CPCU 552, CP&L FINAL EXAM QUESTIONS AND ANSWERS 2025, Exams of Law

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ANSWER ALL QUESTIONS IN THIS SECTION

QUESTION 1

When considering risk control measures to protect against loss exposure, legal duties imposed on organizations are continuously changing, and they are an important factor that risk management professionals need to consider. Which laws develop out of court decisions in particular cases that establish precedent for future cases, helping determine legal duties?

A) Tort Law

B) Statutory Law

C) Common Law

D) Plaintiff Liability Law

E) Tenent Law - ANSWERS-Correct Answer

C) Common Law

QUESTION 2

Which of the following is the distinguishing element of workers compensation and employers liability compared to commercial general liability?

A) Injured person involved (employee)

B) Statutory Workers Compensation

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C) No-fault coverage

D) Premise liability

E) A, B, and C - ANSWERS-E

QUESTION 3

The phrase "Commerical General Liability" is used to refer to the legal liability of a business arising from. What does commercial general liability insurance cover?

A. slips and falls on the premises

B. completed operations

C.Personal and advertising injury

D. Damage to premises rented to you

E. All of them - ANSWERS-Correct Answer: E.

QUESTION 4

In 2002, Philip Morris, the number one cigarette producer at the time, was sued by Betty Bullock, a woman who claimed that her lung cancer was the result of smoking cigarettes. Furthermore, she argued that her tobacco addiction was caused by Philip Morris's failure to warn her of the risks of smoking. The company was ordered to pay punitive damages of $28 billion, $750,000 in economic damages, and $100,000 for pain and suffering. How much of this award would Philip Morris's insurer pay?

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D. All of the statements are true. - ANSWERS-The correct answer is C

QUESTION 6

A. A underaged UGA student goes downtown with his parents and is drinking a couple of shots. He asks for another shot from the server. The server, knowing that his parents might leave a good tip, decides to serve the student one more shot. As the family gives the server a tip and drags their child outside, they are picked up by a completely sober Uber driver, who then gets into a car accident downtown injuring another driver.

B. An old grandpa named Billy Joe is trying to relive his "glory days" on Homecoming Weekend and decides to go downtown on Friday before the game the next day. He meets up with his Pi Kappa Alpha brothers for their 50th reunion and is noticeably intoxicated. Trying to show his fraternity brothers that he is still the champion, he asks the bartender for one more margarita. He chugs the margarita down, and his fraternity brothers carry him on his shoulders outside to his car that is parked. As he - ANSWERS-B is the correct answer because Billy Joe is noticeably intoxicated and he is the one driving when he runs into the Kia Soul.

A. Civil law is a classification of law that applies to legal matters governed by criminal law and that protects rights and provides remedies for breaches of duties owed to others.

B. Liability insurance responds to liability imposed by both civil law and criminal law.

C. Oftentimes, a single act cannot constitute both a civil wrong and a crime.

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D. The criminal law is punishable by imprisonment and fines, while the civil law is punishable by money and injunctions. - ANSWERS-Explanations:

A. Civil law is a classification of law that applies to legal matters NOT governed by criminal law and that protects rights and provides remedies for breaches of duties owed to others.

Which of the following is NOT part of the Conditions imposed on the insurer's duty to pay damages under CGL Coverage A?

A. The bodily injury or property damage must not be known to the named insured or certain other persons before the policy period.

B. The policy must apply to the bodily injury or property damage.

C. Infringing upon another's copyright, trade dress* or slogan in your advertising.

D. The damages must result from bodily injury or property damage as defined in the policy. - ANSWERS-C. Infringing upon another's copyright, trade dress* or slogan in your advertising.

Which of the following is NOT an essential element in determining if a party was negligent?

