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CISR practice questions

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Question 1Agency Operations

An agency collects premiums from clients on behalf of insurers. How should those funds be handled?

  1. Deposited in the agency's general operating account and used for expenses as needed
  2. Held in the producer's personal account until the policy is issued
  3. Forwarded to the insurer only after the agency deducts its operating costs
  4. Held in a separate trust account and not commingled with agency funds Correct answer.

Explanation

Premiums collected from insureds belong to the insurer or the client, not the agency. Fiduciary duty requires they be held in a separate trust account and not used for agency expenses. Commingling trust funds with operating funds is a serious violation that can create legal and licensing problems.

Question 2Agency Operations

A certificate of insurance primarily serves which purpose?

  1. It guarantees the insurer will give the holder 30 days' notice of cancellation
  2. It provides a summary of coverage and is evidence of insurance in force Correct answer.
  3. It amends the underlying policy to add coverage for the certificate holder
  4. It transfers the insured's rights under the policy to the holder

Explanation

A certificate of insurance is a summary document that evidences coverage in force on the date it is issued. It does not amend, extend, or alter the terms of the policy. Any rights the certificate holder wants must be provided by the policy or an endorsement.

Question 3Agency Operations

A producer may bind coverage on behalf of an insurer when:

  1. The client has signed and returned the application
  2. The company has issued the policy
  3. The producer has submitted a quote to the underwriter
  4. The producer holds binding authority from the insurer Correct answer.

Explanation

Binding is a contractual power granted by an insurer to an agency or producer, usually in the agency agreement. Without that grant, a producer cannot create coverage on the insurer's behalf. An application or quote alone does not bind coverage.

Question 4Agency Operations

When an insured reports a claim to the agency, the CSR's first priority is to:

  1. Deny the claim if it appears excluded
  2. Report the loss to the insurer promptly and document the report Correct answer.
  3. Settle the claim with the claimant within the agency's authority
  4. Determine fault and advise the insured of liability

Explanation

The agency's role in a claim is to report it promptly to the insurer and document the report. The insurer, not the agency, investigates and adjusts the claim. The CSR should not admit liability or determine coverage.

Question 5Agency Operations

An agency's duty of confidentiality generally means client information may be released:

  1. After the policy has been in force for one year
  2. Only with the client's authorization or as required by law Correct answer.
  3. Freely among all agency employees and their family members
  4. To anyone who requests it in writing

Explanation

Client information is confidential and may be shared only with the client's authorization or when law requires disclosure. Agencies should have written procedures for releasing information. Casual sharing with unauthorized persons can violate privacy laws and create liability.

Question 6Agency Operations

Which ACORD form is commonly used as a certificate of liability insurance?

  1. ACORD 25 Correct answer.
  2. ACORD 140
  3. ACORD 125
  4. ACORD 126

Explanation

The ACORD 25 is the standard certificate of liability insurance. ACORD 125 is a commercial insurance application, 126 is a commercial general liability section, and 140 is a property section. Using the correct form helps ensure consistent, accurate evidence of coverage.

Question 7Agency Operations

A premium finance agreement allows an insured to:

  1. Transfer the policy to another insured without the insurer's consent
  2. Pay the premium in installments through a finance company Correct answer.
  3. Avoid paying any premium if no claims are filed during the policy term
  4. Cancel the policy without providing notice to the insurer

Explanation

A premium finance agreement lets the insured borrow funds to pay premium and repay the finance company in installments. The finance company typically receives a power of attorney to cancel the policy if the insured defaults. The agency may assist with the paperwork but does not lend the money.

Question 8Agency Operations

A CSR places a follow-up date in the agency management system for a pending endorsement request. This practice is best described as using a:

  1. Suspense or diary system Correct answer.
  2. Premium audit
  3. Loss run
  4. Binder

Explanation

A suspense or diary system records a future follow-up date so pending items are not forgotten. It is a core E&O loss-control tool for endorsements, renewals, audits, and claims. The system prompts staff to act on the date set.

