p and c test

Performance Bond

Guarantees a contractor completes a project per contract specifications.

Personal Auto Policy (PAP) Eligibility

Covers a personally owned private passenger auto, even if used mostly for business (unless used as a public/livery conveyance).

Transporting people or property for a fee

Requires commercial/business auto coverage

25/50/20

• $25,000 bodily injury per person

• $50,000 bodily injury per accident

• $20,000 property damage

what is not covered for your employees by Auto Liability

No coverage for bodily injury to your employees

Non-Owned Auto

Auto not owned by the insured but used with permission. Liability is generally covered under a PAP.

Unfair Claims Practices Act (UCPA)

Prohibits unfair claim handling, such as unreasonable delays, misrepresenting coverage, or failing to investigate claims.

Unfair Trade Practices Act (UTPA)

Prohibits unfair competition and deceptive insurance sales practices, including misrepresentation, rebating, and false advertising.

Fair Credit Reporting Act (FCRA)

Protects consumer credit information. Requires notice if an insurer takes adverse action based on a consumer report.

Law of Tort

Civil law that allows an injured party to recover damages for another's wrongful act (negligence or intentional tort).

What Supplemental Payments are included in most Personal Auto Policies?

• Any court related fees

• Reasonable expenses incurred by the insured at the insurer's request (including loss of earnings, subject

What is NOT considered a Supplemental Payment in most Personal Auto Policies?

• The insured's medical expenses (covered under Medical Payments Coverage or PIP, if applicable)

• Vehicle repairs (covered under Collision or Other Than Collision)

• Injuries or property damage payments (paid under the policy's liability or physical damage coverages—not as Supplemental Payments)

CGL Coverage C – Medical Payments: What does it cover?

Coverage C – Medical Payments pays medical expenses for bodily injury to a person who is accidentally injured:

• On the insured's premises, or because of the insured's operations

Key points:

• Regardless of fault

• Covers reasonable medical expenses incurred within 1 year of the accident (subject to the policy limit)

DOT COVER

• ❌ Injuries to the insured

• ❌ Injuries to employees (covered by workers' compensation)

• ❌ Injuries to tenants in areas they normally occupy

• ❌ Injuries covered by products-completed operations

CGL Coverage A – Bodily Injury & Property Damage Liability

Coverage A pays when the insured becomes legally liable for bodily injury (BI) or property damage (PD) caused by an occurrence during the policy period.

Coverage A pays for:

• Bodily injury to others

• Property damage to others

• Legal defense costs (in addition to policy limits as Supplemental Payments)

• Settlements and judgments the insured is legally obligated to pay

Requirements:

• Injury or damage must result from an occurrence (generally an accident)

• Injury or damage must occur during the policy period

• Must not be excluded by the policy

• Common Exclusions:

  • ❌ Expected or intended injury

  • ❌ Workers' compensation obligations

  • ❌ Employer's liability (employee injuries)

  • ❌ Pollution (subject to exceptions)

  • ❌ Damage to the insured's own property

  • ❌ Professional liability

Robbery and Safe Burglary Coverage

• Robbery Inside the Premises – Money and securities taken by force or threat inside the business.

• Robbery Outside the Premises – Money and securities taken by force or threat while being transported.

• Safe Burglary – Theft from a locked safe or vault with visible signs of forcible entry.

❌ Not Covered

• Theft (simple stealing without force, threat, or forcible entry into a safe)

• Mysterious disappearance or unexplained loss

• Losses that don't meet the policy's definitions of robbery or safe burglary

Contractual Liability Coverage: When can it be written, and when can't it be written?

Covers

Liability the insured assumes from another party in an insured contract, such as a hold harmless or indemnification agreement.

❌ Does NOT Cover

• Breach of contract (failing to perform the contract)

• Absolute liability

• Strict liability

• Vicarious liability (unless it is specifically assumed under an insured contract)

Absolute Liability?

Liability without fault or defenses.

Absolute = Always liable.

Strict Liability

Liability without proving negligence.

Strict = No negligence required.

Vicarious Liability

Liability for another person's actions.

Vicarious = Through someone else.