A. Breach of Duty

B. Duty of Care

C. Severity of Injury

D. Injury/Damage

E. Causal Connection of Prudent Factors

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E. Pollution liability caused by heat, smoke, or fumes from a hostile fire - ANSWERS-The correct answer is D. A is covered because the liquor liability exclusion only excludes coverage for companies in the alcoholic beverage business

Railroad owners commonly require contractors to purchase a Railroad Protective Liability Coverage Form. Which one of the following statements about this form is true? - ANSWERS-One of the coverage limits applies to physical damage to property owned by or leased or entrusted to the railroad

Which one of the following statements about the general aggregate limit under a Commercial General Liability (CGL) Coverage Form is true? - ANSWERS-It is reduced by an claims paid for medical payments under Coverage C.

Tom often runs errands for his boss at XYZ Company, using the boss' car. On one of these errands, Tom is involved in a serious auto accident. He spends a couple of weeks in the hospital; misses four weeks of work; and must undergo physical therapy. Does XYZ's Workers Compensation and Employers Liability Insurance (WC&EL) Policy cover Tom's injuries, lost income, and rehabilitation expenses? - ANSWERS-Yes, the workers compensation policy would pay all of Tom's expenses, because his injuries arose out of his employment at XYZ Company.

Aircraft have a significant exposure to catastrophe losses. Of the many reasons for the catastrophic loss potential of aircraft, the most significant is - ANSWERS-The physical properties of aircraft.

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A security guard is employed at a pier where shipping containers are loaded and unloaded from barges. There is also a small marina for pleasure craft at the pier. The security guard trips over equipment left on a dock alongside a pleasure craft and is injured. The pier only has insurance coverage that provides benefits under the Longshore and Harbor Workers Compensation Act (LHWCA). Is the guard's injury covered under LHWCA? - ANSWERS-The injury is covered by LHWCA because the guard is not covered under a state's workers compensation law.

ABC Plumbing entered into a contract with Bill to install a commercial grade septic system on his property. The installation of the septic septic was time sensitive because the rest of Bill's construction project could not go forward until the septic system was in place. The contract required that the work be done within 30 days of contract signing, or ABC would have to pay a penalty of $1,000 per day. Which one of the following categories of damages does the $1,000 per day penalty specified in the contract fall into? - ANSWERS-Liquidated damages

Many states have funds from which employers may purchase workers compensation insurance. Such funds may be either - ANSWERS-Competitive or monopolistic

Section II—Who Is an Insured identifies the persons and organizations that qualify as insureds under the Commercial General Liability (CGL) Coverage Form. Which one of the following statements regarding who is considered an insured is most accurate? - ANSWERS-When a CGL policy covers one or more individuals as named insureds, any person or organization having proper temporary custody of the named insured's property following the named insured's death is an insured.

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Acme Insurance cannot agree with insured Jill Jenkins on the amount of a covered physical damage loss under Jill's Business Auto Coverage Form. Jill requested an appraisal. Acme and Jill each appoint an appraiser, and the appraisers appoint an umpire. An award in writing signed by any two of the three binds both Acme and Jill. One appraiser and the umpire ruled for Jill and against Acme. Which one of the following statements is true regarding this scenario? - ANSWERS-Jill and Acme will share the cost of the umpire.

Matthew Jones, the named insured under an unendorsed Business Auto Coverage Form (BACF), requires his employees to use their own cars for business purposes. One of Matthew's employees, Paul, causes an accident while driving his own truck for the business. Matthew's BACF shows symbol 1 for liability coverage. Which one of the following correctly indicates whether Paul is an insured under the policy for the accident? - ANSWERS-Paul is not covered because employees are not insured while using their own autos in the named insured's business.

ABC Corporation is insured under a standard unendorsed workers compensation policy for only the state of Florida. Three months before the present policy began, ABC opened a sales office in Georgia due to business volume growing in that state. ABC failed to report the new location and new state at policy inception. The manager of the Georgia office fell and was injured and missed work for three weeks after the inception of the ABC policy. The manager made claim for Georgia benefits. Which one of the following is true regarding ABC's coverage for Georgia benefits? - ANSWERS-Coverage for this claim would not be covered by ABC's insurance.

