I85PREP
⌘ K
APA Commercial General study materials
APA Commercial General study resources

APA Commercial General practice questions

One question at a time. Build your APA Commercial General understanding.

First 50 of 200 questions. Each one lists the choices, the correct answer, and an explanation. The checker at the top of this page saves progress in this browser when it is available.

Continue in the practice tool above to load more questions, 50 at a time.

Question 1Commercial General Liability

Under the ISO commercial general liability coverage form, which trigger determines whether bodily injury or property damage is covered?

  1. The policy period in which the injurious exposure or accident happened Correct answer.
  2. The date the claimant files suit in court
  3. The date the injury or damage actually occurs
  4. The date the insured first receives written notice of a claim

Explanation

Occurrence-based CGL coverage is triggered when the bodily injury or property damage takes place, not when the claim is reported or litigated. The policy in force at the time of the injurious exposure responds to the loss.

Question 2Commercial General Liability

The CGL Coverage A insuring agreement pays sums the insured becomes legally obligated to pay as damages because of bodily injury or property damage to which the insurance applies. What does the form require regarding the insured's right and duty to defend?

  1. Defense is provided only after the insured pays the self-insured retention
  2. The insurer may defend at its discretion even after limits are exhausted
  3. The insured must retain counsel and seek reimbursement after judgment
  4. The insurer defends even groundless, false, or fraudulent suits seeking covered damages Correct answer.

Explanation

The CGL defense obligation extends to suits seeking damages covered by the policy, including suits that are groundless, false, or fraudulent. The insurer's duty ends when the applicable limit is exhausted by payment of judgments or settlements.

Question 3Commercial General Liability

Coverage B, personal and advertising injury, responds to which of the following offenses?

  1. Bodily injury sustained by a customer during a product demonstration
  2. Employee injury covered by workers compensation law
  3. Oral or written publication of material that slanders a person's goods, products, or services Correct answer.
  4. Property damage to a rented warehouse caused by a fire

Explanation

Coverage B enumerates offenses including libel, slander, disparagement of goods, invasion of privacy, and wrongful eviction. Disparaging a person's or organization's goods, products, or services is one of the listed offenses.

Question 4Commercial General Liability

The CGL aggregate limit applies to which of the following?

  1. The general aggregate, which is the most the insurer pays for all covered losses other than products-completed operations Correct answer.
  2. Each individual occurrence separately, resetting after every claim
  3. Defense costs only, excluding indemnity payments
  4. Products-completed operations only

Explanation

The general aggregate is the maximum payable for all covered losses during the policy period, with products-completed operations subject to its own separate aggregate. The occurrence limit caps any single occurrence.

Question 5Commercial General Liability

Which exclusion in the CGL form bars coverage for injury to an employee arising out of and in the course of employment?

  1. The employer's liability exclusion Correct answer.
  2. The pollution exclusion
  3. The impaired property exclusion
  4. The recall exclusion

Explanation

The employer's liability exclusion removes coverage for bodily injury to employees arising out of and in the course of employment, leaving such exposures to workers compensation and employers liability coverage.

Question 6Commercial General Liability

The CGL supplementary payments provision covers which of the following in addition to the limits of liability?

  1. The insured's lost business income during litigation
  2. Costs the insurer incurs in defending a claim, such as attorney fees and expert costs Correct answer.
  3. Fines and penalties imposed by a regulatory agency
  4. Punitive damages awarded against the insured

Explanation

Supplementary payments include defense costs and certain related expenses, such as premiums on appeal bonds and reasonable expenses incurred at the insurer's request. These are paid in addition to the limits of liability.

Question 7Commercial General Liability

The products-completed operations hazard excludes which of the following from its definition?

  1. Work the insured completed at a customer's premises
  2. Containers furnished in connection with the sale of products
  3. Products still in the insured's physical possession Correct answer.
  4. Products the insured manufactured and sold

Explanation

The products-completed operations hazard covers products and completed work after the insured has relinquished possession. Products still in the insured's physical possession are not within the hazard.

Question 8Commercial General Liability

The 'your work' exclusion in the CGL form generally bars coverage for which of the following?

