AIC FINAL EXAM QUESTIONS CORRECTLY ANSWERED.
1) Your insured, a sole proprietor, purchased a building valued at $1 million. The insurance policy has a coinsurance clause based on the replacement cost value of 90%. Contrary to your advice, your insured insures the building for only $500,000. He s...
AIC FINAL EXAM QUESTIONS
CORRECTLY ANSWERED.
1) Your insured, a sole proprietor, purchased a building valued at $1 million. The insurance policy has a
coinsurance clause based on the replacement cost value of 90%. Contrary to your advice, your insured
insures the building for only $500,000. He suffers a windstorm loss totalling $150,000. How much will
the insurer pay?
a) $75,000
b)$83,333
c)$150,000
d) $93,755 - CORRECT ANSWER b
2) An insured property is covered by two separate commercial policies placed with two different
insurers. Insurer A's policy has a limit of $100,000 and Insurer B's policy has a limit of $200,000. The
insured suffers an insurable loss of $230,000. Assuming no deductibles apply, how much will each
insurer pay?
a) Insurer A will pay $100,000. Insurer B will pay $130,000
b)Insurer A will pay $100,000. Insurer B will pay $200,000
c) Insurer A will pay $76,659. Insurer B will pay $153,341
d) Neither insurer will pay. Two policies on the same property are prohibited - CORRECT ANSWER c
3) On a Commercial Building, Equipment, and Stock Form, that insures the building owner, which of the
following would not be included under the "building" definition?
a) Growing plants and trees inside the building used for decorative purposes
b)Building maintenance supplies
c) Fixed structures pertaining to the building
d) Temporary fixtures and fittings - CORRECT ANSWER d
,4) Under a Commercial Building, Equipment, and Stock insurance policy, the definition of "stock"
includes
a) merchandise of every description usual to the insured's business, including packing and wrapping
materials
b)advertising material usual to the insured's business
c) all stock including similar property belonging to others for which the insured is obligated to insure
d) all of the above - CORRECT ANSWER d
5) The Commercial Building, Equipment, and Stock insurance policy identifies three types of equipment
for which coverage is provided. Which of the following is NOT one of these three types?
a) Tenants' improvements and betterments if the insured does not own the building
b)Packing materials used to ship stock
c) Property belonging to others for which the insured is legally liable
d) The contents usual to the business the insured is engaged in, other than stock - CORRECT ANSWER b
stock6) The basic principle of business interruption insurance is
a) to arrange alternate employment for employees while the building is being repaired following an
insured loss
b)to restore the premises to the condition they were in before the loss
c) to cover the cost of relocating the business
d) to restore the income that would have been earned had the business not been interrupted - CORRECT
ANSWER d
7) On a commercial crime insurance policy, employee dishonesty insurance
a) is provided on a discovery basis
b)is also known as fidelity insurance
, c) protects insured against dishonest acts committed by employees, alone or in collusion with others
d) all of the above - CORRECT ANSWER d
8) Which of the following losses normally excluded under a boiler and machinery policy can be added by
endorsement?
a) Fireb)Nuclear reaction or radioactive contamination
c) Increased costs due to the enforcement of a bylaw regulating building construction
d) War related losses - CORRECT ANSWER c
9) A surety bond
a) is a contract between two parties
b)protects the surety
c) provides security to a party entering into a contractual agreement with another
d) protects the insurer - CORRECT ANSWER c
10) A marine insurance policy provides coverage for
a) the hull and cargo
b)the hull only
c) cargo only
d) property damage to third parties only, not the vessel itself - CORRECT ANSWER a
11) Statutory conditions which are found in all fire policies
a) impose obligations on both the insured and the insurer
b)specify the coverages provided
c) state the rights of a third party
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