RMIN 5540 Final Test Questions Fully Solved Latest Version 2025
issues in use of liability insurance - Answers difficulty in estimating max possible loss for liability loss
exposures, layering of liability coverages, effect of aggregate limits; these are why there is s need for
excess/umbrella
underlying insurance - Answers Insurance that applies below an excess or umbrella liability policy.
excess liability policy - Answers designed to provide excess limits of coverages above the limits of the
underlying coverage; offers no broader protection than what underlying covg does
umbrella liability policy - Answers type of excess policy that not only provides additional limits, but also
provides covg not available in the underlying covgs; subject to insured's assumption of self insured
retention or retained limit; most provide defense covg
forms of excess liability - Answers follows form policy--> subject to the same provisions as the
underlying policy; self contained --> subject to its own provisions only; or a combo of the 2
retention is used for primary insurance - Answers specific excess and aggregate excess are often used
when...
following form - Answers excess liability policy that will only pay above the limits of the underlying
insurance if the loss is covered by the underlying insurance; can state that it follows whatever the
underlying says, or the terms are different but don't conflict with underlying
self contained - Answers excess liability policy; does not depend on primary layer with scope of covg-->
gaps can occur; applies to loss that exceeds limits of the underlying policy only if the loss is also covered
under this layer's terms
combination excess liability - Answers aspects of following form & self contained; incorporates
provisions from the underlying policy and modifies these provisions w/ addtl conditions or exclusions;
may not always "drop down" aka provide covg if claim is excluded by primary
true umbrella policy provision - Answers states that the policy applies over a self insured retention, if the
underlying layer does not cover a loss that is covered by the umbrella
self insured workers compensation plans - Answers specific excess liability insurance and aggregate
excess liability insurance are commonly used in connection with...
specific excess liability insurance - Answers requires the insured to retain a stipulated amount of loss
from the first dollar for all losses resulting from each single occurrence; insurer then pays losses from
that occurrence in excess of the retention, up to the policy limit
aggregate excess liability - Answers aka stop loss excess liability; requires the insured to retain a
specified amount of loss from the first dollar during a specified period of time, usually 1 year; insurer
then pays up to the policy limit, all losses for that period that exceed the retention
, drop down coverage - Answers in umbrella liability policies; means covg will take the place of underlying
insurance when underlying aggregate limits are reduced and exhausted & will also cover some claims
that are not covered by underlying liability policies, subject to self insured retention
first dollar defense coverage - Answers provision that states self insured retention does not apply to
defense costs
aggregate umbrella limits - Answers can act like an agg. limit for underlying; can apply to all claims under
the umbrella or only covgs that are subject to agg limit in underlying
occurrence covg trigger - Answers umbrella policies usually have an...
maintenance of underlying insurance condition - Answers umbrella liability policy condition that
obligates the insured to maintain all required underlying coverages in full force and effect during the
policy period; if underlying is not maintained, umbrella will not drop down for claims that would have
been covered by the underlying--only covers those claims that underlying wouldn't have covered
working layer - Answers many orgs only have one of these; typically an umbrella liability policy above its
primary cgl, commercial auto, and employer's liability covg; called this b/c most often called on to pay
claims
buffer layer - Answers excess insurance; b/t primary layer and umbrella policy; used when the umbrella
insurer will not provide covg unless insured has underlying covg limits higher than the primary insurer is
willing to provide
directors - Answers run corporations; may be major stockholders & execs of the corp., but they usually
include outside business or social leaders who often have little financial stake; elected by stockholders;
establishes corp policy, makes major biz & financial decisions, appoints corp's exec officers
fiduciary duty - Answers includes duty of care, duty of loyalty, duty of disclosure, duty of obedience
duty of care - Answers to act in good faith & in a manner they reasonably believe to be in the corp's best
interest; to discharge their responsibilities with informed judgement & a degree of care that a person in
a similar position would believe to be reasonable under similar circumstances
business judgement rule - Answers A legal rule that provides that a director will not be personally liable
for a decision involving business judgement, provided the director made an informed decision and acted
in good faith
duty of loyalty - Answers directors have a duty of undivided loyalty to the corps they serve; cannot usurp
business opportunities that properly belong to the corp, cannot own/operate a business in competition
w the corp; no insider info (securities & exchange act of 1934)
duty of disclosure - Answers must disclose material facts to all persons who have the right to know such
facts and would not otherwise be able to obtain them; directors not authorized as spokespersons for the
corp, must refrain from disclosing confidential/market sensitive matters w/ family/colleagues
issues in use of liability insurance - Answers difficulty in estimating max possible loss for liability loss
exposures, layering of liability coverages, effect of aggregate limits; these are why there is s need for
excess/umbrella
underlying insurance - Answers Insurance that applies below an excess or umbrella liability policy.