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The claims-made trigger in a site specific environmental impairment liability policy differs in three ways from the trigger in other claims-made liability policies. Which one of the following best describes one of those three ways? - ANSWERS- A site-specific environmental impairment liability policy typically does not have a retroactive date.

The Grey Corporation has a Commercial General Liability Coverage Form with the following limits:

Each Occurrence $1,000,

Damage to rented premises $100,000 each occurrence

Medical expense $5,000 any one person

Personal and advertising injury $1,000,000 any one person or organization

General aggregate limit $2,000,

Product/completed operations aggregate limit $2,000,

Assuming the policy is written on an occurrence basis, how much of the general aggregate limit, if any, remains if the following claims have been paid under the policy?

a premises/operations liability claim of $600,

a products liability claim of $1,200,

$3,000 of medical expenses to a customer injured on the premises.

a personal and advertising injury liability claim of $300,000 - ANSWERS-The general aggregate is reduced by any amounts paid under Coverages A, B, and C, except for those that arise out of products/completed operations. Therefore, the

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Some state no-fault laws preserve the tort system but require insurers to offer personal injury protection (PIP) insurance that provides specified first-party benefits. This is referred to as - ANSWERS-An add-on no-fault law.

Loss reduction techniques are intended to reduce the - ANSWERS-Severity of losses.

Tom and Jerry own a General Motors vehicle dealership, and they have purchased an Auto Dealers Coverage Form (ADCF) with the False Pretense Coverage endorsement. In January, Chuck (one of their salespeople) makes a deal with Max for a new car. Chuck gives Max $30,000 for his two trade-in vehicles and Max drives away with a new car worth $40,000. Later that week, the dealership business office discovers that Max did not have proper title to either of the trade-in vehicles, and now the dealership cannot sell them.How much, if anything, will Tom and Jerry's ADCF pay towards the loss suffered by the taking of these two cars? - ANSWERS-Tom and Jerry's ADCF will pay $25,000 for this loss - the maximum amount payable under the False Pretense endorsement for losses caused by any one person in a year.

Larry is an employee of XYZ Company and works solely in State A which is the only state listed on XYZ's workers compensation policy. XYZ obtained a small job in neighboring State B and while Larry is working in State B he injured himself. Which one of the following would be the response from XYZ's workers compensation insurer to Larry's claim for benefits? - ANSWERS-It would provide State A workers compensation benefits to Larry

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QRS, LLC has been a small town's largest employer for a long time. When the owner of QRS, LLC died, the company was forced to lay off 25 percent of its workforce, because the proper life insurance was not in force for the owner. These mass lay-offs resulted in bad publicity in the town paper and much negativity directed at the company in various town meetings. The employment practices liability (EPL) policy in force for QRS, LLC provided money to cover QRS's costs to retain a PR firm.Such costs are called - ANSWERS-Reputation management costs.

Mitchell is a highway contractor whose company is covered with a workers compensation policy and an unendorsed Business Auto Coverage Form (BACF). Which one of the following losses would be covered by his business auto policy? - ANSWERS-An employee runs over a subcontractor's equipment with an owned auto.

Which one of the following statements is true about an excess policy? - ANSWERS-It provides coverage no broader than is provided by underlying polices.

Although professional liability policies for financial and legal professionals contain many of the same provisions of those for other professionals, there are important differences. Which one of the following would be covered under the professional liability policies for financial and legal professionals that contain the broadest definition of professional services? - ANSWERS-Claims arising from any professional service performed for others for a fee

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the following is one of these conditions? - ANSWERS-The indemnitee and the insured must ask the insurer to conduct and control the defense.

Which one of the following statements about the Liquor Liability Coverage Form is true? - ANSWERS-It contains an each common cause limit as well as an aggregate limit.

Under the Business Auto Coverage Form (BACF), collision is generally understood to mean - ANSWERS-A striking together with violent impact.

A common endorsement to the Business Auto Coverage Form (BACF) is the Employee Hired Auto endorsement. This endorsement states that an employee of the named insured is an insured - ANSWERS-The employee is an insured while operating an auto rented in the employee's name with the named insured's permission.