Question 9Agency Operations

After an insured declines recommended flood coverage, the best E&O loss-control practice is to:

  1. Send the insured a copy of the flood policy
  2. Obtain a signed coverage declination for the file Correct answer.
  3. Add flood coverage to the policy anyway to protect the client
  4. Verbally note the conversation in the file

Explanation

When an insured declines recommended coverage, written documentation protects both the client and the agency. A signed declination shows the coverage was offered and refused. A verbal note alone is weaker evidence if a claim later arises.

Question 10Agency Operations

An insured requests loss runs to market its renewal. If the insurer cannot provide them before the requested date, an acceptable interim step is to:

  1. Submit the application without loss information
  2. Advise the insured to wait until the policy renews
  3. Fabricate estimated loss information
  4. Provide a signed no-loss letter when applicable Correct answer.

Explanation

Loss runs are the insured's claims history and are needed for accurate marketing. If no losses occurred, a signed no-loss letter can serve as an interim substitute. Fabricating or omitting loss information is unacceptable and can mislead underwriters.

Question 11Agency Operations

A certificate holder demands 30 days' notice of cancellation. What should the CSR explain?

  1. The agency can add the notice requirement simply by signing the certificate
  2. The certificate does not amend the policy; notice terms are in the policy Correct answer.
  3. The notice requirement applies only to the first year
  4. The certificate automatically provides that notice

Explanation

A certificate is evidence of insurance and does not change the policy. Notice-of-cancellation rights must be created by the policy or an endorsement. Signing a certificate cannot add terms the insurer has not agreed to.

Question 12Agency Operations

During a workers compensation premium audit, the agency's typical role is to:

  1. Pay any additional premium owed on the insured's behalf
  2. Conduct the audit and set the final premium
  3. Advise the insured to ignore the audit
  4. Help the insured provide payroll records to the insurer Correct answer.

Explanation

The premium audit is performed by or for the insurer to verify exposure such as payroll or sales. The agency's role is to help the insured understand the process and provide records. The agency does not set the final premium.

Question 13Agency Operations

When a producer suspects an E&O error may result in a claim, the producer should:

  1. Promise the insured that the agency will pay for the loss
  2. Wait for the insured to file a lawsuit before acting
  3. Alter the file to remove unfavorable documentation
  4. Notify the agency's E&O carrier and follow its instructions Correct answer.

Explanation

Suspected E&O errors should be reported promptly to the agency's E&O carrier, which will direct the response. Early notice preserves coverage and allows the carrier to manage the claim. Files must never be altered.

Question 14Agency Operations

A client pays a premium by check at the agency counter. The CSR should:

  1. Endorse the check restrictively and issue a receipt Correct answer.
  2. Return the check and ask for cash
  3. Cash the check and hold the cash in a desk drawer
  4. Deposit the check into the agency operating account

Explanation

Payments received at the counter should be handled under the agency's funds-handling procedures. Restrictive endorsement and a receipt create an audit trail and protect against loss. Cash should not be held informally or deposited into the wrong account.

Question 15Agency Operations

An agency that has no actual authority to bind a particular line nevertheless has an employee who repeatedly tells clients coverage is bound. The agency may be obligated because of:

  1. Express authority
  2. Fiduciary authority
  3. Statutory authority
  4. Apparent authority Correct answer.

Explanation

Apparent authority arises when an agency's words or conduct lead a third party to reasonably believe the employee has authority. Even without actual authority, the agency may be bound. This is why agencies must control what employees say about binding coverage.

Question 16Agency Operations

An agency uses its trust account to pay the agency's office rent when premium collections are high. This is a problem because:

  1. Rent must be paid by the insurer
  2. Trust funds may not be commingled with operating funds Correct answer.
  3. The agency should use the producer's personal account
  4. Premiums must be held for 90 days before remittance

Explanation

Trust account funds must be kept separate from agency operating money. Using premium collections to pay rent is commingling and breaches fiduciary duty. It can lead to license discipline and civil liability.

Question 17Agency Operations

A binder is issued effective today while the policy is being underwritten. The CSR should:

  1. Cancel the binder after 24 hours
  2. Track the binder expiration and follow up for the policy Correct answer.
  3. Assume coverage continues indefinitely until the policy issues
  4. Issue a certificate instead of a binder

Explanation

A binder provides temporary evidence of coverage until the policy is issued. It has an expiration date or condition, so the CSR must track it. Following up ensures the policy is issued before the binder expires.

