Illinois Casualty Insurance State Practice Exam

What type of liability does Products and Completed Operations Coverage cover?

1. Liability arising from defective products or completed services

2. Bodily injury claims occurring on business premises

3. Liability from employee actions during work hours

4. Protection against contractual agreements

The correct answer is: Liability arising from defective products or completed services

Products and Completed Operations Coverage is designed to protect businesses from liabilities that arise specifically from their products or services once they have been completed and delivered to the customer. This coverage is particularly important for manufacturers and contractors, as it covers claims related to bodily injury or property damage that may occur after the company has finished its work or sold its products. For example, if a customer is injured due to a defective product that a business has produced, or if a completed construction project results in property damage, this type of coverage would come into play to safeguard the business against related claims. The other options do not accurately represent what this coverage protects against. Claims arising from incidents on business premises typically fall under general liability rather than products and operations. Liability related to employee actions during work hours is addressed through different employee-related coverages, while protection against contractual agreements is related to specific liabilities tied to contracts rather than products or completed operational activities. This makes the first option the correct choice for this question.