Liability insurance — public, product, professional and employer liability covers and claims-made policies.
These are 5 of the 282 IC-74 questions in Certena, taken from across the paper. Every answer key has been checked against a source — a printed answer key, a textbook extract, or arithmetic — not guessed. Reveal the answer and the explanation below each question. No sign-up needed.
Answer: D. Other persons with the same expertise and skill
A professional is judged according to the standard of a reasonably competent person possessing the same expertise and skill. The professional is not expected to meet the standard of the best person in the profession, but must exercise the level of skill and care reasonably expected from others with similar expertise.
Answer: D. Badgley v. Dickson
In this English case, Badgley v. Dickson (1886) , the standard of care expected from an architect was stated as follows: As architect, he is in the same position as any other professional or skilled person, and whether it be in the preparation of plans and specifications, or the doing of any other professional work for reward, is responsible if he omits to do it with an ordinary and reasonable degree of care and skill.
Answer: E. If the net combined operating ratio is within 100%
The combined ratio adds the claims ratio and the expense ratio; when this combined figure is below 100%, it means the premium collected exceeds claims and expenses paid, indicating an underwriting profit -- matching "if the net combined operating ratio is within 100%." A combined ratio above 100% (like the 110% or "above 100%" options) means the portfolio is running at an underwriting loss, since outgo exceeds premium income.
Answer: B. Wrongful escape of smoke
Private nuisance involves an unreasonable interference with a specific individual's use and enjoyment of their own property, such as smoke drifting onto a neighbor's land -- matching "wrongful escape of smoke." The other examples -- trash dumping affecting a wider area, fireworks thrown into a public street, toxic waste in a river, or a motel frequented by drug dealers -- affect the public at large or an indeterminate class of people, making them examples of public nuisance instead.
Answer: A. Only I
The number and type of locations is the correct factor, since CGL premiums are driven by exposure-based rating factors like location, operations, payroll, and sales -- location count and type directly affect the insured's risk exposure. Wages paid and balance-sheet profitability are financial metrics that do not directly drive the liability exposure being underwritten, so they are not standard CGL rating factors.
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