West Virginia Property and Casualty Licensing Practice Exam

Which exposure is typically covered under a basic Commercial General Liability policy?

1. Employee injuries

2. Damages caused by products after their sale

3. Flood damage on premises

4. Theft of inventory

The correct answer is: Damages caused by products after their sale

A basic Commercial General Liability (CGL) policy is designed to protect businesses from a variety of risks, particularly those involving third-party claims for bodily injury, property damage, personal injury, and advertising injury. The correct answer identifies damages caused by products after their sale, which is typically included under the coverage of a CGL policy through its "products-completed operations" coverage. This provision is essential for businesses that manufacture or sell products, as it protects against claims that arise when a product causes injury or damage after it has been sold and is no longer in the control of the manufacturer or seller. In contrast, employee injuries are generally excluded from CGL policies and are typically covered under workers' compensation insurance. Flood damage is often subject to specific exclusions or may require separate flood insurance, as a standard CGL policy does not cover losses resulting from flooding. Similarly, theft of inventory usually requires coverage under a business property insurance policy or a crime insurance policy, not a basic CGL policy. This distinction highlights the specific role of a CGL in addressing liabilities that arise from the business's products and operations.