Auto Medical Payments Coverage (MedPay): What does it cover?

Covers reasonable medical and funeral expenses for injuries caused by an auto accident, regardless of who is at fault.

✅ Covers

• The named insured

• Family members

• Passengers in the covered auto

• The insured or family members as pedestrians if struck by a motor vehicle

❌ Does NOT Cover

• Property damage

• Occupants of the other vehicle (unless they qualify as insureds under your policy)

Coverage B – Personal and Advertising Injury Liability

Covers non-physical liabilities resulting from certain offenses against a person's rights or reputation.

• ✅ False arrest, detention, or imprisonment (A)

• ✅ Wrongful eviction or wrongful entry (B)

• ✅ Libel, slander, or defamation (C)

• ✅ Copyright, trade dress, or slogan infringement in advertisements (with limitations)

It does not cover false statements about the quality or price of your own goods or services. Claims arising from misrepresentation in advertising or failure of products are generally excluded.

• ✅ People → False arrest, wrongful eviction, libel/slander

• ❌ Products → False advertising about quality or price

Autos are usually insured for which Value?

✅ Actual Cash Value (ACV)

ACV = Replacement Cost − Depreciation

Auto Comprehensive (Other Than Collision) Coverage: What does it cover?

Covers direct, accidental damage to your auto from causes other than a collision or upset.

Premises Burglary Coverage: What does it cover?

✅ Covers

• Burglary of merchandise from the insured premises

• Damage to the building caused by the burglary (forcible entry or exit)

• Merchandise taken from a watchman by robbery

❌ Does NOT Cover

• Money or securities

• Robbery of money (covered under Robbery and Safe Burglary Coverage)

Memory Tip:
Premises Burglary = Merchandise.
Robbery & Safe Burglary = Money.

When is a replacement auto automatically covered under a Personal Auto Policy?

A newly acquired auto that replaces a covered auto is automatically covered for a limited time (typically 14 days).

Theft Coverage

Theft Coverage protects against the unlawful taking of covered property without force or violence.

✅ Covers

• Theft of covered property or merchandise

• Loss from stealing (subject to the policy terms)

❌ Does NOT Cover

• Robbery (taking property by force or threat)

• Burglary (theft involving forcible entry)

• Losses excluded by the policy (such as employee theft, unless separately covered)

Theft, Robbery, Burglary

• Theft = Stealing

• Robbery = Force or threat

• Burglary = Forced entry

What information is found on an insurance policy's Declarations Page?

who, what, when, and how much is covered

Employee Dishonesty Policy

✅ Covers

• Loss of money, securities, or other property

• Caused by a dishonest or fraudulent act of an employee

• Theft, embezzlement, or other employee dishonesty

❌ Does NOT Cover

• Theft by customers or strangers

• Robbery or burglary by non-employees

• Unexplained shortages or accounting errors without proof of dishonesty

• Future losses caused by an employee once their dishonesty has been discovered

What is a bond

A bond is a financial guarantee that a person or business will perform a duty or reimburse a loss if they fail to do so.

A bond has three parties:

1. Principal (Obligor) – The person or business that must perform a duty or obligation.

2. Obligee – The person or organization that requires the bond and is protected by it.

3. Surety – The company that guarantees the principal's performance.

Physical Damage Coverage for a Newly Acquired or Replacement Auto: When must it be reported?

Physical Damage Coverage pays for damage to your covered auto, regardless of fault, and includes:

✅ Collision

• Collision with another vehicle or object

• Upset (overturning/rolling the vehicle)

✅ Other Than Collision (Comprehensive)

• Fire

• Theft

• Vandalism

• Hail or windstorm

• Flood

• Falling objects

• Glass breakage

• Contact with an animal

❌ Does NOT Cover

• Another person's injuries or property damage (Liability Coverage)

• Normal wear and tear

• Mechanical breakdown (unless caused by a covered peril)

When must a newly acquired or replacement auto be reported for Physical Damage Coverage?

within 30 days

Declarations

Part of an insurance policy that lists the insured, coverages, limits, etc

Consideration

Something of value exchanged (premium for the insurer's promise to pay covered claims).

