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Commercial General Liability

Practice questions on commercial general liability for the casualty exam, each with an answer and explanation.

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Study questions and answers

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1. A commercial package policy must include common policy declarations, common policy conditions, and at least how many coverage parts?

  1. One
  2. Two
  3. Three
  4. Four
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B. Two
A commercial package policy combines two or more coverage parts. A policy with only one coverage part is a monoline policy.

2. Which coverage of the commercial general liability (CGL) coverage form pays for bodily injury and property damage the insured is legally obligated to pay because of an occurrence?

  1. Coverage A
  2. Coverage B
  3. Coverage C
  4. Supplementary Payments
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A. Coverage A
Coverage A is bodily injury and property damage liability. Coverage B is personal and advertising injury, and Coverage C is medical payments.

3. Under the CGL occurrence form, an occurrence is defined as:

  1. Any claim first made during the policy period
  2. An intentional act by the insured that causes harm
  3. An accident, including continuous or repeated exposure to substantially the same general harmful conditions
  4. Any loss reported within one year of the policy expiration
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C. An accident, including continuous or repeated exposure to substantially the same general harmful conditions
The occurrence definition includes sudden accidents and gradual, repeated exposure to harmful conditions, as long as the injury was not expected or intended.

4. Under the CGL occurrence form, which event must take place during the policy period for coverage to apply?

  1. The claim must be filed
  2. The bodily injury or property damage must occur
  3. The lawsuit must be settled
  4. The insured must report the incident to the agent
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B. The bodily injury or property damage must occur
An occurrence form covers bodily injury or property damage that happens during the policy period, even if the claim is made years later.

5. A competitor sues a business for libel after the business posted false statements about the competitor in a newspaper ad. Which CGL coverage applies?

  1. Coverage A - Bodily Injury and Property Damage
  2. Coverage C - Medical Payments
  3. Products-completed operations coverage
  4. Coverage B - Personal and Advertising Injury
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D. Coverage B - Personal and Advertising Injury
Libel and slander are listed offenses under Coverage B, personal and advertising injury liability.

6. Which of the following is NOT one of the offenses covered under CGL Coverage B, personal and advertising injury?

  1. False arrest, detention, or imprisonment
  2. Wrongful eviction
  3. Bodily injury caused by a defective product
  4. Infringing on another person's copyright in the insured's advertisement
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C. Bodily injury caused by a defective product
Bodily injury from a defective product is covered under Coverage A, not Coverage B. The other choices are listed Coverage B offenses.

7. A customer trips on a torn rug in a retail store and needs stitches. The store has no legal liability. Which CGL coverage can pay the medical bills?

  1. Coverage C - Medical Payments
  2. Coverage A - Bodily Injury and Property Damage
  3. Coverage B - Personal and Advertising Injury
  4. Employers liability
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A. Coverage C - Medical Payments
Coverage C pays medical expenses for bodily injury caused by an accident on the insured's premises or operations, regardless of fault.

8. For CGL Coverage C to pay, medical expenses must be incurred and reported to the insurer within what time after the date of the accident?

  1. 30 days
  2. 90 days
  3. 6 months
  4. One year
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D. One year
Coverage C pays reasonable medical expenses incurred and reported within one year of the accident.

9. Which person would be excluded from CGL Coverage C, medical payments?

  1. A delivery driver from another company injured on the premises
  2. A customer injured in the insured's showroom
  3. An employee of the named insured injured on the job
  4. A visitor injured on the sidewalk the insured maintains
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C. An employee of the named insured injured on the job
Coverage C excludes injury to employees, which is handled by workers compensation. It also excludes any insured and people injured in athletic activities.

10. Under CGL supplementary payments, how much will the insurer pay for loss of earnings when the insured attends a hearing or trial at the insurer's request?

  1. Up to $100 a day
  2. Up to $250 a day
  3. Up to $500 a day
  4. Actual earnings with no limit
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B. Up to $250 a day
The CGL pays up to $250 a day for loss of earnings because of time off from work at the insurer's request.

11. How do CGL supplementary payments, such as defense costs, affect the limits of insurance?

  1. They are paid in addition to the limits of insurance
  2. They reduce the each occurrence limit
  3. They reduce the general aggregate limit
  4. They are deducted from the medical expense limit
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A. They are paid in addition to the limits of insurance
Supplementary payments, including defense costs, are paid in addition to the limits and do not reduce them.

12. Under the CGL coverage form, the insurer's duty to defend ends when:

  1. The suit has lasted more than two years
  2. The insured is found to be at fault
  3. The applicable limit of insurance has been used up in the payment of judgments or settlements
  4. The policy period expires
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C. The applicable limit of insurance has been used up in the payment of judgments or settlements
The duty to defend ends once the applicable limit has been exhausted by paying judgments or settlements.

13. The business is a sole proprietorship. Under the CGL, who is an insured?

  1. Only the named individual
  2. The individual and his or her spouse, but only for the conduct of the business
  3. The individual and all family members living in the household
  4. The individual and any customer on the premises
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B. The individual and his or her spouse, but only for the conduct of the business
For a sole proprietor, the named individual and the spouse are insureds, but only for the conduct of the business the individual owns.

14. Under the CGL, an organization the named insured newly acquires or forms is automatically an insured until the end of the policy period or for how many days after it is acquired, whichever comes first?

  1. 30 days
  2. 60 days
  3. 180 days
  4. 90 days
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D. 90 days
Newly acquired or formed organizations are covered for 90 days or until the end of the policy period, whichever is earlier.

15. Which CGL limit is the most the insurer will pay for the sum of Coverage A, Coverage B, and Coverage C, other than damages within the products-completed operations hazard?

  1. Each occurrence limit
  2. Personal and advertising injury limit
  3. General aggregate limit
  4. Medical expense limit
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C. General aggregate limit
The general aggregate caps Coverages A, B and C combined, except products-completed operations losses, which have their own aggregate.

16. A contractor finishes building a deck, and three months later the deck collapses and injures a guest. Which part of the CGL addresses this loss?

  1. Products-completed operations hazard
  2. Coverage B
  3. Damage to premises rented to you
  4. Medical payments only
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A. Products-completed operations hazard
Injury that arises from the insured's product or from work that has been completed falls within the products-completed operations hazard.

17. Under the CGL, which limit applies to a fire the tenant insured accidentally causes in the building it rents?

  1. Products-completed operations aggregate
  2. Damage to premises rented to you limit
  3. Medical expense limit
  4. Personal and advertising injury limit
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B. Damage to premises rented to you limit
The damage to premises rented to you limit covers fire damage to premises the insured rents, which would otherwise be excluded as property in its care.

18. Under the CGL separation of insureds condition, coverage applies:

  1. Only to the first named insured
  2. As if each named insured were the only named insured and separately to each insured against whom a claim is made
  3. Only when all insureds sign the claim
  4. Only to insureds listed by name in the declarations
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B. As if each named insured were the only named insured and separately to each insured against whom a claim is made
Separation of insureds means each insured is treated separately, except for the limits of insurance, which are shared.
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