The legislated liability imposed by the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund) altered traditional common law concerning responsibilities for environmental pollution by - ANSWERS-Superfund imposes strict liability without regard to fault, even on a retroactive basis.

Before the enactment of Workers Compensation statutes, employers were protected against employee suits by common-law defenses. Under which one of the following common-law defenses were employees unsuccessful in recovering

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damages from occupational injuries resulting in part from the employee's own negligence? - ANSWERS-Contributory negligence

An organization may incur losses from legal liabilities in a number of different ways. Which one of the following actions would best be described as an intentional tort? - ANSWERS-A newspaper mistakenly identifies the driver in an alcohol- related hit and run accident as John Doe, a prominent local attorney.

An employee, while working for the Brown Corporation, was negligent when lighting a cigarette and started a small fire that caused a fellow employee's clothes to catch fire. The injured employee suffered burns as well as the loss of clothes. To what extent, if any, does the corporation's Commercial General Liability Coverage Form provide coverage for the negligent employee if he is sued by the injured employee? - ANSWERS-There is no coverage for the negligent employee because he is not an insured under the policy for bodily injury to a co-employee or damage to such an employee's property

Adam is an executive at Blithe Manufacturing (Blithe). He drives a car that is owned by Blithe and insured under the company's Business Auto Coverage Form (BACF). Adam is permitted to drive the vehicle for both business and personal use. One Sunday morning, Adam is driving the car on a highway when he is struck by another vehicle and pushed into the guardrail. The car that struck Adam did not stop, but several other people who witnessed the accident did stop. They all confirmed that Adam was struck by another reckless driver who never stopped. Adam was seriously injured and car was totaled. Which one of the following endorsements to Blithe's BACF would best cover Adam's significant medical expenses and the damage to the vehicle? - ANSWERS-The Uninsured Motorists

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to pay claims because he was responsible for the injury. - ANSWERS-Answer: A - John must indemnify Bill for the damages resulting from the employee's suit because of the contract. And under worker's compensation laws, a covered employee is not prohibited from suing people other than their employers for occupational injuries or diseases.

In one of the discussion board post we were assigned to read and watch a video on two different liability occurrences. One being the tiger attack at the San Francisco Zoo and the other being the alligator attack at Disney. Which of the following is a TRUE statement about the occurrences?

A) Because the boys were taunting and harassing the tiger the San Francisco was not held liable for the boys actions

B) Disney showed negligence and were held under strict liability

C) Although Disney showed negligence they were not held under strict liability

D) Because the tiger was used as an attraction to make revenue this would be held under products liability - ANSWERS-The correct answer is C) Although Disney showed negligence, they were not held under strict liability. Disney was not liable because they did not own the alligator that attacked the child. The San Francisco Zoo on the other hand was held liable no matter what the teen boys were doing to the tiger because they owned that tiger. The tiger would attack would not be held under products liability.

Most Valuable Bowler is a bowling company that provides food and drinks (including alcohol) while you bowl that has a standard unendorsed CGL policy. Which of the following would the CGL policy pay for?

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1. A worker gets decapitated by the pin setting machine bar when he leaned down to push a pin that was stuck in the gutter.
2. A server forgot to check the ID of someone she was serving alcohol, and she accidentally served someone who was under the legal drinking age. When the underage drinker was driving on her way home, she got in a car accident and injures another driver. The injured person sues Most Valuable Bowler.
3. A customer drops a bowling ball on her foot and breaks it. She has to pay medical bills of $5,000.
4. An employee is moving bowling balls back into the storage room of the building. He was about to hand another employee the heaviest ball they had in the store, and he drops it onto the other employee - ANSWERS-The correct answer would be C (3 and 5).

- ANSWERS-

Please indicate which of the following is/are TRUE regarding the Damages to Premises You Rent Provision of the CGL.

This covers the tenant's liability when they are legally responsible for causing any damages to the building that is rented.

This provision's limit is related to Coverage A.

This provision is only applicable if due to a single fire caused by the tenant renting the space.