  1. Property damage to the insured's own completed work arising out of that work Correct answer.
  2. Bodily injury to a third party caused by the insured's negligence
  3. Personal injury arising from the insured's advertising
  4. Damage to a customer's separate property caused by the insured's work

Explanation

The 'your work' exclusion removes coverage for property damage to the insured's own work arising out of it, reflecting that the cost of correcting defective work is a business risk. Damage to other property may still be covered.

Question 9Commercial General Liability

A general contractor is named as an additional insured on a subcontractor's CGL policy. Under a typical additional insured endorsement, the coverage afforded to the general contractor is usually:

  1. Limited to the additional insured's own negligent acts
  2. Void unless the general contractor is also a named insured
  3. Excess over any other valid and collectible insurance available to the additional insured
  4. Primary and non-contributory for the additional insured's liability arising from the named insured's operations Correct answer.

Explanation

Additional insured endorsements commonly provide primary and non-contributory coverage to the additional insured for liability arising out of the named insured's operations or completed work. This makes the subcontractor's policy respond first.

Question 10Commercial General Liability

The CGL form excludes property damage to property the insured owns, rents, or occupies. Which coverage does the form provide as an exception for damage by fire to rented premises?

  1. The products-completed operations hazard
  2. Fire legal liability coverage, subject to a separate limit shown in the declarations Correct answer.
  3. Coverage B, personal and advertising injury
  4. No exception exists; rented premises are always excluded

Explanation

The standard CGL form includes fire legal liability coverage as an exception to the care, custody, and control exclusion, with a separate limit shown in the declarations. This covers the insured's liability for fire damage to rented premises.

Question 11Commercial General Liability

An insured's defective roof installation causes water damage to the customer's inventory inside the building. The cost to repair the roof itself is excluded under the 'your work' exclusion. What is the treatment of the damage to the inventory?

  1. Excluded under the impaired property exclusion
  2. Excluded because it arose from the insured's faulty workmanship
  3. Covered as property damage to property other than the insured's work Correct answer.
  4. Excluded because it is consequential economic loss

Explanation

The 'your work' exclusion targets damage to the insured's own work, but damage to other property, such as the customer's inventory, may still be covered. The exclusion does not extend to resulting damage to other property.

Question 12Commercial General Liability

An insured's employee is injured on the job and the insured has no workers compensation coverage. Which CGL exclusion is most directly relevant to the employee's claim against the insured?

  1. The professional services exclusion
  2. The aircraft exclusion
  3. The pollution exclusion
  4. The employer's liability exclusion, which applies regardless of whether the insured is covered by workers compensation Correct answer.

Explanation

The employer's liability exclusion applies to bodily injury to employees arising out of and in the course of employment, whether or not the insured has workers compensation coverage. The exclusion is not dependent on the existence of workers compensation benefits.

Question 13Commercial General Liability

An insured hosts a company picnic and a guest is injured when a tent collapses. Which part of the CGL policy responds?

  1. Coverage B, because the guest's privacy was invaded
  2. Coverage A, because the guest sustained bodily injury caused by an occurrence Correct answer.
  3. The products-completed operations hazard, because the tent was a product
  4. The supplementary payments provision, because the guest was a vendor

Explanation

Bodily injury caused by an occurrence on the insured's premises or during the insured's operations is addressed under Coverage A. Premises and operations liability is the core of Coverage A.

Question 14Commercial General Liability

The CGL pollution exclusion bars coverage for bodily injury or property damage arising out of the actual or threatened discharge of pollutants. Which circumstance is typically an exception to this exclusion?

  1. Smoke, vapor, or fumes from a hostile fire Correct answer.
  2. Pollutants discharged as part of the insured's regular business operations
  3. Pollutants brought onto the premises by the insured for use in the insured's operations
  4. Waste materials transported by the insured to a disposal site

Explanation

The pollution exclusion includes an exception for bodily injury or property damage caused by heat, smoke, or fumes from a hostile fire. This exception preserves coverage for hostile fire losses that produce smoke or fumes.

Question 15Commercial General Liability

An insured's product causes bodily injury to a consumer after the product has left the insured's premises. Which coverage part of the CGL policy responds?