Question 18Agency Operations

Best practice for renewal review is to:

  1. Cancel all policies at renewal and re-quote
  2. Wait until the expiration date before contacting the insured
  3. Renew automatically without contacting the insured
  4. Start renewal early and discuss changes with the insured Correct answer.

Explanation

Renewal review should start well before expiration so coverage changes and marketing can be addressed. Contacting the insured early avoids last-minute gaps. Automatic renewal without review can leave coverage out of date.

Question 19Agency Operations

An agency agreement between an insurer and an agency typically defines:

  1. The claimant's settlement rights
  2. The agency's authority, commissions, and termination Correct answer.
  3. The insured's coverage limits
  4. The state's licensing exam requirements

Explanation

The agency agreement defines the relationship between the insurer and the agency. It typically covers authority, commissions, and termination. It does not set the insured's coverage or claim rights.

Question 20Agency Operations

Which situation most clearly calls for written documentation in the file?

  1. A change of mailing address
  2. A routine question answered by phone about office hours
  3. A request for a duplicate ID card
  4. An insured's refusal of recommended coverage Correct answer.

Explanation

Documentation should focus on anything that could later be disputed, especially coverage discussions and declinations. A written record of the insured's refusal is strong E&O protection. Routine administrative items usually need less detailed notes.

Question 21Agency Operations

An attorney requests a copy of an insured's policy for litigation. The agency should:

  1. Send the entire policy immediately to avoid any delay
  2. Refuse all requests from attorneys
  3. Send only the declarations page to the requesting attorney
  4. Verify authorization or legal process before release Correct answer.

Explanation

Requests for an insured's policy from third parties raise confidentiality issues. The agency should follow its procedures and verify authorization or proper legal process. Releasing the policy without that verification can violate privacy obligations.

Question 22Agency Operations

An insured asks the CSR to cancel a policy for nonpayment of premium. The CSR should:

  1. Backdate the cancellation to the policy inception
  2. Tell the insured to stop paying premiums and let the policy lapse
  3. Cancel immediately without insurer approval
  4. Follow the policy's cancellation terms and verify authority Correct answer.

Explanation

Cancellation must follow the policy's terms and any legal notice requirements. The CSR should confirm the agency has authority to act and document the request. Backdating or cancelling without authority can create coverage and E&O problems.

Question 23Agency Operations

A key benefit of an agency management system's single-entry, multiple-access design is:

  1. It eliminates the need for E&O insurance
  2. It guarantees the insurer will pay all claims
  3. Data is entered once for authorized staff to use Correct answer.
  4. It replaces the need for individual producer licensing

Explanation

An agency management system stores data once so multiple authorized users can access it. This reduces duplicate entry and improves accuracy and service. It does not replace insurance, licensing, or claim obligations.

Question 24Commercial Casualty I

Under the commercial general liability coverage form, Coverage A applies to bodily injury or property damage caused by an occurrence that takes place in the coverage territory during the policy period. On what basis does Coverage A respond?

  1. A reported-injury basis, with a retroactive date that determines which injuries qualify
  2. A claims-made basis, because coverage is triggered when the claim is first made against the insured
  3. A manifestation basis, measured from the date the defect is discovered by the claimant
  4. An occurrence basis, because coverage is triggered by the injury or damage rather than by the filing of a claim Correct answer.

Explanation

The standard CGL Coverage A insuring agreement is written on an occurrence basis, meaning the policy in force when the bodily injury or property damage occurs responds, regardless of when a claim is later made. No retroactive date or reporting requirement governs which losses fall within the policy period.

Question 25Commercial Casualty I

Which statement best describes Coverage C, Medical Payments, under the commercial general liability form?

  1. It reimburses the insured's own employees for job-related injuries they sustain at work
  2. It pays medical expenses only after the insured has been found legally liable for the injury
  3. It pays medical expenses for the insured and the insured's family members injured at the business location
  4. It pays reasonable medical expenses for bodily injury caused by an accident on the insured's premises or because of the insured's operations, regardless of fault Correct answer.

