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UIUC FIN 341 - Fin 341 - Second Exam

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UNIVERSITY OF ILLINOIS AT URBANA-CHAMPAIGNCollege of Commerce and Business AdministrationDEPARTMENT OF FINANCESecond ExamFinance 341Name:_______________________ Spring, 2001Maximum Number of Points: 30True/False and Multiple Choice Questions - Circle the appropriate answer (1 point each). Only circle one choice for each question, unless otherwise indicated. 1. Intentional torts can be covered under the CGL policy.True False2. Under CGL policies, a BERP is automatically provided at no cost if the policy is renewed by the insurer. True False3. If a company's defective product caused an injury to a family member of an employee, damages awarded by a court would be covered under the Workers' Compensation and Employers Liability policy (subject to policy limits). True False4. A plumbing contractor has a CGL policy. One of its plumbers negligently starts a fire at a customer's premises and burns the building down. This loss would be covered under the Fire Legal LiabilityCoverage (subject to policy limits). True False5. An aggregate excess policy would generally cost more than a specific excess policy with the same limits, retention, policy term and policyholder. True False6. The owner of a dry cleaning store has a Building and Personal Property policy, a Commercial General Liability policy and a Workers' Compensation/ Employers Liability policy. One of his employees who issmoking in the back room accidentally starts a fire that burns the dressa customer had left to be cleaned. Which policy would provide coverage for this loss?A. Building and Personal PropertyB. Commercial General LiabilityC. Workers' Compensation/Employers LiabilityD. None of the above7. A chemical company has a Building and Personal Property policy, a Commercial General Liability policy and a Workers' Compensation/Employers Liability policy. One of the employees accidentally opens the spigot of a discharge tank, causing pollutants torun onto the ground and into a nearby river. The company is found to be responsible for the clean-up costs. Which policy would provide coverage for this loss?A. Building and Personal PropertyB. Commercial General LiabilityC. Workers' Compensation/Employers LiabilityD. None of the above8. What was the error on the Workers' Compensation/Employers Liability policy information page pointed out by the guest speaker?A. Mailing addressB. Policy periodC. Policy limitsD. Premium classificationsE. Minimum premium9. What is the exposure base for Workers' Compensation coverage for a pet store in Illinois?A. SalesB. PayrollC. Size of storeD. Number of employeesE. Hours worked10. The University of Illinois hires a visiting professor to teach an architecture class. The professor is allowed to choose her own textbook and teach in any manner she thinks is appropriate. The University also hires a maintenance man to clean up in and around campus buildings. His normal hours are 2 - 10 pm. One day the maintenance man, while driving to work, runs over the visiting professor while she is conducting class outside, showing her students the structure of one of the buildings. Both the professor and the maintenance man are injured and both incur medical expenses and miss work. Which of these individuals is eligible for workers' compensation benefits from this incident?A. The professorB. The maintenance manC. Both would be coveredD. Neither would be coveredShort Answer/Calculation Questions (2 points each).11. A married employee in Illinois with two children has an average weeklywage of $1200. One day she is injured in an accident at work. The employee incurs $5,000 in medical expenses and misses 5 weeks of work. How much will this employee receive in workers' compensation benefits in total for this injury?____________________________________________________________________________________________________________________________________________________________12. St. Paul writes a Workers' Compensation/Employers Liability policy on aauto repair shop. The company purchases two reinsurance policies. One is a quota share policy that cedes 75% of each loss. The other is aper-risk excess reinsurance policy of $5 million excess of $1 million. (The quota share policy "inures to the benefit of" the per-risk excess policy.) A $10 million covered loss occurs when a car falls on one of the employees. Indicate how much each of the insurers will pay:St. Paul ________________Quota Share Reinsurer ________________Per-risk Excess Reinsurer ________________13. You are the underwriter for a commercial lines insurance company. A bookstore applies for a Building and Personal Property policy, a Commercial General Liability policy and a Workers' Compensation/Employers Liability policy. List two questions, other than loss history, that you would ask to help you decide whether or notto insure this store for any or all of these coverages.______________________________________________________________________________________________________________________________________________The next 4 questions relate to the following situation. A pet store had a claims-made CGL policy for the period 1/1/99-12/31/99, with a retroactive date of 1/1/99. They went out of business on 12/31/99. They did purchase SERP coverage at that time. The policy had the following limits:$1,000,000 General Aggregate$1,000,000 Products and Completed Operations Aggregate$1,000,000 Per Occurrence (Coverages A and C) $100,000 Personal and Advertising Injury $100,000 Fire Damage $25,000 Medical Expense Limit per PersonThe store experienced the following losses. Indicate how much this policy would pay in each case. Remember that coverage for each claim can be affected by the other claims. 14. On January 3, 1999, a customer trips in the store and breaks his leg. The store notifies its insurer the day of the accident. The customer files a claim on March 15, 1999. On December 15, 1999, the store is found liable for $250,000 in damages.______________________________________________________________________15. On June 7, 1999, a customer in the store is struck in the face by a hanging birdcage. This customer suffers blindness in her right eye dueto this occurrence. The store notifies its insurer the day of the accident. The customer files a claim on July 21, 1999. On February 17,2000, the company was found liable for $1,500,000


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