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AINS103 PRACTICE QUESTIONS & ANSWERS
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AINS103 PRACTICE QUESTIONS & ANSWERS
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AINS103 PRACTICE QUESTIONS & ANSWERSIn property insurance, the term "Property in Transit" refers to which one of the
following? - Answers -Property while being transported by trucks, cars, buses, trains,
airplanes, and ships.
Extra expenses are expenses, in addition to ordinary expenses, that an organization
incurs to mitigate the effects of a business interruption. Which one of the following is an
example of an extra expense? - Answers -Cost to rent temporary office space.
Upon entering a restaurant, a customer grasped a handrail the broke off, causing the
customer to fall and break his wrist. This is an example of which one of the following
types of commercial general liability loss? - Answers -Premises and operations liability.
A contractor is hired to install a new concrete sidewalk in front of a store. Several weeks
after the sidewalk was installed, the concrete buckles and a passerby trips and falls on
the buckled sidewalk. The passerby sues the contractor to recover medical expenses
incurred due to the fall. This commercial liability is categorized as - Answers -Completed
operations liability.
A carrier that is prevented by an accident from delivering the cargo aboard its ship may
face an exposure called loss of freight, which is - Answers -The compensation the
carrier receives for transporting cargo.
The management of Maryland Marine Co. (MMC) must ensure that proper coverage is
obtained for work- related injuries. The employee population of MMC is a mixture of full-
time and part-time employees as well as some casual employees for one-time tasks.
Much of MMC's work is done by independent contractors and temporary employees
during peak seasons. Which one of the following statements about these persons is
true? - Answers -Many states workers compensation statutes exclude casual labor
(temporary employees).
When a clothing manufacturer decides to expand the sale of its clothing line by offering
internet purchases, it creates new exposures not otherwise covered, or not fully
covered, by a traditional policy. These include - Answers -Loss or damage caused by
computer virsuses.
Meat Products Company (MPC) runs packing plants in three Midwest states. The
company was in the news recently because of its labor practices. The Department of
Labor (DOL) investigated complaints from five female employees that MPC
discriminated against them. The DOL found the claim was true. The Immigration and
Naturalization Service (INS) found that the company employed illegal immigrants and
paid them less than the minimum wage. When this news became public, MPC's
reputation was severely harmed. This scenario illustrates which source of reputation risk
- Answers -Regulatory and legal compliance.
,Perils are an important aspect of property insurance. Which one of the following
statements is correct with respect to perils? - Answers -A peril is the actual means by
which property is damaged or destroyed such as fire, lightning, windstorm, hail or theft.
During a business interruption, some of the organizations expenses, called continuing
expenses, will continue, and other expenses, called non-continuing expenses, will not
continue. Which one of the following is an example of a continuing expense? - Answers
-Payroll of key employees.
Which one of the following loss exposure exist when a business can be held legally
liable for bodily injury or property damaged caused by their repair or contracting work? -
Answers -Completed operations liability.
Which one of the following entities would likely have the greatest completed operations
loss exposure? - Answers -Paul the plumber.
Inland marine insurance is insurance that covers - Answers -Many different classes of
property that typically involve an element of transportation on land.
Joe signs a contract with Home Builders to install the electrical wiring for a new home.
He uses his own tools and follows the specifications in the contract. Joe is burned while
installing the wiring. Does Home Builders' workers compensation policy cover Joe's
injury? - Answers -No, because Joe is not an employee of Home Builders.
Cyber risk intellectual property loss exposures include - Answers -Cyber extortion of
trade secrets.
As part of its assessment of its cyber risk, an organization should consider whether
there are any intangible property exposures. Which one of the following would best be
classified as an intangible property loss? - Answers -The computer system is hacked
and data including credit card numbers are stolen.
Property insurance policies use the term "personal property" to refer to the - Answers -
Contents in and around a building.
In business income insurance, the expenses that an organization would not have
incurred if the business interruption have not occurred are called - Answers -Extra
expenses.
Radley Contracting Company is installing new signage on the front of a building.
George, a passerby walking near the building is injured when a Radley employee
accidentally drops a tool from a crane. George likely has the ability to assert which one
the following types of claim? - Answers -Premises and operations liability.