Explanation

Coverage C is a goodwill coverage that pays reasonable and necessary medical expenses for bodily injury to third parties caused by an accident on the insured's premises or arising out of the insured's operations. No showing of legal liability is required, and payment is subject to a separate limit and a time limit measured from the date of the accident.

Question 26Commercial Casualty I

Which of the following is a personal and advertising injury offense covered under Coverage B?

  1. Bodily injury to an employee arising out of and in the course of employment
  2. Failure of the insured's product to perform as warranted
  3. Breach of a written contract to pay a supplier on time
  4. Oral or written publication of material that slanders or libels a person or disparages a person's goods, products, or services Correct answer.

Explanation

Coverage B lists specific offenses, including libel, slander, and the disparagement of a person's or organization's goods, products, or services. The coverage is limited to the enumerated offenses and does not extend to contract breaches or employee injuries.

Question 27Commercial Casualty I

Which costs does the CGL pay as supplementary payments, in addition to the limits of liability?

  1. Defense expenses, premiums on appeal bonds, and reasonable costs the insured incurs at the insurer's request Correct answer.
  2. That portion of a judgment that exceeds the each-occurrence limit
  3. Punitive damages assessed against the insured in a covered suit
  4. The deductible the insured owes on each claim

Explanation

Supplementary payments are paid in addition to the limits of liability and include defense costs, bond premiums for appeals, and reasonable expenses the insured incurs at the insurer's request. These payments do not reduce the amounts available to pay judgments or settlements.

Question 28Commercial Casualty I

An employee of the named insured causes bodily injury to a customer while acting within the scope of employment. The employee is an insured under the CGL. What limit applies to the employee's coverage?

  1. The same limits that apply to the named insured apply to the employee Correct answer.
  2. A separate limit equal to the general aggregate applies to each employee
  3. The employee is covered only for property damage, not bodily injury
  4. The employee is an insured only if added by endorsement as an additional insured

Explanation

Employees and volunteer workers are insureds for acts within the scope of their duties, and their coverage shares the limits that apply to the named insured. The policy does not provide a separate per-employee limit.

Question 29Commercial Casualty I

The CGL pollution exclusion bars coverage for bodily injury or property damage arising out of the discharge of pollutants. Which situation falls within an exception to that exclusion?

  1. Bodily injury from asbestos fibers released during the insured's demolition work
  2. Property damage from waste the insured hauled to its own disposal site
  3. Bodily injury caused by smoke or fumes from a furnace used to heat the insured's building Correct answer.
  4. Property damage from fuel oil that seeps from a storage tank the insured owns

Explanation

The pollution exclusion contains narrow exceptions, one of which restores coverage for injury or damage caused by smoke, fumes, vapor, or soot from equipment used to heat, cool, or dehumidify a building, or to heat water. The other listed situations involve traditional pollutant releases that remain excluded.

Question 30Commercial Casualty I

The CGL shows a separate limit for damage to premises rented to the insured. What does that coverage pay for?

  1. The insured's liability for fire damage to premises the insured occupies as a tenant Correct answer.
  2. Loss of business income while leased premises are being repaired
  3. Damage to the insured's own building caused by a tenant of the insured
  4. The cost of repairing the insured's equipment stored in a leased building

Explanation

Coverage A excludes damage to property rented to, occupied, or used by the insured, but restores limited coverage for fire damage to rented premises, subject to a separate limit shown in the declarations. The coverage responds to the tenant's legal liability for the landlord's building.

Question 31Commercial Casualty I

Which statement correctly describes how the CGL general aggregate limit works?

  1. It applies only to Coverage B claims and operates independently of Coverage A
  2. It caps the total payable for all covered claims during the policy period, except those under the products-completed operations hazard Correct answer.
  3. It applies separately to each claim and restores automatically after each loss is paid
  4. It replaces the each-occurrence limit whenever a single loss exceeds that limit

Explanation

The general aggregate is the most the policy will pay for the sum of all covered losses in the policy period other than losses subject to the products-completed operations aggregate. It does not restore automatically when a claim is paid.

Question 32Commercial Casualty I

Which situation is an exception to the CGL exclusion for damage to the insured's work?

