AINS103 Practice Questions, AINS 103
In property insurance, the term "Property in Transit" refers to which one of the
following? - ANS 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
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of the following is an example of an extra expense? - ANS Cost to rent temporary
office space.
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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? - ANS Premises and
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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
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as - ANS 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 - ANS The
compensation the carrier receives for transporting cargo.
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The management of Maryland Marine Co. (MMC) must ensure that proper
coverage is obtained for work- related injuries. The employee population of MMC
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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
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following statements about these persons is true? - ANS 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 - ANS 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 - ANS Regulatory and legal compliance.
Perils are an important aspect of property insurance. Which one of the following
statements is correct with respect to perils? - ANS 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
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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? - ANS Payroll of key employees.
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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
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work? - ANS Completed operations liability.
Which one of the following entities would likely have the greatest completed
operations loss exposure? - ANS Paul the plumber.
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Inland marine insurance is insurance that covers - ANS 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
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policy cover Joe's injury? - ANS No, because Joe is not an employee of Home
Builders.
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Cyber risk intellectual property loss exposures include - ANS Cyber extortion of
trade secrets.
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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? - ANS 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 - ANS
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 - ANS 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? - ANS 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 - ANS
Completed operations liability.
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Automobile liability exposures can result from - ANS Hiring or borrowing an
automobile.
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Workers compensation benefits include which one of the following? - ANS
Rehabilitation Benefits.
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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? - ANS Intangible property.
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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 - ANS Damage to intangible
property.
Which one of the following best describes real property? - ANS Tangible property
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that include land, structures permanently attached to the land, and whatever is
growing on the land.
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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? - ANS
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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 - ANS 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? - ANS 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? - ANS 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 - ANS Reputation.
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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
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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
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information? - ANS 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
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amounting to $310,000 in covered damages. How much would Billy's insurer pay
under his BPP? - ANS $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? - ANS Explosion.
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Which one of the following statements about Inflation Guard optional coverage of
the Building and Personal Property Coverage Form (BPP) is true? - ANS It
automatically increases the limit of insurance by the percentage of annual
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increase shown in the declarations.
Which one of the following would be covered under the Extra Expense insuring
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agreement of the Business Income (and Extra Expense) Coverage Form? - ANS
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: - ANS The salary of the
assistant baker and cake decorator.
