17 Free Pennsylvania Property & Casualty Practice Questions: Commercial General Liability & Commercial Auto (2026)
How to Use This Commercial Liability Set
This set covers commercial general liability and the commercial automobile policy. On the Pennsylvania Property and Casualty exam, Commercial General Liability is 7% (10-11 items) and Commercial Automobile Policy is 5% (7-8 items).
Liability questions are about timing and about whose liability is being paid. Find the date of the injury or damage, find the policy period, and then ask whether the insured is paying for its own liability or one it assumed by contract. The 17 questions are grouped by those themes.
Practice Questions 1-6: Contractual Liability, Lessors, Motor Carriers and Personal Injury
Liability assumed under a lease or subcontract, the endorsement for a lessor, the federal endorsement for motor carriers and the defamation offences in Coverage B.
Question 1 (Chapter 5)
A Pennsylvania contractor's Commercial General Liability policy includes contractual liability coverage. The contractor signs a lease agreement for office space that contains a clause requiring the contractor to indemnify the landlord for any bodily injury occurring on the premises. A visitor slips and falls in the leased office and sues the landlord. The landlord tenders the claim to the contractor's insurer. Which statement is correct regarding coverage under the contractor's CGL policy?
- A) Coverage does not apply because contractual liability is excluded under the standard CGL policy.
- B) Coverage applies only if the lease agreement was signed before the policy inception date.
- C) Coverage applies for the contractor's indemnity obligation to the landlord arising from the lease agreement.
- D) Coverage does not apply because the bodily injury occurred on premises not owned by the contractor.
Show answer & explanation
Answer: C
Contractual liability coverage under a CGL policy applies when the insured assumes liability of another party through a contract (such as a lease indemnity agreement) and bodily injury or property damage occurs. The contractor assumed the landlord's liability via the lease agreement, and the visitor's bodily injury occurred on the leased premises, so coverage applies. Option A is incorrect because contractual liability is included in the standard CGL policy (unless specifically excluded by endorsement). Option B is incorrect because there is no requirement that the contract be signed before policy inception; coverage applies to contracts executed during the policy period. Option D is incorrect because premises liability coverage extends to locations where the contractor is performing work under contract, including leased premises.
Question 2 (Chapter 5)
A Pennsylvania construction company leases a bulldozer for a project. The leasing company requires the construction company to name it as an additional insured and loss payee on the Commercial Automobile policy for the bulldozer. Which endorsement is most appropriate to satisfy this requirement?
- A) CA 99 10 - Drive Other Car Coverage
- B) CA 20 01 - Lessor - Additional Insured and Loss Payee
- C) CA 99 17 - Individual Named Insured
- D) CA 20 15 - Mobile Equipment
Show answer & explanation
Answer: B
The CA 20 01 endorsement is specifically designed to add a lessor as both an additional insured and loss payee to a Commercial Automobile policy. This satisfies the leasing company's requirement to be protected under the policy for liability and to receive loss payments if the leased bulldozer is damaged. Option A (CA 99 10) provides coverage for named individuals when driving non-owned vehicles, which is not relevant here. Option C (CA 99 17) names an individual as an insured on the policy, which does not address the lessor's interest. Option D (CA 20 15) is used to cover mobile equipment (like bulldozers) under the automobile policy for physical damage, but it does not add the lessor as an additional insured or loss payee.
Question 3 (Chapter 5)
A Pennsylvania motor carrier operates in interstate commerce. The carrier's Commercial Automobile policy must include an endorsement to comply with federal regulations for public liability. Which endorsement is required for this purpose?
- A) CA 99 10 - Drive Other Car Coverage
- B) CA 20 01 - Lessor - Additional Insured and Loss Payee
- C) CA 99 17 - Individual Named Insured
- D) MCS-90 - Endorsement for Motor Carrier Policies of Insurance for Public Liability
Show answer & explanation
Answer: D
The MCS-90 endorsement is required by federal regulation (under the Motor Carrier Act of 1980) for motor carriers operating in interstate commerce. It ensures that the Commercial Automobile policy provides the necessary public liability coverage as mandated by the federal government, and it guarantees payment to victims even if the policy would otherwise exclude the claim. Option A (CA 99 10) provides coverage for named individuals driving non-owned vehicles and is not specific to motor carriers. Option B (CA 20 01) addresses lessor interests and is not a federal requirement for motor carrier liability. Option C (CA 99 17) names an individual as an insured and does not satisfy federal public liability requirements for motor carriers.