  1. Coverage B, because the product disparaged a competitor
  2. The fire legal liability coverage
  3. Coverage A, subject to the products-completed operations aggregate Correct answer.
  4. The supplementary payments provision

Explanation

Bodily injury caused by a product after it leaves the insured's possession falls within the products-completed operations hazard, which is part of Coverage A and subject to its own aggregate limit.

Question 16Commercial General Liability

The CGL form's 'your product' exclusion bars coverage for property damage to the insured's product arising out of the product. What does this exclusion generally not bar?

  1. The cost of repairing the product under warranty
  2. The cost of replacing the defective product
  3. Damage to other property caused by the insured's product Correct answer.
  4. Damage to the product itself caused by a defect in the product

Explanation

The 'your product' exclusion targets damage to the product itself, but damage to other property caused by the product may still be covered. The exclusion reflects that the cost of repairing or replacing the insured's own product is a business risk.

Question 17Commercial General Liability

A vendor endorsement on a CGL policy is intended to provide coverage for which situation?

  1. A retailer that sells the insured's products in the regular course of business Correct answer.
  2. An employee injured on the job
  3. An additional insured general contractor on a construction project
  4. A landlord named on a tenant's policy

Explanation

Vendor endorsements extend products liability coverage to distributors or retailers that sell the named insured's products in the regular course of the vendor's business. This addresses the vendor's exposure for selling the product.

Question 18Commercial General Liability

The CGL form's 'damage to property' exclusion bars coverage for property damage to property in the insured's care, custody, or control. Which exception is commonly built into the form?

  1. Rented premises damaged by fire, addressed through fire legal liability Correct answer.
  2. The insured's own property used in operations
  3. Property being transported by the insured
  4. Personal property in the insured's care, custody, or control that is the subject of a bailment

Explanation

The care, custody, and control exclusion includes an exception for fire damage to rented premises, covered by fire legal liability. This exception is subject to the separate limit shown in the declarations.

Question 19Commercial General Liability

An insured receives a claim alleging that its advertisement infringed on a competitor's copyright. How does the standard CGL Coverage B respond?

  1. Coverage B covers copyright infringement in advertisements without limitation
  2. Coverage B covers the claim only if the competitor is an individual
  3. Coverage B covers the claim under the products-completed operations hazard
  4. Coverage B excludes infringement of copyright, patent, trademark, or trade secret Correct answer.

Explanation

Coverage B excludes personal and advertising injury arising out of infringement of copyright, patent, trademark, trade secret, or other intellectual property rights. Coverage is generally limited to offenses such as libel, slander, and disparagement.

Question 20Commercial General Liability

An insured's employee drives a company-owned truck on an errand and causes an accident. Which CGL exclusion is most relevant to the resulting bodily injury claim?

  1. The recall exclusion
  2. The auto exclusion, which bars coverage for injury arising out of the use of an auto Correct answer.
  3. The pollution exclusion
  4. The employer's liability exclusion

Explanation

The CGL auto exclusion bars coverage for bodily injury or property damage arising out of the ownership, maintenance, or use of an auto. Such exposures are intended for commercial auto coverage.

Question 21Commercial General Liability

The CGL form's 'impaired property' exclusion bars coverage for property damage to impaired property. Which situation is most consistent with this exclusion?

  1. A fire at the insured's premises damages a neighboring building
  2. A product the insured sold fails to perform and the customer's entire production line is shut down Correct answer.
  3. A customer's inventory is damaged by water from the insured's defective roof
  4. An employee is injured by a machine the insured manufactures

Explanation

The impaired property exclusion applies when the insured's product or work is incorporated into other property and makes that property unusable, where the property can be restored by repair or replacement of the insured's product. The exclusion targets economic losses from impaired property.

Question 22Commercial General Liability

An insured contractor's completed work causes bodily injury to a third party two years after the project was finished. Which statement best describes how the CGL policy responds?

  1. Coverage applies only if the claimant sues within the policy period
  2. Coverage is barred by the 'your work' exclusion because the work was the insured's own
  3. Coverage may respond under the products-completed operations hazard if the injury occurred during the policy period Correct answer.
  4. Coverage is barred because the work was completed before the policy period

Explanation

Completed operations injuries are addressed under the products-completed operations hazard, and the policy in force when the injury occurs responds. The 'your work' exclusion targets damage to the work itself, not bodily injury to third parties.

