AU 62 Chapter 2 Questions with 100% Correct
Answers
Premises and operations liability exposure
Premises and operations liability exposure is the possibility that an organization will be held
liable because of bodily injury or property damage caused by an accident that either occurs
on the organization's premises or arises out of the organization's ongoing (as opposed to
completed) operations on or off those premises. It could be caused by an accident arising out
of the products manufactured, sold, or distributed by the organization and occurring after the
products are no longer on the organizations's premises or int he organization's physical
possession or by an accident arising out of the organization's completed work, including
defective parts or materials furnished with the work.
Accidents that could lead to claims
A consumer dies because of impurities in a medicine sold by a pharmaceutical firm.
The tenants of an apartment building are injured by smoke inhalation, and their personal
property is destroyed by a fire that resulted from faulty electrical work completed by a
contractor several hours earlier.
Personal and Advertising Injury Liability
CGL form defines this to mean any kind of injury (such as loss of reputation, humiliation,
economic loss, or even consequential bodily injury) arising out of any of several listed
offenses. Examples of the listed offenses are false arrest, wrongful eviction, libel, slander and
infringing upon another's copyright in the insured's advertisement. It is now such a common
exposure that is is an integral part of the CGL form, but it can be omitted if the insured does
not want to buy it. This is Coverage B on the CGL form.
,Medical Payments
CGL form includes Coverage C - Medical Payments, which pays medical expenses of others
in certain circumstances. Coverage C, Medical Payments does not require the insured to be
legally liable and, therefore, is not technically liability insurance. Underwriters do not
individually underwrite this loss exposure but do consider the medical payments loss
exposure as part of the premises or operations loss exposures.
Bodily Injury and Property Damage Liablity
On CGL form, this is Coverage A - Bodily Injury and Property Damage Liability.
Requirements for Medical Payments Coverage
To be covered, the medical expenses (as defined in the form) must result from bodily injury
because of an accident occurring on the insured's premises or arising out of the insured's
operations (other than completed operations) anywhere in the coverage territory.
Limits of Medical Payments Insurance
Medical payments coverage has a much lower limit of insurance than either Coverage A or
Coverage B. Its role is to pay small bodily injury claims without having to establish liability,
perhaps reducing the likelihood that an accident victim will sue the insured.
Other General Liability Exposures
While ISO general liability coverage forms are available for covering either specific situation
or specific loss exposure that are not adequately covered by the CGL form, successful
underwriting of these types of loss exposures requires a thorough understanding of the policy
provision to properly evaluate the general liability loss exposures and to determine whether
the insured's loss exposure is on that is covered under the CGL policy or would be more
appropriately covered under a different coverage form.
, The underwriter should also not ignore possible gaps, omissions, or overlaps in coverage by
automatically providing only the coverage requested by the producer. Whenever necessary,
underwriters should explain to the producer alternative methods of treating any observed gap,
omission or overlap. This elimination of gaps in coverage aids all parties concerned,
including the insurer, by avoiding misunderstandings about coverage that might arise after a
loss occurs.
Components of a General Liability Coverage Part
One or more general liability declaration forms
One or more general liability coverage forms
Any applicable endorsements
Under ISO procedures, a general liability coverage part can be included in a CPP or issued in
a monoline policy that provides general liability coverage only.
General Liability Declarations
ISO has developed separate declarations forms for use with each of its general liability
coverage forms. Some of the declarations forms also contain spaces for showing additional
information relevant to the associated coverage form.
- The insurer's and producers names
- The named insured's name and mailing address
-The policy inception and expiration dates
Answers
Premises and operations liability exposure
Premises and operations liability exposure is the possibility that an organization will be held
liable because of bodily injury or property damage caused by an accident that either occurs
on the organization's premises or arises out of the organization's ongoing (as opposed to
completed) operations on or off those premises. It could be caused by an accident arising out
of the products manufactured, sold, or distributed by the organization and occurring after the
products are no longer on the organizations's premises or int he organization's physical
possession or by an accident arising out of the organization's completed work, including
defective parts or materials furnished with the work.
Accidents that could lead to claims
A consumer dies because of impurities in a medicine sold by a pharmaceutical firm.
The tenants of an apartment building are injured by smoke inhalation, and their personal
property is destroyed by a fire that resulted from faulty electrical work completed by a
contractor several hours earlier.
Personal and Advertising Injury Liability
CGL form defines this to mean any kind of injury (such as loss of reputation, humiliation,
economic loss, or even consequential bodily injury) arising out of any of several listed
offenses. Examples of the listed offenses are false arrest, wrongful eviction, libel, slander and
infringing upon another's copyright in the insured's advertisement. It is now such a common
exposure that is is an integral part of the CGL form, but it can be omitted if the insured does
not want to buy it. This is Coverage B on the CGL form.
,Medical Payments
CGL form includes Coverage C - Medical Payments, which pays medical expenses of others
in certain circumstances. Coverage C, Medical Payments does not require the insured to be
legally liable and, therefore, is not technically liability insurance. Underwriters do not
individually underwrite this loss exposure but do consider the medical payments loss
exposure as part of the premises or operations loss exposures.
Bodily Injury and Property Damage Liablity
On CGL form, this is Coverage A - Bodily Injury and Property Damage Liability.
Requirements for Medical Payments Coverage
To be covered, the medical expenses (as defined in the form) must result from bodily injury
because of an accident occurring on the insured's premises or arising out of the insured's
operations (other than completed operations) anywhere in the coverage territory.
Limits of Medical Payments Insurance
Medical payments coverage has a much lower limit of insurance than either Coverage A or
Coverage B. Its role is to pay small bodily injury claims without having to establish liability,
perhaps reducing the likelihood that an accident victim will sue the insured.
Other General Liability Exposures
While ISO general liability coverage forms are available for covering either specific situation
or specific loss exposure that are not adequately covered by the CGL form, successful
underwriting of these types of loss exposures requires a thorough understanding of the policy
provision to properly evaluate the general liability loss exposures and to determine whether
the insured's loss exposure is on that is covered under the CGL policy or would be more
appropriately covered under a different coverage form.
, The underwriter should also not ignore possible gaps, omissions, or overlaps in coverage by
automatically providing only the coverage requested by the producer. Whenever necessary,
underwriters should explain to the producer alternative methods of treating any observed gap,
omission or overlap. This elimination of gaps in coverage aids all parties concerned,
including the insurer, by avoiding misunderstandings about coverage that might arise after a
loss occurs.
Components of a General Liability Coverage Part
One or more general liability declaration forms
One or more general liability coverage forms
Any applicable endorsements
Under ISO procedures, a general liability coverage part can be included in a CPP or issued in
a monoline policy that provides general liability coverage only.
General Liability Declarations
ISO has developed separate declarations forms for use with each of its general liability
coverage forms. Some of the declarations forms also contain spaces for showing additional
information relevant to the associated coverage form.
- The insurer's and producers names
- The named insured's name and mailing address
-The policy inception and expiration dates