Question 4 (Chapter 5)
A Pennsylvania business has a Commercial General Liability policy with a contractual liability exclusion. The business signs a contract with a client that includes an indemnity agreement. During the performance of the contract, the business's work causes property damage to a third party. The client tenders the claim to the business's insurer. Which statement is correct regarding coverage?
- A) Coverage applies because the property damage occurred during the performance of the contract.
- B) Coverage applies only if the indemnity agreement was signed before the policy inception date.
- C) Coverage does not apply because the contractual liability exclusion removes coverage for liability assumed under contract.
- D) Coverage does not apply because the property damage was caused by the business's work, not assumed liability.
Show answer & explanation
Answer: C
If a CGL policy includes a contractual liability exclusion, then coverage does not apply for liability that the insured assumes under a contract (such as an indemnity agreement). The exclusion removes coverage for bodily injury or property damage arising from the insured's assumption of liability in a contract. In this scenario, even though the property damage resulted from the business's work, the client is seeking recovery based on the indemnity agreement (assumed liability), which is excluded. Option A is incorrect because the contractual liability exclusion overrides coverage even if the damage occurred during contract performance. Option B is incorrect because the timing of the contract signing does not affect the application of the exclusion; if the exclusion is in the policy, it applies to assumed liability regardless of when the contract was signed. Option D is incorrect because while the work caused the damage, the claim is being made based on the assumed liability under the indemnity agreement, which is what the exclusion targets.
Question 5 (Chapter 5)
A Pennsylvania manufacturing company purchases a Commercial General Liability policy. During the policy period, an employee sends an email that falsely claims a competitor is under federal investigation, causing the competitor to lose customers. The competitor sues for slander. Which statement is correct regarding coverage under the CGL policy?
- A) Coverage applies under Coverage A (bodily injury and property damage) because the claim involves reputational harm.
- B) Coverage does not apply because electronic communications are not considered 'advertising' under the policy.
- C) Coverage applies under Coverage B (personal and advertising injury) as slander is a defined offense in the policy.
- D) Coverage applies only if the employee was acting within the scope of employment at the time of sending the email.
Show answer & explanation
Answer: C
Coverage B of the CGL policy covers personal and advertising injury, which includes slander (oral defamation) and libel (written defamation) as defined offenses. The medium (email) does not disqualify it from being considered advertising injury if it is made in the course of the insured's business. Coverage A does not apply to defamation claims. Scope of employment is relevant to whether the insured is liable for the employee's act, but if the act is covered under the policy, the insurer would defend and pay damages if the employee was acting within the scope of employment; however, the coverage trigger for the offense itself is not contingent on scope of employment for the definition of the offense.
Question 6 (Chapter 5)
A Pennsylvania contractor's Commercial General Liability policy includes contractual liability coverage. The contractor signs a subcontract agreement that requires the contractor to indemnify the general contractor for any bodily injury arising from the contractor's work. A pedestrian is injured by the contractor's negligent work and sues the general contractor. The general contractor tenders the claim to the subcontractor's insurer. Which statement is correct regarding coverage under the subcontractor's CGL policy?
- A) Coverage does not apply because contractual liability coverage only covers liability assumed in contracts related to premises, not work performance.
- B) Coverage applies only if the pedestrian is an employee of the general contractor.
- C) Coverage applies because the contractor assumed liability via contract, and the injury arose from the work performed under that contract.
- D) Coverage does not apply because the general contractor, not the subcontractor, is the named insured in the tendered claim.
Show answer & explanation
Answer: C
Contractual liability coverage in a CGL policy covers liability that the insured assumes under a contract, such as an indemnity agreement. Here, the subcontractor agreed to indemnify the general contractor for bodily injury arising from the subcontractor's work. The pedestrian's injury resulted from the subcontractor's negligent work, which is within the scope of the assumed liability. Therefore, coverage applies. Option A is incorrect because contractual liability coverage is not limited to premises contracts; it includes contracts for work performance. Option B is incorrect because contractual liability coverage applies to third parties, not just employees. Option D is incorrect because the subcontractor is the party that assumed liability via contract and is the insured under whose policy the claim is tendered.
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Practice Questions 7-12: Occurrence Timing, Fire Legal Liability and Individual Named Insureds
When damage must occur for an occurrence form to respond, a fire that spreads to a neighbour, and the commercial auto endorsements that add an individual or a driver of a car they do not own.
Question 7 (Chapter 5)
A Pennsylvania manufacturer's Commercial General Liability policy includes products and completed operations coverage. A product manufactured by the company is sold and installed at a customer's facility. Eighteen months after installation, a defect in the product causes a fire that damages the customer's building. The manufacturer's policy is an occurrence form in effect from January 1, 2023, to December 31, 2023. Which statement is correct regarding coverage?
