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All of the following correctly describe underwriting considerations when evaluating the extent of an insured's liability exposure to the public, EXCEPT:
All of the following correctly describe underwriting considerations when evaluating the extent of an insured's liability exposure to the public, EXCEPT:
When evaluating an insured with primarily a premises exposure, the underwriter need not be concerned with the property damage liability exposure.
When evaluating an insured with primarily a premises exposure, the underwriter need not be concerned with the property damage liability exposure.
True
What factors may cause differences in exposure between two premises?
What factors may cause differences in exposure between two premises?
Location, type of business, and time in business.
A contractor was hired by a railroad to work on a bridge adjacent to railroad tracks. Which one of the following types of insurance coverage would best respond to claims against the railroad arising out of the contractor's work?
A contractor was hired by a railroad to work on a bridge adjacent to railroad tracks. Which one of the following types of insurance coverage would best respond to claims against the railroad arising out of the contractor's work?
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XYZ contractor, covered under an unendorsed Commercial General Liability (CGL) Coverage Form, is installing kitchen cabinets in a customer's home. Which one of the following best explains how coverage under the contractor's CGL Coverage Form applies in this case?
XYZ contractor, covered under an unendorsed Commercial General Liability (CGL) Coverage Form, is installing kitchen cabinets in a customer's home. Which one of the following best explains how coverage under the contractor's CGL Coverage Form applies in this case?
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Which one of the following is an example of injury or damage arising from an occurrence that would be covered by the products and completed operations liability portion of the Commercial General Liability (CGL) Coverage Form?
Which one of the following is an example of injury or damage arising from an occurrence that would be covered by the products and completed operations liability portion of the Commercial General Liability (CGL) Coverage Form?
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Which one of the following statements about owners and contractors protective liability coverage is true?
Which one of the following statements about owners and contractors protective liability coverage is true?
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Pedestrian Wilma was injured as a result of a contractor's negligence when the contractor failed to adequately warn the public of a hazard when paving a road. Any resulting liability claim by Wilma against the contractor would be considered to have arisen from the contractor's:
Pedestrian Wilma was injured as a result of a contractor's negligence when the contractor failed to adequately warn the public of a hazard when paving a road. Any resulting liability claim by Wilma against the contractor would be considered to have arisen from the contractor's:
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The five classifications the Commercial Lines Manual (CLM) uses to refine the general liability classification process include all of the following, EXCEPT:
The five classifications the Commercial Lines Manual (CLM) uses to refine the general liability classification process include all of the following, EXCEPT:
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When classifying and pricing manufacturing or processing operations, underwriters should follow all of the following guidelines, EXCEPT:
When classifying and pricing manufacturing or processing operations, underwriters should follow all of the following guidelines, EXCEPT:
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Weaver Brothers owns three buildings in Boston. Each building contains eight apartment units that are rented out to college students. Which one of the following major business groups found in the Commercial Lines Manual (CLM) would apply for Weaver Brothers' operations?
Weaver Brothers owns three buildings in Boston. Each building contains eight apartment units that are rented out to college students. Which one of the following major business groups found in the Commercial Lines Manual (CLM) would apply for Weaver Brothers' operations?
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James Smith operates a wholesale nursery that sells only to retail nursery and garden shops. In Commercial Lines Manual classification terminology, Mr. Smith is a:
James Smith operates a wholesale nursery that sells only to retail nursery and garden shops. In Commercial Lines Manual classification terminology, Mr. Smith is a:
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Best Builders is a commercial building contractor. The company often hires subcontractors to perform certain activities on a job. According to the Commercial Lines Manual (CLM), the work performed by subcontractors should be separately classified under Contractors - subcontracted work (91583) only if which one of the following is true?
Best Builders is a commercial building contractor. The company often hires subcontractors to perform certain activities on a job. According to the Commercial Lines Manual (CLM), the work performed by subcontractors should be separately classified under Contractors - subcontracted work (91583) only if which one of the following is true?
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In addition to salaries and wages, the ISO Commercial Lines Manual's definition of 'payroll' includes all of the following, EXCEPT:
In addition to salaries and wages, the ISO Commercial Lines Manual's definition of 'payroll' includes all of the following, EXCEPT:
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Courtland Incorporated owns a four-story plus basement office building. The dimensions of each floor are 120 feet long by 60 feet wide. The basement contains the heating and air-conditioning units, and other building maintenance equipment. It is only used by the building maintenance employees. Which one of the following is the appropriate exposure to use when calculating Courtland Incorporated's commercial general liability premium?
Courtland Incorporated owns a four-story plus basement office building. The dimensions of each floor are 120 feet long by 60 feet wide. The basement contains the heating and air-conditioning units, and other building maintenance equipment. It is only used by the building maintenance employees. Which one of the following is the appropriate exposure to use when calculating Courtland Incorporated's commercial general liability premium?
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The commercial general liability premium for Springer's Pools and Spas (Springer's) is based on gross sales. A customer purchases a $2,000 spa from Springer's. Because the customer is willing to pay cash, Springer's gives the customer a 10 percent discount and waives the $150 freight charge. The customer pays $1,800 plus $108 in sales tax for a total of $1,908 in cash. Which one of the following represents the amount for this sale that should be included in Springer's gross sales calculation?