  1. The cost of correcting the insured's own faulty workmanship
  2. Damage to the insured's work caused by a material the insured supplied
  3. Damage to the insured's work arising out of work performed on the insured's behalf by a subcontractor Correct answer.
  4. Damage to the insured's work while it is still in the insured's possession

Explanation

The exclusion for damage to your work contains an exception for work performed on the insured's behalf by a subcontractor, restoring coverage for damage arising out of that subcontracted work. The exclusion continues to bar the cost of repairing the insured's own defective work and work still in the insured's possession.

Question 33Commercial Casualty I

Which of the following qualifies as an insured contract under the CGL, so that the contractual liability exclusion does not bar coverage?

  1. A contract in which the insured guarantees that its product will meet a stated performance specification
  2. A contract in which the insured assumes liability for damage to property in its care, custody, or control
  3. A hold-harmless agreement in which the insured assumes responsibility for injury to the other party's employees
  4. A commercial lease in which the tenant agrees to hold the landlord harmless for injuries arising from the tenant's use of the premises Correct answer.

Explanation

The definition of insured contract includes a lease of premises, so the insured's assumption of liability under such a lease is not barred by the contractual liability exclusion. The other agreements fall outside the definition or are expressly carved out of it.

Question 34Commercial Casualty I

A building owner requires a general contractor to add the owner as an additional insured using an endorsement limited to liability arising out of the named insured's ongoing operations. What does this provide the owner?

  1. Coverage limited to the owner's completed operations exposure after the project is finished
  2. Coverage for all of the owner's business liability, regardless of who caused the injury
  3. Coverage only after the owner's own liability policy limits are exhausted
  4. Coverage for the owner's liability for injury arising from the contractor's operations, but not for liability arising after those operations are complete Correct answer.

Explanation

Ongoing operations endorsements extend additional insured status to liability arising out of the named insured's work while that work is in progress. Liability arising after the work is complete requires a separate completed operations additional insured endorsement.

Question 35Commercial Casualty I

Coverage C, Medical Payments, does not apply to which expense?

  1. First aid given to a delivery driver injured in the insured's parking lot
  2. Medical expenses for a person hired to work on the insured's premises who is injured there Correct answer.
  3. Dental treatment for a visitor struck by falling merchandise
  4. An ambulance bill for a customer who slips on the insured's sidewalk

Explanation

Coverage C excludes medical expenses for persons hired to do work for or on behalf of any insured, for the insured's employees, and for anyone covered by workers compensation. Ordinary members of the public injured by the insured's premises or operations remain eligible.

Question 36Commercial Casualty I

Which statement correctly describes the expected or intended injury exclusion in the CGL?

  1. Coverage is barred only if a court finds the insured acted negligently
  2. Coverage is barred for injury the insured expected or intended from the standpoint of the insured, so deliberate acts certain to cause harm are not covered Correct answer.
  3. Coverage is barred only if the injured party seeks punitive damages
  4. Intent is judged from the injured party's perspective rather than the insured's

Explanation

The exclusion is evaluated from the standpoint of the insured, barring coverage where the insured expected or intended the bodily injury or property damage. Negligent conduct that produces unexpected harm remains covered.

Question 37Commercial Casualty I

The exclusion for damage to the insured's product bars coverage for which loss?

  1. The cost of defending a suit alleging that the product injured a consumer
  2. Property damage to other property caused by the insured's product, such as a curtain ignited by a defective lamp
  3. Bodily injury to a consumer caused by the insured's product
  4. Property damage to the insured's product arising out of the product itself Correct answer.

Explanation

The exclusion removes property damage to the insured's product arising out of the product or any part of it, which is essentially a warranty exposure. Damage the product causes to other property, along with bodily injury and defense costs, remains eligible for coverage.

Question 38Commercial Casualty I

Which claim falls within the products-completed operations hazard?

  1. A visitor injured in the insured's parking lot by a falling sign
  2. An employee injured while assembling a product in the insured's plant
  3. A customer injured when a display rack falls on her inside the insured's store
  4. A homeowner injured by a water heater the insured installed and no longer owns or controls Correct answer.