- A) Coverage applies because the injury (property damage) occurred during the policy period due to the ongoing hazard of the installed product, even though the damage manifested later.
- B) Coverage does not apply because the damage occurred after the policy period ended, and occurrence forms require the claim to be made during the policy period.
- C) Coverage applies only if the manufacturer purchased prior acts coverage to cover the post-policy period damage.
- D) Coverage does not apply because products and completed operations coverage only applies to injury occurring within the policy period, and the damage occurred after the policy expired.
Show answer & explanation
Answer: D
Under an occurrence-form CGL policy, coverage is triggered when the property damage or bodily injury actually occurs, not when the product was sold or installed. The product was installed during the 2023 policy period, but the fire that caused the property damage did not happen until eighteen months later, well after the policy expired on December 31, 2023. Because the damage occurred after the policy period ended, this policy does not respond to the claim. Option A misapplies an 'ongoing hazard' theory that is not how a single-year occurrence policy functions; the manufacturer would need occurrence coverage in force at the time the damage actually happened. Option B is incorrect because extended reporting periods apply to claims-made policies, not occurrence forms. Option C is incorrect because the occurrence trigger depends on when damage occurs, not when it is discovered.
Question 8 (Chapter 5)
During a dinner service, a restaurant's kitchen fire spreads to the adjoining restaurant's dining room, causing property damage. The fire originated on the insured's premises. Under the insured's CGL policy, what is the correct outcome?
- A) The loss is excluded because the CGL never covers fire damage to a neighbor's property.
- B) Coverage A pays the neighbor regardless of fault, because fire damage is a first-party loss under the CGL.
- C) Coverage A covers the property damage liability to the neighbor if the insured is legally liable; the Damage to Premises Rented to You limit does not apply because the neighbor's premises are not rented to the insured.
- D) Coverage is limited to the Damage to Premises Rented to You limit shown in the declarations.
Show answer & explanation
Answer: C
Fire spreading to a neighbor's building is ordinary third-party property damage under Coverage A, payable when the insured is legally liable, usually through negligence. The separate Damage to Premises Rented to You limit applies only to premises the insured rents or occupies, so it neither caps nor replaces Coverage A here. A is wrong because such damage is covered. B is wrong because the CGL is liability insurance and pays only when the insured is legally liable. D applies the wrong limit.
Question 9 (Chapter 5)
A Pennsylvania consulting firm holds an occurrence‑form CGL ’13 policy for 2024. On December 31, 2024, an employee negligently leaves a ladder on a client’s site. The ladder falls on January 5, 2025, injuring a worker. The claim is filed in February 2025. Does the CGL policy provide coverage?
- A) Yes, because the injury occurred after the policy period but the claim was made during the period.
- B) Yes, because the occurrence form covers any injury that occurs after the policy expires.
- C) No, because the injury occurred after the policy period and the occurrence form only covers injuries occurring during the period.
- D) Yes, because the policy includes an extended reporting period.
Show answer & explanation
Answer: C
An occurrence‑form CGL covers claims arising from injuries that occur during the policy period, regardless of when the claim is made. Here the injury occurred on January 5, 2025, after the policy expired, so coverage is denied. A and B misstate the occurrence trigger. D is incorrect because the policy does not automatically include an extended reporting period; such an endorsement would have to be purchased.
Question 10 (Chapter 5)
A small Pennsylvania business wants its owner, John Doe, to be covered when he drives a company van for personal errands. Which endorsement should be added to the commercial automobile policy?
- A) CA 20 01 – Additional Insured endorsement
- B) CA 99 10 – Drive Other Car endorsement
- C) CA 20 15 – Mobile Equipment endorsement
- D) CA 99 17 – Individual Named Insured endorsement
Show answer & explanation
Answer: D
The CA 99 17 Individual Named Insured endorsement adds a specific person as an insured under the liability portion of the commercial automobile policy, allowing that person to be covered when driving the insured vehicle. The other endorsements serve different purposes.
Question 11 (Chapter 5)
A Pennsylvania-based auto repair shop purchases a Commercial Automobile policy with liability coverage. The policy includes the CA 99 10 Drive Other Car endorsement. The shop’s owner, John Doe, uses his personal SUV to run errands during business hours. While driving the SUV, John accidentally hits a pedestrian, causing $150,000 in bodily injury damages. The pedestrian sues John and the repair shop. Which statement is correct regarding coverage under the Commercial Automobile policy?
- A) The claim is not covered under the commercial policy, because the Drive Other Car endorsement applies only to vehicles the listed individual does not own; John's personal auto policy responds.
