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AINS 103: CHAPTER 2 QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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AINS 103: CHAPTER 2 QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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AINS 103: CHAPTER 2 QUESTIONS ANDANSWERS WITH SOLUTIONS 2024
Commercial property coverage components: - ANSWER Commercial property declarations, one or more
commercial property coverage forms, one or more causes of loss forms, commercial property conditions
form, and any applicable endorsements.
Commercial property declarations: - ANSWER The declaration page contains information such as a
description of the property insured, the kinds and amounts of coverage provided, and any optional
coverages.
Commercial property coverage forms: - ANSWER Contain descriptions of the specific coverages being
provided to the business. Typically, one coverage form insures the insured's buildings and/or personal
property, and another coverage form insures business income and/or extra expense.
What are the three types of causes of loss forms and what do they allow the insured to select? -
ANSWER Basic, Broad, Special. These allow the insured to select, or the underwriter to offer, a range of
covered perils.
Commercial property conditions form: - ANSWER Contains conditions applicable to all coverage forms
included in a commercial property coverage part unless a coverage form contains a condition to the
contrary.
What does the commercial property coverage conditions list? - ANSWER Each obligation of the insured.
This also includes various provisions, and rules to which the insurer must adhere to.
(Y/N) Leah is a claims rep for a commercial client who has experiences a property loss. The client wants
to know whether they have to hold up their end of the insuring agreement if their policy covers the loss.
How should Leah respond? - ANSWER Yes.
What can the Insurance Services, Inc. (ISO) Building and Personal Property Coverage Form, also known as
the BPP, cover? - ANSWER Damage to a business's physical structures, the property inside, and other
items that it owns.
, The BBP's Basic and Broad Forms: - ANSWER The Basic and Broad forms are nearly identical. They use
the named perils approach, which means they explicitly state the policy's covered causes of loss, which
can include: fire, lightning, explosion, windstorm or hail, smoke, and sprinkler leakage.
What perils are covered by the Broad form that are not covered under the Basic form? - ANSWER Falling
objects, weight of ice, snow or sleet, and water damage, so it is slightly more expensive.
The Special Form: - ANSWER Insures on an open peril basis, which means that it covers anything that the
policy doesn't specifically list as being excluded. This allows for broader coverage, so it is preferred by
most businesses.
(Y/N) Lite Incorporated insures its building under a commercial property policy that includes the Causes
of Loss-Broad Form. A windstorm came into town and damages the company's roof. Would the loss be
covered under the policy? - ANSWER Yes.
How does the BPP supplement its core coverages? - ANSWER Through additional coverage, coverage
extensions, and optional coverages detailed in the policy.
Amy owns an IT business and insures her building and personal property under a BPP coverage form. She
leases all of her equipment, and according to the lease agreement, she is responsible for the
replacement cost of the leased equipment in the event that it's damaged. How can Amy ensure that her
insurance coverage meets the obligations of her lease agreement? - ANSWER Replacement cost +
extension of a replacement cost to personal property of others optional coverage.
(BPP Optional Coverages) The Agreed Value Coverage: - ANSWER Suspends the requirement that the
insured carry a certain percentage of insurance relative to the value of the covered party.
(BPP Optional Coverages) The Inflation Guard options: - ANSWER Annually increases the limit of
insurance by the percentage of annual increase shown in the declarations to account for inflation.
(BPP Optional Coverages) The Replacement Cost options: - ANSWER Allows for coverage to most types of
property on a replacement cost, rather than actual cash value. This option can be extended to cover the
personal property of others valued at replacement cost.
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