Explanation

The products-completed operations hazard covers bodily injury or property damage occurring away from premises the insured owns or rents and arising out of the insured's product or completed work that is no longer in the insured's physical possession. An installed water heater in a customer's home fits that definition.

Question 39Commercial Casualty I

A CGL policy shows these limits: each occurrence $1,000,000; general aggregate $2,000,000; products-completed operations aggregate $2,000,000; personal and advertising injury $1,000,000; damage to premises rented to you $100,000. Fire destroys $300,000 of the building the insured leases. How much is available for that loss?

  1. $1,000,000, because the each-occurrence limit applies
  2. $300,000, because the loss is paid in full up to the amount of damage
  3. $2,000,000, because the general aggregate applies
  4. $100,000, because the separate limit for damage to premises rented to the insured caps the payment Correct answer.

Explanation

Fire damage to premises the insured rents is subject to its own limit in the declarations, and that limit controls no matter how large the each-occurrence or aggregate limits are. The separate limit is the maximum payable for that exposure.

Question 40Commercial Casualty I

The CGL defines an occurrence as an accident, including continuous or repeated exposure to substantially the same general harmful conditions. How does that definition affect a claim for repeated exposure to the insured's emissions over two years?

  1. Each injured person's claim is treated as a separate occurrence
  2. It is not covered because there was no single sudden accident
  3. It may be treated as a single occurrence, so one each-occurrence limit applies Correct answer.
  4. Each day of exposure is treated as a separate occurrence for limit purposes

Explanation

Because an occurrence expressly includes continuous or repeated exposure to substantially the same harmful conditions, a series of exposures is generally treated as one occurrence. That means the each-occurrence limit applies once, rather than once per exposure or per claimant.

Question 41Commercial Casualty I

A commercial umbrella policy carries a $25,000 self-insured retention and sits above a CGL with a $1,000,000 each-occurrence limit. A claim is covered by the umbrella but excluded by the underlying CGL. How does the umbrella respond?

  1. It pays after the insured satisfies the $25,000 self-insured retention, because no underlying insurance applies to the loss Correct answer.
  2. It pays nothing, because an underlying policy must always pay first
  3. It pays only amounts above $1,000,000, treating the underlying limit as a deductible
  4. It pays the claim in full with no retention because the loss is excluded below

Explanation

When no underlying policy covers a loss, the umbrella drops down to respond, but the insured must first absorb the self-insured retention stated in the umbrella. The underlying limit is not treated as a deductible in that situation.

Question 42Commercial Casualty I

An additional insured endorsement requires a contractor's coverage to be primary and noncontributory with respect to the owner's own liability policy. What is the effect of that wording?

  1. The contractor's policy pays first, and the owner's insurer is not called upon to share the loss Correct answer.
  2. The owner's policy pays first, and the contractor's policy pays only the excess
  3. The owner's insurer must share defense costs equally with the contractor's insurer
  4. Both policies share the loss equally up to their respective limits

Explanation

Primary and noncontributory wording places the contractor's policy first in line and prevents the owner's insurer from being asked to contribute to the same loss. Without it, the two policies would allocate the loss under their other insurance conditions.

Question 43Commercial Casualty I

A contractor is remodeling a customer's store and accidentally damages a section of the store's wall that the crew was working on at the time. How does the CGL treat that property damage?

  1. It is covered because the customer's building is not the insured's work
  2. It is covered because the loss occurred during the policy period
  3. It is excluded only if the contractor is never paid for the remodeling work
  4. It is excluded, because the damage to property exclusion applies to that particular part of real property on which the insured is performing operations Correct answer.

Explanation

The damage to property exclusion removes coverage for that particular part of real property on which the insured is performing operations, if the damage arises out of those operations. The exclusion applies to the specific portion being worked on, not to the entire building.

Question 44Commercial Casualty I

An insured discovers that a batch of valves it manufactured is likely to fail and cause injury, so it recalls and replaces them at its own cost. How does the CGL respond to the replacement cost?

