a property policy? Answer: It requires the insured to carry a minimum percentage of the property's value to receive full compensation for a loss; otherwise, a penalty may apply. Risk Management Questions What is the purpose of a risk management program in casualty insurance? Answer: To identify, assess, and minimize risks, and to implement controls that reduce the likelihood or impact of claims or losses. What are the five steps in the risk management process? Answer: Identify risks, assess the likelihood and impact of risks, evaluate alternatives for managing the risks, implement the chosen risk control strategies, and monitor the effectiveness of those strategies.
What is the difference between risk avoidance and risk retention? Answer: Risk avoidance eliminates the risk entirely (e.g., not engaging in a particular activity), while risk retention means accepting the risk and its potential consequences. Liability Limits Questions What is the "per occurrence" limit in a general liability policy? Answer: The maximum amount an insurer will pay for a single claim or event. What is the "aggregate limit" in a liability insurance policy? Answer: The maximum amount the insurer will pay for all claims during the policy period, regardless of the number of incidents. How are liability limits typically structured in a commercial general liability (CGL) policy? Answer: The limits are often set as a "per occurrence" limit and an "aggregate" limit, with the aggregate limit being higher to cover multiple claims during the policy period. Insurance Policy Endorsements Questions What is an endorsement in an insurance policy? Answer: An endorsement is a written provision that modifies the original terms of the policy, either adding, deleting, or altering coverage. What is the purpose of an "additional insured" endorsement in liability insurance?
Answer: It provides coverage for allegations of abuse, molestation, or harassment that occur during the course of the insured’s operations, such as in daycare centers, schools, or religious institutions. What is "event cancellation insurance" and why is it important for event planners? Answer: It covers financial losses due to the cancellation of an event caused by unforeseen circumstances, such as extreme weather, acts of terrorism, or venue issues. What is "media liability insurance"? Answer: Coverage for individuals or businesses involved in creating or publishing content, protecting against claims related to defamation, invasion of privacy, and intellectual property infringement.Product Recall Liability Questions What is product recall insurance, and why is it important for manufacturers? Answer: Product recall insurance provides coverage for the costs associated with recalling defective or harmful products from the market, including transportation, destruction, and notification costs. It is crucial for manufacturers to mitigate financial losses from a recall event. What are the typical triggers for a product recall? Answer: Product recalls are typically triggered by consumer complaints, regulatory findings, or reports of injury or property damage linked to the product. Does product liability insurance cover the costs of product recalls? Answer: Most standard product liability policies do not cover recall costs, which is why specific product recall insurance is often purchased separately.
Excess Liability and Umbrella Questions What is the difference between an umbrella liability policy and excess liability insurance? Answer: An umbrella liability policy provides broader coverage and can extend to areas not covered by underlying policies, while excess liability insurance only increases the limits of coverage provided by specific underlying policies. What types of incidents can be covered under an umbrella policy that are not typically covered under standard liability policies? Answer: Umbrella policies may provide coverage for claims such as libel, slander, false arrest, and other incidents not typically included under basic general liability policies. What is the usual limit of an umbrella policy, and how does it interact with underlying policies? Answer: Umbrella policies often have higher coverage limits, such as $1 million or more. They provide additional coverage above the limits of underlying policies, such as auto or general liability insurance. Environmental Liability Questions What is the role of an environmental consultant in managing environmental liability risks? Answer: Environmental consultants assess and identify potential environmental hazards, advise businesses on risk mitigation strategies, and help ensure compliance with environmental regulations. What does "sudden and accidental" pollution coverage refer to in environmental liability insurance?
What is the "drive other car" endorsement, and when is it used in commercial auto insurance? Answer: The "drive other car" endorsement extends coverage to employees who drive a vehicle that is not owned by the company, typically for business-related purposes. How do auto liability limits work in commercial auto policies? Answer: Commercial auto policies typically offer liability limits that apply to bodily injury and property damage for a single accident. The limits are usually set as per person, per accident, and per property damage. What is the purpose of "non-owned auto liability" coverage in a commercial auto policy? Answer: It provides liability coverage for accidents involving vehicles not owned by the insured business but used for business purposes (e.g., personal cars of employees used for business tasks). Workers' Compensation Questions What is the "three-part test" for determining whether an employee is covered under workers' compensation? Answer: The three-part test considers whether the worker was employed at the time of the injury, whether the injury occurred during the course of employment, and whether the injury is compensable under workers’ compensation laws. What is "Second Injury Fund" in workers’ compensation? Answer: A Second Injury Fund provides benefits to workers who suffer a subsequent injury that worsens the effects of a pre-existing condition or disability.
