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AU 62 Chapter 2 questions and correct answers (elaborations) with 100% accurate , verified , latest fully updated , 2024/2025 ,already passed , graded a+, complete solutions guarantee distinctions rationales| 5-star rating
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AU 62 Chapter 2 questions and correct answers (elaborations) with 100% accurate , verified , latest fully updated , 2024/2025 ,already passed , graded a+, complete solutions guarantee distinctions rationales| 5-star rating

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  • August 5, 2024
  • 9
  • 2024/2025
  • Exam (elaborations)
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  • Commercial Construction
  • Commercial Construction

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AU 62: Chapter 2
A. Contracting or servicing - ANS-Which one of the following is one of the five classifications the
Commercial Lines Manual (CLM) uses to refine the general liability classification process?
Select one:
A. Contracting or servicing
B. Building Construction
C. Not-for-profit
D. Subcontracted operations

A. Gratuities and severance pay - ANS-In addition to salaries and wages, the ISO Commercial
Lines Manual's definition of "payroll" includes all of the following, EXCEPT:
Select one:
A. Gratuities and severance pay
B. Commissions, bonuses, and piecework rates
C. Overtime, holiday, and vacation pay
D. The value of lodging, meals, and merchandise the insured provides to employees

A. Gross sales are the same as receipts. - ANS-All of the following regarding gross sales as a
rating basis for general liability insurance are true, EXCEPT:
Select one:
A. Gross sales are the same as receipts.
B. Gross sales include revenue earned from operations performed during the policy period.
C. Gross sales include the gross amount of money charged by the named insured, including
rentals.
D. Gross sales are sometimes a better measure of a store's exposure than the store's physical
area.

A. Premises and operations liability applies because the contractor was in the process of
installing the cabinets. - ANS-XYZ contractor, covered under an unendorsed Commercial
General Liability (CGL) Coverage Form, is installing kitchen cabinets in a customer's home. The
contractor manufactured the cabinets. While the contractor is fastening a cabinet, it falls and
injures the customer. Which one of the following best explains how coverage under the
contractor's CGL Coverage Form applies in this case?
Select one:
A. Premises and operations liability applies because the contractor was in the process of
installing the cabinets.
B. Premises and operations liability applies because the contractor was working at the
customer's premises.
C. Products and completed operations liability applies because the contractor was installing
cabinets it manufactured.

, D. Products and completed operations liability applies because the contractor was completing
the work.

B. For pricing purposes, exclude the value of any transfers of component parts or interim
processes within the operations of the same named insured. - ANS-When classifying and
pricing manufacturing or processing operations, underwriters should follow which one of the
following guidelines?
Select one:
A. If the insured manufactures its own packaging, separately classify and charge for those
operations.
B. For pricing purposes, exclude the value of any transfers of component parts or interim
processes within the operations of the same named insured.
C. If an application lists more than one named insured, select the named insured whose
operations best describe the primary operations of the insured as a whole.
D. If a manufacturer sells its own products through its own retail operations, classify and rate
only the manufacturing operations.

B. If a manufacturer sells its own products through its own retail operations, classify and rate
only the manufacturing operations. - ANS-When classifying and pricing manufacturing or
processing operations, underwriters should follow all of the following guidelines, EXCEPT:
Select one:
A. For pricing purposes, exclude the value of any transfers of component parts or interim
processes within the operations of the same named insured.
B. If a manufacturer sells its own products through its own retail operations, classify and rate
only the manufacturing operations.
C. Base classification on the final product, not on component parts or interim processes.
D. If an application lists more than one named insured, classify each named insured separately.

B. Premises and operations liability exposure. - ANS-Pedestrian Wilma was injured as a result
of a contractor's negligence when the contractor failed to adequately warn the public of a hazard
when paving a road. Any resulting liability claim by Wilma against the contractor would be
considered to have arisen from the contractor's
Select one:
A. Products and completed operations liability exposure.
B. Premises and operations liability exposure.
C. Personal liability exposure.
D. Absolute liability exposure.

B. The presence of heavy traffic automatically means that the premises has an excessive
exposure. - ANS-All of the following correctly describe underwriting considerations when
evaluating the extent of an insured's liability exposure to the public, EXCEPT:
Select one:
A. The underwriter must consider the legal status of persons likely to be on the insured's
premises.

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