Question 23Commercial General Liability

An insured leases a building and the lease requires the insured to insure the landlord as an additional insured. The insured's CGL policy includes a blanket additional insured endorsement. Which statement is correct?

  1. The landlord's own negligence is covered as an additional insured
  2. The landlord's coverage is excess over the landlord's own policy in all cases
  3. The landlord is automatically an additional insured if the written contract requires it and the endorsement covers such contracts Correct answer.
  4. The landlord must be specifically named in the declarations to receive any coverage

Explanation

Blanket additional insured endorsements extend additional insured status to parties with whom the named insured has a written contract requiring such status. The landlord qualifies if the lease requires it and the endorsement's terms are met.

Question 24Commercial General Liability

The CGL form's 'recall' exclusion bars coverage for which of the following?

  1. Costs of recalling a product because of a known or suspected defect Correct answer.
  2. Bodily injury caused by a product after it is sold
  3. Property damage to a customer's inventory caused by a fire
  4. Defense costs for a covered bodily injury claim

Explanation

The recall exclusion bars coverage for costs incurred to recall, withdraw, or inspect a product because of a known or suspected defect or deficiency. The exclusion targets the recall itself, not resulting bodily injury that may be covered.

Question 25Commercial General Liability

An insured's employee is injured by a product the insured manufactured and sold. The employee is also covered by workers compensation. Which statement best describes the CGL response to the employee's claim against the insured?

  1. The employer's liability exclusion bars the claim, and workers compensation responds instead Correct answer.
  2. The products-completed operations hazard provides coverage without regard to the employment relationship
  3. Coverage A responds because the employee is also a consumer
  4. Coverage B responds because the employee's privacy was invaded

Explanation

The employer's liability exclusion bars coverage for bodily injury to an employee arising out of and in the course of employment, even if a product is involved. Workers compensation is the intended source of recovery for the employee.

Question 26Commercial General Liability

Under the ISO commercial general liability coverage form, which limit applies to the total of all damages under Coverage A for bodily injury and property damage combined during the policy period, regardless of the number of claims?

  1. The general aggregate limit Correct answer.
  2. The damage to premises rented to you limit
  3. The products-completed operations aggregate limit
  4. The each occurrence limit

Explanation

The general aggregate limit is the most the insurer will pay for all Coverage A damages other than those subject to the products-completed operations aggregate. The each occurrence limit caps any single occurrence, while the general aggregate caps the sum of occurrences in the policy period.

Question 27Commercial General Liability

An insured rents office space and accidentally starts a fire that damages the landlord's building. Which CGL provision responds to the landlord's claim for the fire damage to the rented premises?

  1. The damage to premises rented to you limit Correct answer.
  2. The supplementary payments provision
  3. The products-completed operations aggregate
  4. The medical payments coverage

Explanation

The CGL form provides a separate limit for property damage to premises rented to the insured caused by fire, commonly called fire legal liability. This coverage applies even though the damage to property exclusion would otherwise bar damage to rented property in the insured's care.

Question 28Commercial General Liability

Which coverage part of the CGL policy responds to a claim for bodily injury or property damage caused by an occurrence that takes place during the policy period in the coverage territory?

  1. Coverage B, personal and advertising injury liability
  2. Coverage A, bodily injury and property damage liability Correct answer.
  3. Coverage C, medical payments
  4. Coverage D, damage to premises rented to you

Explanation

Coverage A is the occurrence-based liability grant for bodily injury and property damage. Coverage B addresses personal and advertising injury offenses, while Coverage C pays medical expenses without regard to fault.

Question 29Commercial General Liability

A CGL policy written on an occurrence basis is triggered by which event?

  1. The date the insured receives written notice of the suit
  2. The date the bodily injury or property damage occurs Correct answer.
  3. The date the claim is first reported to the insurer
  4. The date the policy is renewed

Explanation

An occurrence policy responds based on when the injury or damage takes place, not when the claim is made or reported. This distinguishes it from claims-made forms, which are keyed to the claim date.

