Commercial General Liability (CGL) Quiz

What is the purpose of Section III in a CGL policy?

• Outlines conditions and obligations

• Lists the coverages

• Defines who is insured

• Specifies maximum payouts per occurrence and aggregate limits

Answer explanation

Section III of a CGL policy specifies maximum payouts per occurrence and aggregate limits, ensuring that insured parties understand the financial boundaries of their coverage.

What does a surety bond guarantee?

• Performance or compliance

• Insurance coverage

• Financial investment

• Legal defense

Answer explanation

A surety bond guarantees that a party will fulfill their obligations, ensuring performance or compliance with a contract. It does not provide insurance coverage, financial investment, or legal defense.

Which type of policy covers claims made and reported during the policy period?

• Claims-Made

• Retroactive

• Occurrence

• Extended Reporting

Answer explanation

A Claims-Made policy covers claims that are made and reported during the policy period. This means that for a claim to be covered, it must be both made and reported while the policy is active.

What is an example of a task required by Section IV conditions?

• The insured must provide a list of all employees

• The insured must notify the insurer promptly and cooperate with investigations

• The insured must pay premiums annually

• The insured must renew the policy every year

Answer explanation

The correct choice highlights a key responsibility of the insured under Section IV, which is to notify the insurer promptly and cooperate with investigations, ensuring effective claims handling.

What is the primary difference between occurrence and claims-made policies?

• Occurrence is more expensive than claims-made

• Occurrence covers only physical damage; claims-made covers non-physical damage

• Occurrence requires annual renewal; claims-made does not

• Occurrence covers losses during the policy period regardless of reporting time; claims-made covers claims made and reported during the policy period

Answer explanation

The primary difference is that occurrence policies cover losses that happen during the policy period, regardless of when claims are reported, while claims-made policies only cover claims made and reported during the policy period.

What is a key feature of an occurrence policy?

• Covers losses that happen during the policy period, regardless of when reported

• Only covers incidents reported within the policy period

• Covers claims made and reported during the policy period

• Requires annual renewal

Answer explanation

An occurrence policy covers losses that happen during the policy period, regardless of when they are reported. This means claims can be filed after the policy has expired, as long as the loss occurred while the policy was active.

What is an example of a professional liability policy?

• Errors & Omissions (E&O) coverage for accountants

• CGL Coverage A

• CGL Coverage B

• CGL Coverage C

Answer explanation

Errors & Omissions (E&O) coverage for accountants is a type of professional liability policy that protects against claims of negligence or inadequate work, making it the correct choice. CGL coverages are not specifically for professional liability.

Which section of CGL defines who is automatically covered?

• Section III

• Section I

• Section II

• Section IV

Answer explanation

Section II of the CGL defines who is automatically covered, outlining the specific parties and circumstances that qualify for coverage without needing to apply for it.

What type of harm does Coverage B under CGL address?

• Medical expenses

• Property damage

• Bodily injury

• Non-physical harm like libel and slander

Answer explanation

Coverage B under CGL addresses non-physical harm like libel and slander, which refers to reputational damage rather than direct bodily injury or property damage.

Which of the following is an example of a situation covered by Coverage C?

• An employee causes injury during delivery

• A business is sued for using a competitor’s slogan

• A contractor damages a client's flooring

• A visitor trips on a rug and breaks an arm

Answer explanation

Coverage C typically covers bodily injury to visitors on the premises. In this case, a visitor tripping on a rug and breaking an arm is a clear example of such an incident, making it the correct choice.