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CPCU 552, Chapter 8 Questions and Correct
Answers
Which one of the following statements about defense coverage in
the typical professional liability insurance policy is most accurate?
Ans: Although professional liability policies differ, most policies
pay for defense costs as long as they fall within the limits of the
policy.
Which one of the following statements relating to the legal liability
of healthcare professionals to use an appropriate standard of care
when providing health care is most accurate? Ans: Most courts
require the testimony of expert witnesses to establish the
appropriate standard of care for medical treatment.
ABC Insurance Company provided commercial general liability
insurance for XYZ Grocery Chain with aggregate annual limits of
$2,000,000. XYZ was sued for $5,000,000 by a plaintiff that
alleged that she was injured on XYZ's premises when XYZ
employees failed to clean up some spilled milk in the dairy aisle.
Against the advice of his senior claims manager, the vice president
of claims at ABC vowed to continue to contest the claim, even after
a reasonable settlement offer of $300,000 was made by the
plaintiff's attorney. At the conclusion of the trial, a jury awarded
the plaintiff $4,500,000. ABC was found to have acted in bad faith
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in the course of rejecting the $300,000 settlement offer and was
ultimately required to pay the full amount of the $4,500,000
judgment. Of the $4,500,000 that ABC was eventually required to
pay, how much of it would be classified as "extracontractual
damages"? Ans: 2,500,000
The extracontractual damages amount to $4,500,00 which is the
amount in excess of the policy limits of $2,000,000.
The Insurance Services Office (ISO) Commercial Lines Manual
states that various professional services exclusions should be
added to the general liability policies for numerous business
classifications. Which one of the following is an example of
classifications requiring professional services exclusions? Ans:
Barber shops
In professional liability, the difference between a contract claim
and a tort claim can be an important distinction. Which one of the
following statements pertaining to the difference between tort
claims and contract claims is most accurate? Ans: Tort claims and
contract claims may be subject to different statutes of limitations,
making one type of claim preferable to the other in some
jurisdictions.
Healthcare professional liability policies for physicians generally
split coverage into two insuring agreements. The first insuring
© 2025 All rights reserved
CPCU 552, Chapter 8 Questions and Correct
Answers
Which one of the following statements about defense coverage in
the typical professional liability insurance policy is most accurate?
Ans: Although professional liability policies differ, most policies
pay for defense costs as long as they fall within the limits of the
policy.
Which one of the following statements relating to the legal liability
of healthcare professionals to use an appropriate standard of care
when providing health care is most accurate? Ans: Most courts
require the testimony of expert witnesses to establish the
appropriate standard of care for medical treatment.
ABC Insurance Company provided commercial general liability
insurance for XYZ Grocery Chain with aggregate annual limits of
$2,000,000. XYZ was sued for $5,000,000 by a plaintiff that
alleged that she was injured on XYZ's premises when XYZ
employees failed to clean up some spilled milk in the dairy aisle.
Against the advice of his senior claims manager, the vice president
of claims at ABC vowed to continue to contest the claim, even after
a reasonable settlement offer of $300,000 was made by the
plaintiff's attorney. At the conclusion of the trial, a jury awarded
the plaintiff $4,500,000. ABC was found to have acted in bad faith
© 2025 All rights reserved
, 2 | Page
in the course of rejecting the $300,000 settlement offer and was
ultimately required to pay the full amount of the $4,500,000
judgment. Of the $4,500,000 that ABC was eventually required to
pay, how much of it would be classified as "extracontractual
damages"? Ans: 2,500,000
The extracontractual damages amount to $4,500,00 which is the
amount in excess of the policy limits of $2,000,000.
The Insurance Services Office (ISO) Commercial Lines Manual
states that various professional services exclusions should be
added to the general liability policies for numerous business
classifications. Which one of the following is an example of
classifications requiring professional services exclusions? Ans:
Barber shops
In professional liability, the difference between a contract claim
and a tort claim can be an important distinction. Which one of the
following statements pertaining to the difference between tort
claims and contract claims is most accurate? Ans: Tort claims and
contract claims may be subject to different statutes of limitations,
making one type of claim preferable to the other in some
jurisdictions.
Healthcare professional liability policies for physicians generally
split coverage into two insuring agreements. The first insuring
© 2025 All rights reserved