Question 30Commercial General Liability

An insured's employee slips on a wet floor in the insured's store and the insured's workers compensation insurer pays the claim. The employee later sues the insured in tort. Which CGL exclusion is most directly relevant?

  1. The aircraft exclusion
  2. The pollution exclusion
  3. The employer's liability exclusion Correct answer.
  4. The liquor liability exclusion

Explanation

The employer's liability exclusion bars Coverage A coverage for bodily injury to an employee arising out of employment, which is the domain of workers compensation and employer's liability coverage. It applies whether or not the insured has workers compensation coverage.

Question 31Commercial General Liability

Which of the following is an offense covered under Coverage B, personal and advertising injury liability?

  1. Bodily injury arising from a fall on the insured's sidewalk
  2. Fire damage to premises rented to the insured
  3. Oral or written publication of material that slanders or libels a person Correct answer.
  4. Property damage caused by a defective product

Explanation

Coverage B enumerates offenses such as libel, slander, disparagement, invasion of privacy, and infringement of certain rights in an advertisement. The other answers involve bodily injury or property damage, which fall under Coverage A or its sublimits.

Question 32Commercial General Liability

The CGL policy defines 'occurrence' as an accident, including continuous or repeated exposure to substantially the same general harmful conditions, that results in which of the following?

  1. Punitive damages only
  2. Advertising injury only
  3. Bodily injury or property damage Correct answer.
  4. Personal injury only

Explanation

The definition ties an occurrence to bodily injury or property damage neither expected nor intended from the standpoint of the insured. Personal and advertising injury are addressed by a separate coverage grant with its own offense-based trigger.

Question 33Commercial General Liability

A customer sues an insured retailer alleging that a display shelf the insured installed in the customer's store collapsed and damaged the customer's merchandise. The shelf itself was also destroyed. Which exclusion most directly bars coverage for the damage to the shelf?

  1. The electronic data exclusion
  2. The employment-related practices exclusion
  3. The pollution exclusion
  4. The 'your work' exclusion Correct answer.

Explanation

The 'your work' exclusion bars property damage to the insured's work, including the cost of repairing or replacing it. Damage to the customer's merchandise may still be covered because it is other property.

Question 34Commercial General Liability

An insured's advertisement uses a slogan that a competitor claims infringes its trademark. The competitor sues for infringement in the insured's advertisement. Which statement best describes Coverage B's response?

  1. Coverage B responds only if the insured had no knowledge of the mark
  2. Coverage B responds only if the infringement was intentional
  3. Coverage B may apply because infringement of copyright, trade dress, or slogan in an advertisement is a covered offense Correct answer.
  4. Coverage B never responds to any intellectual property claim

Explanation

Coverage B covers infringement of copyright, trade dress, or slogan in the insured's advertisement. The form also contains exclusions for knowing violation of rights and for certain trademark and patent claims, but the enumerated slogan offense can be covered.

Question 35Commercial General Liability

An insured general contractor is sued for property damage to a building caused by a subcontractor's faulty work. The insured's CGL policy contains the standard subcontractor exception to the 'your work' exclusion. How does the exception affect the claim?

  1. It preserves coverage for property damage to other property caused by the subcontractor's work on the insured's behalf Correct answer.
  2. It converts the policy into a surety bond for the subcontractor
  3. It excludes all damage caused by any subcontractor
  4. It limits coverage to the cost of repairing the subcontractor's own work

Explanation

The standard exception restores coverage for property damage to property other than the insured's own work when the damage arises out of work performed by a subcontractor on the insured's behalf. The exclusion still bars the cost of correcting the subcontractor's defective work itself.

Question 36Commercial General Liability

An insured owns a building and rents part of it to a tenant. A fire originating in the insured's portion damages the tenant's personal property. Which exclusion applies to the tenant's property claim?

  1. The personal and advertising injury exclusion
  2. The medical payments exclusion
  3. The damage to property exclusion, because the property is rented to or in the care of the insured Correct answer.
  4. The products-completed operations hazard

Explanation

The damage to property exclusion bars coverage for property damage to property rented to, occupied by, or used by the insured, or in its care, custody, or control. The fire legal liability sublimit applies to the rented premises themselves, not to the tenant's separate personal property.