- B) The claim is not covered because the endorsement applies only to vehicles owned by the repair shop.
- C) The claim is covered because the repair shop’s liability policy automatically extends to the owner’s personal vehicle when used in connection with the business.
- D) The claim is covered because the CA 99 10 endorsement extends liability coverage to the owner while driving his personal vehicle for business purposes.
Show answer & explanation
Answer: A
The Drive Other Car endorsement (CA 99 10) gives a listed individual, typically an executive who has no personal auto policy, liability coverage while driving a vehicle he does not own. John owns the SUV, so the endorsement does not reach it; his personal auto policy is the coverage for his own car. B misstates the endorsement, which covers non-owned cars, not shop-owned ones. C invents an automatic extension to owned personal vehicles. D applies the endorsement to exactly the vehicle it excludes.
Question 12 (Chapter 5)
A Pennsylvania-based business purchases a Commercial Automobile policy with physical damage coverage that includes collision and comprehensive coverage. One of the business’s delivery vans is damaged in a collision with a deer while driving on a rural road. The repair cost is $12,000. Which statement is correct regarding coverage for this loss?
- A) The claim is not covered because collision coverage does not apply to collisions with animals.
- B) The claim is covered under comprehensive coverage because it involves a collision with an animal.
- C) The claim is covered under collision coverage because the van was involved in a collision.
- D) The claim is not covered because comprehensive coverage excludes damage caused by animals.
Show answer & explanation
Answer: B
Comprehensive coverage in a Commercial Automobile policy typically includes damage caused by collisions with animals, such as deer. Collision coverage applies to collisions with other vehicles or objects, not animals. Distractors: A and D are incorrect because comprehensive coverage does cover animal collisions. C is incorrect because collision coverage does not apply to animal collisions.
Practice Questions 13-17: Products, Additional Insureds, Completed Operations and Cancellation
Products and completed operations on an occurrence form, the additional insured endorsement for ongoing operations, and what happens to a loss that happens after a policy ends.
Question 13 (Chapter 5)
A Pennsylvania-based manufacturer's Commercial General Liability policy includes products and completed operations coverage. The manufacturer sells a defective product to a retailer on October 1, 2024, who installs it in a customer's home. Six months later, on April 1, 2025, the product malfunctions and causes $50,000 in property damage to the customer's home. The customer sues the manufacturer. The manufacturer's policy is an occurrence form in effect from January 1, 2024, to December 31, 2024. Which statement is correct regarding coverage under the policy?
- A) The claim is covered because the damage arose from a defective product sold during the policy period.
- B) The claim is not covered because the damage occurred after the policy period ended.
- C) The claim is not covered because the policy excludes products and completed operations hazards.
- D) The claim is covered only if the manufacturer purchases an extended reporting period endorsement.
Show answer & explanation
Answer: B
Under an occurrence-form CGL policy, coverage is triggered when the property damage actually occurs, not when the product was sold. The product was sold during the 2024 policy period, but the property damage did not occur until April 1, 2025, after the policy expired on December 31, 2024. Because the damage occurred after the policy period ended, this policy does not respond to the claim. Option A incorrectly treats the sale date, rather than the date of the damage, as the trigger. Option C is incorrect because products and completed operations coverage is a standard, included part of CGL, not an excluded hazard. Option D is incorrect because an extended reporting period is a claims-made concept and would not change the result for an occurrence form in any event.
Question 14 (Chapter 5)
A Pennsylvania contractor’s Commercial General Liability policy includes the CG 20 10 additional insured endorsement, naming a general contractor as an additional insured. The general contractor is sued for bodily injury arising out of the subcontractor’s work on a construction project. The subcontractor’s policy has limits of $1,000,000 per occurrence. Which statement best describes the coverage provided by the CG 20 10 endorsement in this scenario?
- A) The endorsement provides the general contractor with primary coverage up to the subcontractor’s policy limits.
- B) The endorsement provides the general contractor with excess coverage over the subcontractor’s policy limits.
- C) The endorsement provides the general contractor with coverage only if the subcontractor’s policy is exhausted.
- D) The endorsement provides the general contractor with coverage on a pro rata basis with the subcontractor’s policy.
Show answer & explanation
Answer: A
The Additional Insured - Owners, Lessees or Contractors endorsement (CG 20 10) makes the general contractor an insured on the subcontractor's CGL for bodily injury or property damage caused in whole or in part by the subcontractor's ongoing operations, and the coverage is primary and shares the subcontractor's own limits. B and C wrongly describe it as excess or as contingent on exhaustion. D is wrong because the endorsement does not create a pro rata sharing arrangement with another policy.
