Chapter 11 - The Commercial Package Policy

1. Under a CPP, when does the Inspections and Surveys condition give the insurance company the right to inspect the insured's premises?

At any time

Quarterly

Every six months

Once a year

A is correct. The insurance company has the right to inspect the insured's premises at any time.

Explanation

A is correct. The insurance company has the right to inspect the insured's premises at any time.

2. Under a CPP, how long after the end of the policy period can the insurance company examine the insured's books and records?

10 days

3 months

1 year

3 years

D is correct. The insurance company can examine an insured's books and records up to three years after the end of the policy period.

Explanation

D is correct. The insurance company can examine an insured's books and records up to three years after the end of the policy period.

3. Under a CPP, how many days advance notice is required if the insurance company is cancelling the contract for nonpayment of premium?

10 days

21 days

30 days

60 days

A is correct. When a CPP is cancelled by the insurer for nonpayment of premium, it is required to give notice at least 10 days in advance. In all other cases of permitted cancellation by the insurer, it must give notice at least 30 days in advance.

Explanation

A is correct. When a CPP is cancelled by the insurer for nonpayment of premium, it is required to give notice at least 10 days in advance. In all other cases of permitted cancellation by the insurer, it must give notice at least 30 days in advance.

4. Which of the following are contained in the Common Policy Declarations?

The policy period

The name and mailing address of the insured

Conditions specifying the insured's duties following a loss

The insured's premium for each coverage part purchased

A, B, and D are correct. The Common Policy Declarations contains information about who is insured, when he or she is insured, and for what lines he or she is insured. It includes the name and mailing address of the named insured, the policy period, and a summary of the premiums charged. Loss conditions are described in the policy form, not the declarations.

Explanation

A, B, and D are correct. The Common Policy Declarations contains information about who is insured, when he or she is insured, and for what lines he or she is insured. It includes the name and mailing address of the named insured, the policy period, and a summary of the premiums charged. Loss conditions are described in the policy form, not the declarations.

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5. Who may cancel a CPP?

Any named insured.

The insurance company.

The first named insured.

None of the above; once a policy is issued, it can never be cancelled.

B and C are correct. Under the Common Policy Conditions, certain responsibilities and obligations are assigned to the first named insured. One of these is cancellation of the policy. The insurance company may also cancel the policy under certain circumstances.

Explanation

B and C are correct. Under the Common Policy Conditions, certain responsibilities and obligations are assigned to the first named insured. One of these is cancellation of the policy. The insurance company may also cancel the policy under certain circumstances.

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6. Which of these statements concerning the CPP are correct?

Almost all commercial risks are eligible for coverage under the CPP.