CAIB 2 Chapter 7 Practice Test 1 Questions With 100% Complete Solutions Latest Update 2024/2025
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Course
CAIB 2 Chapter 7
Institution
CAIB 2 Chapter 7
Provide four sources of Business Interruption losses and an example of each. - CORRECT ANSWER-i) Physical damage to business
example: Fire destroys business and customers cannot make purchases
ii) Failure of public utilities
example: Ice storm damages power lines and power cannot be restored for...
CAIB 2 Chapter 7 Practice Test 1
Questions With 100% Complete
Solutions Latest Update 2024/2025
Provide four sources of Business Interruption losses and an example of each. -
CORRECT ANSWER-i) Physical damage to business
example: Fire destroys business and customers cannot make purchases
ii) Failure of public utilities
example: Ice storm damages power lines and power cannot be restored for several
weeks. This results in sales at the business to plummet
iii) Transportation related accidents
example: Railcar containing hazardous gas overturns causing evacuation of town.
As a result, of this railcar accident, sales at business cease.
iv) Physical damage to neighbouring premises
example: Your client, who is a tenant in a shopping mall, experiences drop in
sales when anchor store burns to the ground
Identify three sources of funding available to businesses when their operations are
interrupted. - CORRECT ANSWER-i) Reduce capital reserves
ii) Take out a bank loan
iii) Purchase adequate amounts of business interruption insurance
What are the two key coverages provided by business interruption policies? -
CORRECT ANSWER-i) Insure lost net profit of the business which it could have earned
had there been
no loss
ii) Insure expense that must continue during period of business interruption
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