Theft & Robbery Outside the Premises Coverage: What does it cover?

✅ Covers property other than money and securities

• Inside the premises: Theft

• Outside the premises: Robbery of a messenger

❌ Does NOT Cover

• Money or securities (covered by separate money and securities crime forms)

Towing and Labor Coverage

• Towing the disabled vehicle

• Labor performed at the place of disablement (e.g., jump-starting a battery, changing a flat tire, minor roadside services)

❌ Does NOT Cover

• Cost to repair the vehicle

• Replacement parts (e.g., a new battery or tire)

• Mechanical breakdown repairs

Theft, Disappearance, and Destruction

is specifically designed for and restricted to money and securities.

A claims-made policy

covers liability claims only if the incident occurs on or after your retroactive date and the formal claim is filed and reported while the policy is actively in force. Because coverage ends when the policy expires, professionals often need to purchase "tail coverage" (an extended reporting period) to protect against future lawsuits stemming from past work.

What is the fundamental difference between Bodily Injury Liability and Medical Payments (MedPay)?

• Bodily Injury Liability covers injuries to other people when you are at fault.

• Medical Payments (MedPay) covers medical bills for you, your family, and your passengers, regardless of fault.

What is the difference between Replacement Cost (RCV) and Actual Cash Value (ACV)?

Back: RCV pays the current cost to repair or replace property with new materials of like kind/quality without deducting for depreciation. ACV factors in depreciation, paying what the property was worth right at the time of the loss.

bid bond

A bid bond is a type of surety bond that guarantees a contractor will enter into a contract and provide performance and payment bonds if their bid is accepted. It protects the project owner (obligee) if the winning bidder backs out or refuses to sign the contract, covering the financial difference between their bid and the next lowest bidder's price.

Claims made policy

coverage for any claims made while the policy is active

occurrence policy

coverage for any claim made in relation to an event that occurred while the policy is active

Principle of Indemnity

Insurance pays only the actual amount of the loss, restoring the insured to their pre-loss financial position without allowing for profit or gain.

What are "Supplementary Payments" in a Personal Auto Policy?

Automatic, built-in coverage for incidental legal/defense expenses. Key Rule: Paid in addition to (on top of) your liability limits.

Covers:

• Bail bonds

• Appeal bonds

• Court interest

• Loss of earnings (while at court)

• First aid costs at the scene

DOES NOT COVER

any expenses handled by other specific sections of the policy.

What does "Contractual Liability" cover vs. exclude?

• Covers: liability assumed in a contract.

• Excludes: Breach of contract (failing to perform the contract itself).

What are the three parties to a surety bond?

• Principal: The person who must perform (e.g., the contractor).

• Obligee: The person protected/benefited by the bond (e.g., the project owner).

• Surety: The insurance company guaranteeing the principal's performance.

Owners and Contractors Protective (OCP) Liability

is purchased by a contractor to protect a property owner or general contractor with dedicated limits against liability arising from that contractor's work.

Products and Completed Operations coverage

protects a business against bodily injury or property damage claims arising from its products or completed work after the work has been finished and left the premises.

Employers Non-ownership Liability coverage

protects a business against third-party claims for bodily injury or property damage arising from an employee's use of their personal vehicle for company business

What are the duties of the insured in a property insurance policy?

• Give prompt notice

• Protect property from further loss

• Inventory damaged property

• Show damaged property

• Provide records and documents

• Submit signed proof of loss within 60 days

• Cooperate with the investigation

• Submit to examination under oath

An Extra Expense form is

a property insurance coverage that pays for the necessary additional costs a business incurs to continue normal operations after a direct physical loss occurs.

a Homeowner 3 policy is

an open-perils homeowners insurance policy that covers the dwelling for all risks except those specifically excluded, while covering personal property named perils only.

A coinsurance clause is

an insurance policy provision that requires the insured to maintain property coverage up to a specified percentage of the property's value, or face a proportional reduction in claim payouts.

What is an Extra Expense form

a coverage provision that reimburses a business for the necessary, immediate, and additional costs incurred to maintain operations at a temporary location or through other means following a direct physical loss that would otherwise force a complete shutdown.