  1. It pays the recall cost as a supplementary payment
  2. It pays the cost only if a government agency ordered the recall
  3. It pays the replacement cost under the products-completed operations hazard
  4. It pays nothing, because the recall exclusion bars the cost of recalling, withdrawing, or replacing the insured's product Correct answer.

Explanation

The recall exclusion removes coverage for costs the insured or others incur to withdraw, recall, inspect, repair, replace, or dispose of the insured's product because of a known or suspected defect. The exclusion applies whether or not a regulator is involved.

Question 45Commercial Casualty I

A warehouse worker employed by the named insured is injured by a forklift at the insured's facility, and the injury is covered by workers compensation. The worker nevertheless sues the insured in tort for negligence. How does the CGL respond?

  1. Coverage applies because the worker chose to sue in tort instead of accepting comp benefits
  2. Coverage applies under Coverage C, Medical Payments, subject to its limit
  3. No coverage applies, because the employers liability exclusion bars bodily injury to an employee arising out of and in the course of employment Correct answer.
  4. Coverage applies because the worker was acting within the scope of employment at the time of injury

Explanation

The CGL excludes bodily injury to an employee arising out of and in the course of employment, and the exclusion applies whether the claim sounds in tort or in comp. Suits of this kind are addressed by the employers liability coverage that accompanies a workers compensation policy.

Question 46Commercial Casualty I

Which item is treated as mobile equipment rather than as an auto under the CGL?

  1. A leased sedan driven by the insured's sales manager
  2. A bulldozer used solely at the insured's construction site Correct answer.
  3. A pickup truck used to haul supplies between job sites
  4. A trailer hauling the insured's equipment over public roads

Explanation

Mobile equipment includes vehicles such as bulldozers and other machines designed primarily for use off public roads and not required to be licensed. Because such equipment is not an auto, injury or damage arising from its use falls under the CGL rather than being excluded as auto exposure.

Question 47Commercial Casualty II

In workers compensation, what does the term "exclusive remedy" mean for an injured employee?

  1. The employee may collect comp benefits and also sue the employer for the same injury.
  2. The employee gives up the right to sue the employer in tort and receives statutory benefits instead. Correct answer.
  3. The insurer gains the sole right to pursue any responsible third party.
  4. The employer is shielded from lawsuits brought by injured third parties.

Explanation

Workers compensation statutes provide scheduled benefits for work-related injury and, in return, make those benefits the employee's exclusive remedy against the employer. That bars most tort suits by the employee against the employer for the injury, subject to limited exceptions such as intentional acts.

Question 48Commercial Casualty II

An employer's Workers Compensation and Employers Liability policy shows Part Two limits of $1,000,000 each accident, $1,000,000 disease-each employee, and $1,000,000 disease-policy limit. Two employees are injured in a single accident and each wins a $700,000 judgment. What is the most the insurer pays under Part Two for that accident?

  1. $2,000,000
  2. $1,400,000
  3. $700,000
  4. $1,000,000 Correct answer.

Explanation

The each-accident limit under Part Two is the maximum the insurer will pay for all damages because of bodily injury by accident to employees in any one accident. Both judgments share that single limit, so the total payable is capped at $1,000,000.

Question 49Commercial Casualty II

How does Part Three, Other States Insurance, of the Workers Compensation and Employers Liability policy operate?

  1. It applies only to federal workers compensation exposures.
  2. It covers listed states entered after inception, but not Item 3.A states or monopolistic states. Correct answer.
  3. It covers any state where the employer begins work, including monopolistic states.
  4. It applies only to the states listed on the policy as of the effective date.

Explanation

Part Three provides coverage in states shown in Item 3.C where the employer begins operations after the policy begins. It does not extend to states listed in Item 3.A, where coverage must be purchased, and it cannot apply in monopolistic states where private insurance is unavailable.

Question 50Commercial Casualty II

Which individual is not automatically treated as an employee under the standard Workers Compensation and Employers Liability policy?

  1. A full-time office bookkeeper
  2. A supervisor paid an annual salary
  3. A partner in the insured partnership Correct answer.
  4. A part-time seasonal laborer

Explanation

The policy definition of employee excludes sole proprietors and partners, so they are not covered automatically. Coverage for such individuals can be added only by endorsement where state law permits them to elect coverage.