Question 37Commercial General Liability

An insured's product is incorporated into a larger machine sold by a manufacturer. The insured's component fails and damages the machine, but the component itself is not damaged. Which exclusion is most relevant to the manufacturer's claim for damage to the machine?

  1. The liquor liability exclusion
  2. The 'your product' exclusion Correct answer.
  3. The employer's liability exclusion
  4. The aircraft exclusion

Explanation

The 'your product' exclusion bars property damage to the insured's product arising out of it, but damage to other property into which the product is incorporated may be covered. Because the failed component is not itself damaged, the analysis turns on whether the machine qualifies as other property.

Question 38Commercial General Liability

An insured's employee is injured while operating machinery at the insured's plant, and the insured has valid workers compensation coverage. The employee also sues the insured alleging the machinery was negligently maintained. Which statement best describes the CGL response?

  1. The CGL policy pays the claim because the injury occurred on the insured's premises
  2. The CGL policy pays the claim under medical payments coverage
  3. The employer's liability exclusion bars the CGL claim, and the injury is addressed by workers compensation and employer's liability coverage Correct answer.
  4. The CGL policy pays the claim under the products-completed operations hazard

Explanation

The employer's liability exclusion removes bodily injury to employees arising out of employment from Coverage A. Such injuries are handled by workers compensation and, for tort suits, by the employer's liability part of the workers compensation policy.

Question 39Commercial General Liability

An insured contractor completes a project and, two years later, a third party is injured when a portion of the completed structure collapses. Which coverage part of the CGL policy is designed to respond?

  1. Coverage B, personal and advertising injury
  2. The supplementary payments provision
  3. Coverage C, medical payments
  4. The products-completed operations hazard under Coverage A Correct answer.

Explanation

The products-completed operations hazard covers bodily injury and property damage occurring away from the insured's premises and arising out of the insured's product or completed work. Completed construction projects fall within this hazard.

Question 40Commercial General Liability

An insured's building is damaged by a covered occurrence, and the insured also faces a claim from a customer for bodily injury at the same premises. Which coverage part responds to the customer's bodily injury claim?

  1. Coverage A, bodily injury and property damage liability Correct answer.
  2. Coverage B, personal and advertising injury liability
  3. Coverage D, damage to premises rented to you
  4. Coverage C, medical payments

Explanation

Coverage A responds to third-party bodily injury claims arising from an occurrence. Coverage C may pay medical expenses without regard to fault, but it does not respond to a liability claim for damages.

Question 41Commercial General Liability

An insured's policy has a general aggregate limit of $2 million, an each occurrence limit of $1 million, and a products-completed operations aggregate of $2 million. The insured pays $1 million for a premises occurrence and $1 million for a products occurrence. How much remains available for a second premises occurrence?

  1. $0, because the general aggregate is exhausted by the premises and products payments Correct answer.
  2. $500,000, because the products aggregate is shared
  3. $2 million, because each occurrence has its own aggregate
  4. $1 million, because the products payment does not erode the general aggregate

Explanation

Under the standard form, the general aggregate is reduced by amounts paid under Coverage A, including products-completed operations payments unless the policy provides otherwise. Once the general aggregate is exhausted, no further amounts are payable for the policy period.

Question 42Commercial General Liability

An insured's employee is injured by a product the insured manufactured and sold, and the employee is also covered by workers compensation. Which coverage most directly applies to the employee's injury?

  1. Workers compensation and employer's liability coverage Correct answer.
  2. The CGL medical payments coverage
  3. The CGL supplementary payments provision
  4. The CGL products-completed operations hazard

Explanation

Injuries to employees arising out of employment are addressed by workers compensation and employer's liability coverage, not by the CGL policy. The CGL employer's liability exclusion removes such claims from Coverage A.

Question 43Commercial General Liability

An insured contractor's defective roof installation causes water damage to the customer's inventory inside the building. The cost to repair the roof itself is also claimed. Which statement best describes the CGL response?