The commercial general liability premium for Springer's Pools and Spas (Springer's) is based on gross sales. A customer purchases a $2,000 spa from Springer's. Because the customer is willing to pay cash, Springer's gives the customer a 10 percent discount and waives the $150 freight charge. The customer pays $1,800 plus $108 in sales tax for a total of $1,908 in cash. Which one of the following represents the amount for this sale that should be included in Springer's gross sales calculation?
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Palmer & Sons Electrical has a total of twenty-four employees. In addition to the two executive officers, there are two administrative employees in the office, and twenty electricians. Payroll is the premium base for commercial general liability (CGL) insurance for electrical contractors. The payroll used to calculate the CGL premium for Palmer & Sons should include all of the following, EXCEPT:
Palmer & Sons Electrical has a total of twenty-four employees. In addition to the two executive officers, there are two administrative employees in the office, and twenty electricians. Payroll is the premium base for commercial general liability (CGL) insurance for electrical contractors. The payroll used to calculate the CGL premium for Palmer & Sons should include all of the following, EXCEPT:
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For general liability insurance purposes, in addition to salaries and wages, the ISO Commercial Lines Manual's definition of 'payroll' includes which one of the following?
For general liability insurance purposes, in addition to salaries and wages, the ISO Commercial Lines Manual's definition of 'payroll' includes which one of the following?
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Which one of the following insureds would be legally required to exercise the highest degree of care for individuals on its premises?
Which one of the following insureds would be legally required to exercise the highest degree of care for individuals on its premises?
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Olivia is a commercial lines underwriter. She is in the process of reviewing several different applications for commercial general liability (CGL) coverage. Which one of the following businesses would Olivia expect to have a higher frequency of property damage losses than bodily injury losses?
Olivia is a commercial lines underwriter. She is in the process of reviewing several different applications for commercial general liability (CGL) coverage. Which one of the following businesses would Olivia expect to have a higher frequency of property damage losses than bodily injury losses?
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Food for All is a grocery store located in the suburbs of Maryland. It is a free-standing building with its own parking lot. In addition to typical grocery products, Food for All has a prepared food section with seating for customers. The store often blocks off a section of the parking lot on weekends and provides carnival-like activities for children with adult supervision. Which one of the following would be considered a common hazard related to Food for All's premises and operations liability loss exposures?
Food for All is a grocery store located in the suburbs of Maryland. It is a free-standing building with its own parking lot. In addition to typical grocery products, Food for All has a prepared food section with seating for customers. The store often blocks off a section of the parking lot on weekends and provides carnival-like activities for children with adult supervision. Which one of the following would be considered a common hazard related to Food for All's premises and operations liability loss exposures?
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Durham Insurance has insured Camp Hill Auto Parts (Camp Hill) for commercial general liability coverage for over three years. Camp Hill has always operated as a wholesale distributor of auto parts. They have a large inventory in their warehouse and are known for providing prompt delivery service to service stations in the area. During the current policy year, Camp Hill decided to convert a section of the warehouse to a retail store. They now sell auto parts to the general public. Which one of the following members of the staff at Durham Insurance is least likely to discover this midterm change in operations at Camp Hill?
Durham Insurance has insured Camp Hill Auto Parts (Camp Hill) for commercial general liability coverage for over three years. Camp Hill has always operated as a wholesale distributor of auto parts. They have a large inventory in their warehouse and are known for providing prompt delivery service to service stations in the area. During the current policy year, Camp Hill decided to convert a section of the warehouse to a retail store. They now sell auto parts to the general public. Which one of the following members of the staff at Durham Insurance is least likely to discover this midterm change in operations at Camp Hill?
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A building's heating and electrical systems would fall into which one of the following categories of physical hazards relating to premises and operations liability loss exposures?
A building's heating and electrical systems would fall into which one of the following categories of physical hazards relating to premises and operations liability loss exposures?
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Paradox Construction is a residential building contractor. Employees are often assigned to the task at hand, which may include carpentry, painting, electrical, or clean-up work. Paradox Construction does not keep track of payroll by the various task classifications. According to the Commercial Lines Manual (CLM), which one of the following is the proper way to classify payroll for these construction workers?
Paradox Construction is a residential building contractor. Employees are often assigned to the task at hand, which may include carpentry, painting, electrical, or clean-up work. Paradox Construction does not keep track of payroll by the various task classifications. According to the Commercial Lines Manual (CLM), which one of the following is the proper way to classify payroll for these construction workers?
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Martin, a commercial lines underwriter, is reviewing the general liability application for Shelton Manufacturing. The company processes recyclable plastic into a variety of products. Which one of the following guidelines should Martin follow when classifying Shelton Manufacturing's operations?
Martin, a commercial lines underwriter, is reviewing the general liability application for Shelton Manufacturing. The company processes recyclable plastic into a variety of products. Which one of the following guidelines should Martin follow when classifying Shelton Manufacturing's operations?