Question 15 (Chapter 5)
A Pennsylvania business purchases a Commercial Automobile policy that includes proof of coverage as required by 75 Pa. C.S. Ch. 17 §§ 1781-1787. Which of the following is an acceptable form of proof of financial responsibility under this law?
- A) A letter from the business's accountant confirming financial stability
- B) A copy of the business's federal tax return
- C) A verbal statement to a police officer that the business has insurance
- D) An insurance ID card issued by the insurer showing the policy number and effective dates
Show answer & explanation
Answer: D
Under 75 Pa. C.S. Ch. 17 §§ 1781-1787, acceptable proof of financial responsibility for Commercial Automobile policies includes an insurance identification card issued by the insurer that shows the policy number, effective and expiration dates, and description of the covered vehicle(s). This is the standard form of proof carried in vehicles. Option A is incorrect because an accountant's letter is not a recognized form of proof. Option B is incorrect because a federal tax return does not serve as proof of insurance. Option C is incorrect because verbal statements are not acceptable; physical or electronic proof must be provided.
Question 16 (Chapter 5)
A Pennsylvania restaurant owner purchases a Commercial Automobile policy with liability coverage and the CA 99 10 (Drive Other Car) endorsement. The owner occasionally uses a friend’s personal SUV to run errands during business hours. While driving the SUV, the owner is involved in an accident that causes $400,000 in property damage. The friend’s personal auto policy has limits of $300,000. Which statement is correct regarding coverage under the CA 99 10 endorsement?
- A) The friend’s personal auto policy pays first, and the restaurant’s policy provides excess coverage up to its liability limits.
- B) The CA 99 10 endorsement provides primary coverage for the restaurant owner while driving the friend’s vehicle, regardless of the friend’s personal policy.
- C) The claim is excluded because the CA 99 10 endorsement only applies to leased or rented vehicles, not personally owned vehicles.
- D) The restaurant’s policy does not cover the owner while driving a non-owned vehicle unless the friend’s policy is primary and exhausted.
Show answer & explanation
Answer: B
The correct answer is B because the CA 99 10 (Drive Other Car) endorsement provides primary coverage for the named insured (restaurant owner) while driving a non-owned auto, even if the owner of the vehicle has their own policy. Option A is wrong because the endorsement is primary, not excess. Option C is wrong because the endorsement applies to non-owned vehicles, including personally owned ones. Option D is wrong because the endorsement does provide coverage without requiring the friend’s policy to be exhausted first.
Question 17 (Chapter 5)
A Pennsylvania business owns a Commercial Automobile policy with physical damage coverage. One of its vehicles is damaged in a flood. Which statement is correct regarding coverage for this loss?
- A) Physical damage coverage will pay for the flood damage only if the business also has comprehensive coverage.
- B) Physical damage coverage will pay for the flood damage under the collision coverage portion of the policy.
- C) Physical damage coverage does not apply to flood damage because it is considered an act of God.
- D) Physical damage coverage will pay for the flood damage under the comprehensive coverage portion of the policy.
Show answer & explanation
Answer: D
Physical damage coverage in a Commercial Automobile policy consists of collision and comprehensive coverages. Comprehensive coverage specifically covers damage to the insured vehicle from causes other than collision, including flood, fire, theft, vandalism, and falling objects. Flood damage is a covered peril under comprehensive coverage. Option A is incorrect because physical damage coverage includes comprehensive coverage; it does not require an additional purchase beyond the physical damage coverage itself. Option B is incorrect because collision coverage only covers damage from impact with another vehicle or object, not flood. Option C is incorrect while flood may be considered an act of God, it is explicitly covered under comprehensive coverage in standard automobile policies.
The Commercial Liability Mistakes That Cost Marks
Using the wrong date. An occurrence form responds to bodily injury or property damage that occurs during the policy period, not to the date the product was sold, the work was completed or the claim was filed.
Importing claims-made ideas. An extended reporting period belongs to claims-made forms. It does not change the result for an occurrence form.
Missing contractual liability. Liability the insured assumes under a lease or subcontract is covered by the standard CGL unless a contractual liability exclusion removes it.
Putting defamation under Coverage A. Libel and slander are personal and advertising injury, which is Coverage B.
Applying Drive Other Car to a vehicle the individual owns. CA 99 10 reaches vehicles the listed person does not own, and the Individual Named Insured endorsement is the one that adds a person to the policy.
Treating the motor carrier endorsement as optional. MCS-90 is the federal public liability endorsement for motor carriers in interstate commerce.
Your Next Step
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