excess liability policy - Answers designed to provide excess limits of coverages above the limits of the
underlying coverage; offers no broader protection than what underlying covg does
umbrella liability policy - Answers type of excess policy that not only provides additional limits, but also
provides covg not available in the underlying covgs; subject to insured's assumption of self insured
retention or retained limit; most provide defense covg
forms of excess liability - Answers follows form policy--> subject to the same provisions as the
underlying policy; self contained --> subject to its own provisions only; or a combo of the 2
retention is used for primary insurance - Answers specific excess and aggregate excess are often used
when...
following form - Answers excess liability policy that will only pay above the limits of the underlying
insurance if the loss is covered by the underlying insurance; can state that it follows whatever the
underlying says, or the terms are different but don't conflict with underlying
self contained - Answers excess liability policy; does not depend on primary layer with scope of covg-->
gaps can occur; applies to loss that exceeds limits of the underlying policy only if the loss is also covered
under this layer's terms
combination excess liability - Answers aspects of following form & self contained; incorporates
provisions from the underlying policy and modifies these provisions w/ addtl conditions or exclusions;
may not always "drop down" aka provide covg if claim is excluded by primary
true umbrella policy provision - Answers states that the policy applies over a self insured retention, if the
underlying layer does not cover a loss that is covered by the umbrella
self insured workers compensation plans - Answers specific excess liability insurance and aggregate
excess liability insurance are commonly used in connection with...
specific excess liability insurance - Answers requires the insured to retain a stipulated amount of loss
from the first dollar for all losses resulting from each single occurrence; insurer then pays losses from
that occurrence in excess of the retention, up to the policy limit
aggregate excess liability - Answers aka stop loss excess liability; requires the insured to retain a
specified amount of loss from the first dollar during a specified period of time, usually 1 year; insurer
then pays up to the policy limit, all losses for that period that exceed the retention
, drop down coverage - Answers in umbrella liability policies; means covg will take the place of underlying
insurance when underlying aggregate limits are reduced and exhausted & will also cover some claims
that are not covered by underlying liability policies, subject to self insured retention
first dollar defense coverage - Answers provision that states self insured retention does not apply to
defense costs
aggregate umbrella limits - Answers can act like an agg. limit for underlying; can apply to all claims under
the umbrella or only covgs that are subject to agg limit in underlying
occurrence covg trigger - Answers umbrella policies usually have an...
maintenance of underlying insurance condition - Answers umbrella liability policy condition that
obligates the insured to maintain all required underlying coverages in full force and effect during the
policy period; if underlying is not maintained, umbrella will not drop down for claims that would have
been covered by the underlying--only covers those claims that underlying wouldn't have covered
working layer - Answers many orgs only have one of these; typically an umbrella liability policy above its
primary cgl, commercial auto, and employer's liability covg; called this b/c most often called on to pay
claims
buffer layer - Answers excess insurance; b/t primary layer and umbrella policy; used when the umbrella
insurer will not provide covg unless insured has underlying covg limits higher than the primary insurer is
willing to provide
directors - Answers run corporations; may be major stockholders & execs of the corp., but they usually
include outside business or social leaders who often have little financial stake; elected by stockholders;
establishes corp policy, makes major biz & financial decisions, appoints corp's exec officers
fiduciary duty - Answers includes duty of care, duty of loyalty, duty of disclosure, duty of obedience
duty of care - Answers to act in good faith & in a manner they reasonably believe to be in the corp's best
interest; to discharge their responsibilities with informed judgement & a degree of care that a person in
a similar position would believe to be reasonable under similar circumstances
business judgement rule - Answers A legal rule that provides that a director will not be personally liable
for a decision involving business judgement, provided the director made an informed decision and acted
in good faith
duty of loyalty - Answers directors have a duty of undivided loyalty to the corps they serve; cannot usurp
business opportunities that properly belong to the corp, cannot own/operate a business in competition
w the corp; no insider info (securities & exchange act of 1934)
duty of disclosure - Answers must disclose material facts to all persons who have the right to know such
facts and would not otherwise be able to obtain them; directors not authorized as spokespersons for the
corp, must refrain from disclosing confidential/market sensitive matters w/ family/colleagues
