Illinois Casualty Insurance State Practice Exam

What does Owners and Contractors Protective Liability Coverage protect against?

1. Negligence claims by employees of a business

2. Liability resulting from actions of contractors hired

3. Damage caused by the insured's own employees

4. Claims related to insured property modifications

The correct answer is: Liability resulting from actions of contractors hired

Owners and Contractors Protective Liability Coverage is designed specifically to protect the insured from liability arising out of the actions of independent contractors they hire for construction or other projects. This type of coverage is particularly important because it safeguards the property owner and the contractor against claims for bodily injury or property damage that occur as a result of the contractor's work or negligence on the job. This coverage is often essential in construction contracts where the property owner seeks to minimize their exposure to liabilities related to workers or third parties that may be harmed by the contractor's activities. The intent is to ensure that even if the contractor is primarily responsible, the property owner still has a safety net against claims that could arise from the contractor's performance. The other options address different types of liabilities that are not covered by this specific type of insurance. Claims by employees of a business typically fall under workers' compensation or general liability, damage caused by the insured's own employees would also be addressed through different insurance avenues, and claims related to modifications made to insured property are often covered through general liability or property insurance, rather than the Owners and Contractors Protective Liability policy.