Insurance and risk management Answer as many as possible Thank you in advance 8-15 8. Which of the following statements is true about a directors and officers liability insurance? a. The ISO (Insurance Services Office) directors and officers liability insurance policy is designed for use only for publicly traded corporations b. Privately held companies do not need to purchase directors and officer's liability insurance c. Not-for-profit organizations are not eligible to purchase the ISO directors and officer's liability insurance d. The standard directors and officer's liability insurance policy requires the insureds to obtain fiduciary bonds e. A director may also be a corporate officer. 9. Kelly is upset because a corporation in which he owns shares of stock recently purchased another company in a country that is known for violations of humanitarian rights issues. The board of directors announced that this could be a very profitable operation. Kelly filed a lawsuit against the directors on behalf of himself and other shareholders who own the corporation. This type of action is called: a. A negligence suit b. A tort liability c. A derivative suit d. A breach of candor suit e. A protected group suit 10. Which of the following is NOT considered one of the Board of Directors' and officers' fiduciary duties? a. The duty of good faith b. The duty of candor c. Maximizing share price d. The duty of loyalty e. All of the above are considered fiduciary duties 11. Leroy is a developer who has a contract to build a shopping center for LongTree Corporation. One of the members of LongTree's Board of Directors is Leroy's sister. Some of LongTree's other shareholders believe that this contract was given to Leroy because of this relationship and not because Leroy could provide the best service. As a result, the shareholders sued LongTree's board of directors. Their claim could be based on: a. A breach of the business judgment rule b. Gross negligence c. A breach of loyalty d. Employment decisions based on gender e. A breach of employment related claims 12. Marsha is considering serving on a community board of directors but is concerned about being sued. Marsha lives in a state that has passed a statute that requires corporations to indemnify the board's expenses for legal proceedings defense costs and settlements. Marsha probably lives in a state with: a. Mandatory indemnification statutes b. Financial loss cap laws c. Comparative negligence laws d. Permissive indemnification statutes e. Deepening insolvency laws 13. Which of the following would NOT be considered a business? a. making money by preparing tax returns every year c. making money by winning the occasional poker game b. making money by selling handicrafts at fairs d. making money by coaching a youth sports group 14. Personal auto policies DO NOT allow for: a. a salesman using his own car to make calls c. an electrician using her own van to transport equipment b. a driver using her own car as a taxi d. a cleaning crew using one member's car to drive to clients' homes 15. For a home business to be covered by an endorsement to a homeowner's policy: a. the business must be owned by a person insured on the homeowner's policy c. the business must be wholly owned by a single individual b. the business must make a minimum of $10,000 per year d. the business must be owned by a limited-liability company, formed by the owners