An insurance producer fails to obtain automobile insurance for client after agreeing to do so. The client is involved in an automobile accident after running a red light and is found to be at fault. The damage to the other vehicle totals $5,000. Which statement regarding the producer's errors and omissions liability policy is true?

A. It will provide coverage because punitive damages have been awarded.

B. It will provide coverage because the damage to the client resulted from the producer's negligence.

C. It will not provide coverage; such physical damage to property is not covered.

D. It will not provide coverage because the property damage resulted from the client breaking the law.

Answer: B

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An insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay?

An insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay? a) $0 b) $30,000 c) $32,000 d) $40,000 Answer: B

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An insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay?

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