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When classifying and pricing manufacturing or processing operations, underwriters should follow which one of the following guidelines?
When classifying and pricing manufacturing or processing operations, underwriters should follow which one of the following guidelines?
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Which one of the following is one of the five classifications the Commercial Lines Manual (CLM) uses to refine the general liability classification process?
Which one of the following is one of the five classifications the Commercial Lines Manual (CLM) uses to refine the general liability classification process?
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Which one of the following is correct with respect to the classification of contracting risks?
Which one of the following is correct with respect to the classification of contracting risks?
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Which one of the following statements regarding gross sales as a rating basis for general liability insurance is true?
Which one of the following statements regarding gross sales as a rating basis for general liability insurance is true?
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All of the following regarding gross sales as a rating basis for general liability insurance are true, EXCEPT:
All of the following regarding gross sales as a rating basis for general liability insurance are true, EXCEPT:
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The ISO Commercial Lines Manual's definition of the premium base 'gross sales' is the gross amount of money charged by the named insured, by the concessionaires of the named insured, or by others trading the insured's name for various specifically named sources of funds collected. Which one of the following is one of those sources of funds?
The ISO Commercial Lines Manual's definition of the premium base 'gross sales' is the gross amount of money charged by the named insured, by the concessionaires of the named insured, or by others trading the insured's name for various specifically named sources of funds collected. Which one of the following is one of those sources of funds?
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The Park Slope Theater is a local performing arts center with a seating capacity of 1,000. A variety of musical and theatrical groups perform at the theater, which is open six days a week. Which one of the following is the most appropriate premium base for Park Slope Theater's commercial general liability (CGL) insurance?
The Park Slope Theater is a local performing arts center with a seating capacity of 1,000. A variety of musical and theatrical groups perform at the theater, which is open six days a week. Which one of the following is the most appropriate premium base for Park Slope Theater's commercial general liability (CGL) insurance?
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The ISO Commercial Lines Manual's definition of the premium base 'gross sales' is the gross amount of money charged by the named insured, by the concessionaires of the named insured, or by others trading the insured's name for all of the following, EXCEPT:
The ISO Commercial Lines Manual's definition of the premium base 'gross sales' is the gross amount of money charged by the named insured, by the concessionaires of the named insured, or by others trading the insured's name for all of the following, EXCEPT:
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Which one of the following physical hazards would be considered a special hazard of the class?
Which one of the following physical hazards would be considered a special hazard of the class?
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Which one of the following is an underwriting consideration when evaluating the extent of an insured's liability exposure to the public?
Which one of the following is an underwriting consideration when evaluating the extent of an insured's liability exposure to the public?
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Study Notes
Insurance Coverage and Liability
- Railroad Protective Liability Coverage is ideal for claims arising from contractor work adjacent to railroad tracks.
- Commercial General Liability (CGL) coverage is crucial for contractors during installation activities, with premises and operations liability applying when work is actively being performed.
- Products and completed operations liability applies when defects in manufactured goods cause injury, such as a gas range explosion.
- Owners and Contractors Protective Liability Coverage is intended to cover property owners for damages from contractors' operations.
Classification and Guidelines
- The Commercial Lines Manual uses classifications such as manufacturing, building, and contracting to streamline general liability underwriting.
- Underwriters should classify manufacturing operations based on the intended use of final products, excluding interim processes for pricing purposes.
- Payroll for electrical contractors should primarily consider direct employee costs related to high-risk work, while excluding certain admin payrolls.
Gross Sales and Premium Calculations
- Gross sales revenue, including rentals and service sales, is critical for determining general liability premiums but excludes sales taxes.
- For specific businesses like theaters, the number of persons admitted provides a practical basis for calculating general liability premiums.
Physical Hazards and Underwriting Considerations
- Common hazards include mechanical systems in buildings, while special hazards might involve unique risks, such as cooking in restaurants.
- Evaluating public liability exposure takes into account operational hazards and environmental factors like traffic and business type; excessive exposure cannot be assumed solely based on traffic.
Miscellaneous Facts
- Liability exposure from construction tasks depends on various job classifications and the workload of subcontractors, highlighting the need for accurate insurance coverage.
- In underwriting, awareness of outdoor activities affecting safety, such as those in a grocery store's parking lot during events, is essential.
Legal and Liability Framework
- Underwriters should note the highest duty of care for businesses dealing with children, like toy stores, due to increased safety expectations.
- For insurance reporting, the premium base "gross sales" includes revenue generated within a given operating period, not simply receipts from sales.
Operational Risks and Insurance Metrics
- Understanding different physical hazards, from icy sidewalks to unsafe food handling, shapes the underwriting process in assessing risk for various business types.
- Evaluating general liability involves distinguishing duties across various business lines, ensuring a comprehensive grasp of potential exposures.
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Description
Test your knowledge on various insurance coverages relevant to contractors and property owners. This quiz covers Railroad Protective Liability, Commercial General Liability, and classifications used in underwriting. Understand the nuances of liability insurance and its implications for contractors and project owners.