John purchased a new lawnmower two years ago. After significant use, the lawnmower
needed servicing. A repairman sharpened the blade but he failed to reattach it properly
,to the lawnmower. When John was using the lawnmower, the blade flew off and
seriously injured John's daughter. From the standpoint of a commercial liability loss for
the repair shop, this is an example of - Answers -Completed operations liability.
Automobile liability exposures can result from - Answers -Hiring or borrowing an
automobile.
Workers compensation benefits include which one of the following? - Answers -
Rehabilitation Benefits.
The unauthorized intrusion into a company's computer network resulting in damage to
intellectual property is best classified as which one of the following types of cyber
liability exposures? - Answers -Intangible property.
An email was sent to a company's employee containing a harmful attachment. Several
employees opened the attachment which allowed hackers to obtain customer contact
information. This cyber risk loss is - Answers -Damage to intangible property.
Which one of the following best describes real property? - Answers -Tangible property
that include land, structures permanently attached to the land, and whatever is growing
on the land.
Which one of the following is an example of injury or damage arising from an
occurrence that would be covered by the products and completed operations liability
portion of the Commercial General Liability (CGL) Coverage Form? - Answers -A
defective gas range manufactured by the insured explodes causing injury.
A building contractor uses lower grade materials than called for in the specifications for
an office building. A year after the building was completed, a balcony collapses, injuring
several employees and customers and causing damage to the building and contents.
For the building construction company, this is an example of - Answers -A completed
operations liability exposure.
To be covered under a workers compensation statute, an injury or disease (in most
states) must meet which one of the following requirements? - Answers -Arise out of
employees job-related injuries and diseases.
Which one of the following supply chain exposures can a business mitigate by carefully
wording contracts and diversifying suppliers? - Answers -Loss of supply due to external
events.
Bio-Pharma was a highly regarded pharmaceutical company. That changed last year
when it was revealed that Bio-Pharma researchers had fabricated test results of the
company's new hypertension drug, a company official bribed a key regulator to get the
drug approved. These revelations led to a sharp decline in sales of all Bio-Pharma's
, drugs, a sharp decline in net income, and a decline in Bio-Pharma's stock price. This
scenario clearly indicates the value of a corporation's - Answers -Reputation.
Sally is a commercial property claims adjuster. When she first assigned a claim, she
reviews the commercial property part of the policy to make sure that the property that
suffered the loss matches the description of the property insured. She also reviews the
kinds and amounts of coverage provided. Which of the following components of the
commercial property part will provide Sally with this information? - Answers -
Commercial property declarations page.
Billy owns a baseball souvenir store in Cooperstown, NY. He insured his store under a
Building and Personal Property Coverage Form (BPP) with a $275,000 limit and a
$1,500 deductible. A large fire in the store caused significant damage amounting to
$310,000 in covered damages. How much would Billy's insurer pay under his BPP? -
Answers -$275,000.
Which one of the following is one of the covered causes of loss in the commercial
property policy Causes of Loss - Basic Form? - Answers -Explosion.
Which one of the following statements about Inflation Guard optional coverage of the
Building and Personal Property Coverage Form (BPP) is true? - Answers -It
automatically increases the limit of insurance by the percentage of annual increase
shown in the declarations.
Which one of the following would be covered under the Extra Expense insuring
agreement of the Business Income (and Extra Expense) Coverage Form? - Answers -
Costs to move to a temporary location.
Lucy's Bakery is insured under a commerical package policy with the Business Income
(and Extra Expenses) Coverage Form. A fire loss caused significant damage to the
building. When Lucy learned that it would take 9 months to repair the building, she
decided to temporarily relocate to a nearby rental location. All of the following would be
considered covered extra expenses under the Business Income (and Extra Expense)
Coverage form, EXCEPT: - Answers -The salary of the assistant baker and cake
decorator.
Dooley's Restaurant is insured under a commerical pacakge policy (CPP) with the
Business Income (with Extra Expense) Coverage form. The business sufferd a
$400,000 loss of business income when it was forced to suspend operations after
floodwaters damaged the basement and first floor of the restaraunt. Which one of the
follow is an acceptable reason for the CPP insurer to deny the business income claim? -
Answers -The policy's covered cause of loss did not include flood.
Richard's Clothing Store has a $500,000 Business Income (and Extra Expense)
Coverage Form on which there is an 80 percent coinsurance clause. A fire swept
through the store. Richard's Clothing Store estimates that its net income plus all
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