What is "occupational disease" coverage under workers' compensation? Answer: Occupational disease coverage compensates workers for diseases or illnesses caused by their work environment or job duties, such as respiratory diseases from exposure to chemicals. Professional Liability (E&O) Questions What is the typical coverage provided by Errors and Omissions (E&O) insurance for consultants? Answer: E&O insurance for consultants covers legal costs, damages, and settlements resulting from claims that the consultant made errors or failed to perform their professional duties as expected. What is the "retroactive date" in a professional liability insurance policy? Answer: The retroactive date is the date from which claims made under the policy will be covered, even if the incident occurred before the policy was purchased, as long as it occurred after the retroactive date. What is the primary purpose of a "claims-made" professional liability policy? Answer: The primary purpose is to cover claims made during the policy period for alleged professional errors or omissions, regardless of when the incident occurred, provided it is after the policy's retroactive date. Miscellaneous Liability Questions What is the purpose of an "employer's liability" policy in workers' compensation insurance?
Answer: Businesses can use additional insured endorsements or specific liability coverage (such as commercial general liability) to cover risks transferred through contractual agreements, protecting themselves from liability in case of a third-party claim. General Liability Questions What is the difference between "bodily injury" and "property damage" coverage in a general liability policy? Answer: Bodily injury coverage protects against claims of physical harm or injury to people, while property damage coverage protects against claims involving damage to or destruction of third-party property. What is "personal and advertising injury" coverage in a general liability policy? Answer: It covers claims arising from actions such as defamation, invasion of privacy, false arrest, and infringement of intellectual property in advertising or business activities. What is the "products-completed operations hazard" in a general liability policy? Answer: This coverage applies to claims for bodily injury or property damage that occur after the insured’s product has been sold or work has been completed, covering incidents that arise from the product or service after it leaves the insured’s control. Excess Liability Coverage Questions How does excess liability coverage work in relation to underlying policies? Answer: Excess liability coverage provides additional limits above those provided by underlying insurance policies (such as auto or general liability insurance), covering claims that exceed the primary policy’s limits.
What are the typical limits for excess liability coverage, and how are they structured? Answer: Excess liability policies typically offer limits ranging from $1 million to $ million or more. These limits are added on top of the limits of the underlying policies, providing more coverage in the event of large claims. What is a "self-insured retention" (SIR) in an excess liability policy? Answer: A self-insured retention is a specified amount that the insured must pay out-of-pocket before the excess policy coverage kicks in, similar to a deductible but generally applies to certain claims only. Workers’ Compensation and Employer’s Liability Questions What is "voluntary compensation" in workers' compensation insurance? Answer: Voluntary compensation is a provision that extends workers' compensation benefits to employees who may not be legally covered under the workers' compensation law, such as certain agricultural or domestic workers. What is the significance of "subrogation" in workers' compensation insurance? Answer: Subrogation allows the insurer to recover costs from a third party that may have been responsible for the injury. This helps to ensure that the workers' compensation insurer can recoup its expenses after compensating the injured worker. What is "Employer’s Liability" in workers’ compensation insurance? Answer: Employer’s liability provides coverage for an employer if an employee sues for work-related injuries that fall outside the scope of workers’ compensation laws, such as third-party liability claims.
Answer: Pollution legal liability provides coverage for claims arising from pollution incidents, including cleanup costs, bodily injury, and property damage caused by pollutants released into the environment. What types of claims are typically excluded from a pollution liability policy? Answer: Claims arising from the intentional release of pollutants, long-term pollution incidents, and certain violations of environmental regulations may be excluded. Directors and Officers (D&O) Liability Questions What is "directors and officers" (D&O) liability insurance? Answer: D&O insurance provides protection for company directors and officers against personal liability for actions taken in their official capacity, such as management decisions, financial mismanagement, or failure to comply with regulations. What is the "deferred compensation" provision in D&O insurance? Answer: Deferred compensation coverage ensures that the costs of compensation due to lawsuits or claims involving the director or officer will be covered under the policy, even if the payment is made after the policy expires. What types of claims are typically covered under a D&O liability insurance policy? Answer: Claims related to breach of fiduciary duty, misrepresentation of financial information, violations of securities laws, and other wrongful acts committed in the management or direction of the company. Insurance Coverage for Non-Profit Organizations Questions What types of insurance policies are recommended for non-profit organizations?
Answer: Non-profit organizations should consider a variety of coverage types, including general liability, professional liability, directors and officers liability, property insurance, and workers’ compensation. What is the importance of "volunteer" coverage in a non-profit organization's insurance policy? Answer: Volunteer coverage provides protection for non-profit organizations in case a volunteer is injured while working for the organization or causes injury to others during the course of their volunteer work. How does "Charitable Gaming Liability" insurance protect a non-profit organization? Answer: Charitable gaming liability covers the organization against risks related to raffles, bingo, and other fundraising gaming activities, including claims of fraud, mismanagement, or injury during the event. Miscellaneous Risk Questions What is "liquor liability" insurance? Answer: Liquor liability insurance covers businesses that serve alcohol, protecting them from claims related to injuries or damages caused by intoxicated customers or minors who were served alcohol by the insured. What is the role of "accident insurance" in business operations? Answer: Accident insurance provides coverage for medical expenses and lost wages for employees or customers injured on the business’s premises or during business- related activities