  1. Both the inventory damage and the roof repair are covered
  2. The inventory damage may be covered, but the cost of repairing the defective roof is barred by the 'your work' exclusion Correct answer.
  3. The roof repair is covered, but the inventory damage is excluded
  4. Neither the inventory damage nor the roof repair is covered

Explanation

The 'your work' exclusion bars the cost of repairing or replacing the insured's defective work, but it does not bar damage to other property such as the customer's inventory. The inventory damage may therefore be covered if it resulted from an occurrence.

Question 44Commercial General Liability

An insured's product causes bodily injury to a consumer after the product has left the insured's premises. Which coverage part responds to the consumer's claim?

  1. Coverage C, medical payments
  2. The supplementary payments provision
  3. The products-completed operations hazard under Coverage A Correct answer.
  4. Coverage B, personal and advertising injury

Explanation

The products-completed operations hazard covers bodily injury and property damage arising out of the insured's product after it has left the insured's premises. Coverage A is the grant that responds, subject to the products-completed operations aggregate.

Question 45Commercial General Liability

An insured's defective product is recalled to prevent injury, and the insured seeks coverage for the cost of the recall. Which exclusion bars the claim?

  1. The pollution exclusion
  2. The recall exclusion Correct answer.
  3. The employment-related practices exclusion
  4. The aircraft exclusion

Explanation

The recall exclusion bars coverage for costs incurred to withdraw, recall, or replace the insured's product because of a known or suspected defect. It applies even if the recall is undertaken to prevent bodily injury or property damage.

Question 46Commercial General Liability

An insured's defective component is incorporated into a larger system, and the system becomes unusable because the component must be replaced. The system itself is not physically damaged. Which exclusion is most relevant to the claim for loss of use of the system?

  1. The liquor liability exclusion
  2. The impaired property exclusion Correct answer.
  3. The employer's liability exclusion
  4. The electronic data exclusion

Explanation

The impaired property exclusion bars coverage for property damage to impaired property, which is property that cannot be used because of a known or suspected defect in the insured's product or work. It applies where the property has not been physically injured.

Question 47Commercial General Liability

An insured hosts a company picnic and a guest is injured when a tent collapses. Which part of the CGL policy responds to the guest's claim?

  1. Coverage A, bodily injury and property damage liability Correct answer.
  2. Coverage D, damage to premises rented to you
  3. Coverage B, personal and advertising injury liability
  4. Coverage C, medical payments, if the injury meets the form's conditions

Explanation

A bodily injury claim arising from an occurrence at a company event is addressed by Coverage A. Coverage C may also pay medical expenses without regard to fault if its conditions are met, but the liability claim for damages falls under Coverage A.

Question 48Commercial General Liability

An insured receives a claim alleging that its advertisement infringed on a competitor's copyright. How does the standard CGL form respond?

  1. Coverage A applies because copyright infringement is property damage
  2. Coverage C applies because the claim involves a business injury
  3. Coverage B may apply because infringement of copyright in an advertisement is an enumerated offense Correct answer.
  4. The claim is barred because intellectual property claims are never covered

Explanation

Coverage B enumerates infringement of copyright, trade dress, or slogan in the insured's advertisement as a covered offense. The form also contains exclusions for knowing violation of rights and for certain trademark and patent claims.

Question 49Commercial General Liability

An insured leases a building and the lease requires the insured to insure the landlord as an additional insured. Which endorsement is most commonly used to satisfy this requirement?

  1. A waiver of subrogation endorsement
  2. A primary and noncontributory endorsement
  3. A vendor endorsement
  4. An additional insured endorsement Correct answer.

Explanation

An additional insured endorsement extends coverage to the landlord for liability arising out of the insured's operations. The endorsement defines the scope of coverage and any limits applicable to the additional insured.

Question 50Commercial General Liability

Under the standard commercial general liability coverage form, which limit is the most the insurer will pay for the sum of all damages under Coverage A and Coverage B, except damages covered under the products-completed operations hazard?

  1. The each occurrence limit
  2. The general aggregate limit Correct answer.
  3. The damage to premises rented to you limit
  4. The products-completed operations aggregate limit

Explanation

The general aggregate limit caps the total of all Coverage A and Coverage B payments during the policy period, excluding amounts paid under the products-completed operations hazard, which has its own separate aggregate. The each occurrence limit applies per occurrence, and the premises-rented limit is a sublimit for fire damage to rented premises.