Construction Law Test 3 – Updated Questions With
Complete Solutions
The owner of a large general contractor is exploring options
regarding a full/total self-insurance program for the company.
The owner is tired of paying so much to insurance companies.
What is the biggest deterrent to the GC in self-insuring?
The company will come under the auspices of the state
insurance commission; i.e., will be treated as an insurance
company.
The Occurrence Form of CGL insurance is used mainly by the
___________________.
General Contractor
As a result of the co-insurance clause that is a part of a builder's
risk policy, the general contractor purchasing the policy should
________________.
purchase all-risk builders' risk to make sure losses are covered.
A building inspector is injured on your construction project
when a brick is knocked off the scaffold and hits the inspector.
What insurance will provide "first dollar" coverage? First dollar
coverage is the first insurance policy to provide coverage.
The GCs CGL policy
Some insurance policies contain language referring to
"premises-operations". What does this mean?
,Coverage applies to both the home office (premises) and the
jobsite (operations).
A $10,000,000 construction project has a great deal of site work.
What payment form should the general contractor purchase with
the builder's risk policy?
A reporting form is best in this case as it will result in cost
savings.
An employee of the plumbing subcontractor causes a fire during
the course of construction damaging part of the project. The
general contractor has provided the builder's risk policy
covering the construction. The cost of repairing the damage was
$300,000 which was covered by the builder's risk policy. What
is the likely next step of the insurance company?
Try and recover its losses from the plumbing subcontractor
under its right of subrogation.
All-risk builder's risk insurance is for coverage of ___________.
property under construction and job-related accidents that result
in injuries to your employees
What does "EC" stand for in regard to builders risk insurance?
Extended Coverage
What does "VNM" stand for in regard to builders risk
insurance?
Vandalism and Malicious Mischief
Owner Occupancy
, early occupancy can cause a BR policy to lapse; must get
insurance company approval before an owner moves in if
construction is continuing
Coinsurnace Clause
standard clause in BR. If you insure for less than the contract
amount, you are assumed to be a "co-insurer" based upon the
percentage of insurance to the total contract amount.
Wrap up policies are generally thought of as "big project"
policies. Why is this?
Wrap up policies come with a high deductible, making them
unattractive options for smaller projects.
Why does builder's risk insurance not show up on the pre-
printed ACORD form?
The ACORD form is modeled after an old AIA form
ACORD
Association for Cooperative Operations Research and
Development
Subrogation is __________________.
the right of an insurer to try and collect its losses from
responsible third parties
The premium for worker's compensation insurance for
construction craft workers (16 most common trades) averages
(nationally) about _________ of an employee's pay (straight
time)?
Complete Solutions
The owner of a large general contractor is exploring options
regarding a full/total self-insurance program for the company.
The owner is tired of paying so much to insurance companies.
What is the biggest deterrent to the GC in self-insuring?
The company will come under the auspices of the state
insurance commission; i.e., will be treated as an insurance
company.
The Occurrence Form of CGL insurance is used mainly by the
___________________.
General Contractor
As a result of the co-insurance clause that is a part of a builder's
risk policy, the general contractor purchasing the policy should
________________.
purchase all-risk builders' risk to make sure losses are covered.
A building inspector is injured on your construction project
when a brick is knocked off the scaffold and hits the inspector.
What insurance will provide "first dollar" coverage? First dollar
coverage is the first insurance policy to provide coverage.
The GCs CGL policy
Some insurance policies contain language referring to
"premises-operations". What does this mean?
,Coverage applies to both the home office (premises) and the
jobsite (operations).
A $10,000,000 construction project has a great deal of site work.
What payment form should the general contractor purchase with
the builder's risk policy?
A reporting form is best in this case as it will result in cost
savings.
An employee of the plumbing subcontractor causes a fire during
the course of construction damaging part of the project. The
general contractor has provided the builder's risk policy
covering the construction. The cost of repairing the damage was
$300,000 which was covered by the builder's risk policy. What
is the likely next step of the insurance company?
Try and recover its losses from the plumbing subcontractor
under its right of subrogation.
All-risk builder's risk insurance is for coverage of ___________.
property under construction and job-related accidents that result
in injuries to your employees
What does "EC" stand for in regard to builders risk insurance?
Extended Coverage
What does "VNM" stand for in regard to builders risk
insurance?
Vandalism and Malicious Mischief
Owner Occupancy
, early occupancy can cause a BR policy to lapse; must get
insurance company approval before an owner moves in if
construction is continuing
Coinsurnace Clause
standard clause in BR. If you insure for less than the contract
amount, you are assumed to be a "co-insurer" based upon the
percentage of insurance to the total contract amount.
Wrap up policies are generally thought of as "big project"
policies. Why is this?
Wrap up policies come with a high deductible, making them
unattractive options for smaller projects.
Why does builder's risk insurance not show up on the pre-
printed ACORD form?
The ACORD form is modeled after an old AIA form
ACORD
Association for Cooperative Operations Research and
Development
Subrogation is __________________.
the right of an insurer to try and collect its losses from
responsible third parties
The premium for worker's compensation insurance for
construction craft workers (16 most common trades) averages
(nationally) about _________ of an employee's pay (straight
time)?
