Exam (elaborations)
AINS 103: PRACTICE QUIZ-ALL CHAPTERS QUESTIONS WITH CORRECT ANSWERS
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AINS 103: PRACTICE QUIZ-ALL CHAPTERS QUESTIONS WITH CORRECT ANSWERS
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AINS 103 TEST s s1. Workers compensation benefits include which one of the following?: Reha- s s s s s s s s s
sbilitation benefits s
2. When a clothing manufacturer decides to expand the sale of its clothing lin
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e by offering internet purchases, it creates new exposures not otherwise cov
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ered, or not fully covered, by a traditional policy. These include: Loss or dama
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ge caused by computer viruses.
s s s s
3. Which one of the following supply chain exposures can a business mitigate b
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y carefully wording contracts and diversifying suppliers?: Loss of supply due to e
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xternal events s
4. The commercial property coverage part of a commercial package policy co
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ntains one or more commercial property coverage forms. Each coverage for
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m typically includes all of the following, EXCEPT:: A range of covered peril
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5. Which one of the following statements best describes the Causes of Loss
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—
Special Form?: The Special Form provides coverage for direct physical losses ot
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her than those that are specifically excluded.
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6. Which one of the following best describes real property?: Tangible property th
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at includes land, structures permanently attached to the land, and whatever is growin
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g on the land.
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7. During a business interruption, some of the organization's expenses, called c
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ontinuing expenses, will continue, and other expenses, called noncontinuing ex
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penses, will not continue. Which one of the following is an example of a continu
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ing expense?: Payroll of key employees
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8. A vehicle owner had a tire store install four new wheels and tires on the vehic
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le. On the way home from the store, one of the wheels came off, causing the vehi
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cle to accidentally run off the road and strike a tree.The vehicle owner sued the ti
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re store for failing to properly tighten the lug nuts on the vehicle. The loss expo
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sure faced by the tire store in this case is known as: Completed operations liability
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.
9. Which one of the following entities would likely have the greatest completed o
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perations loss exposure?: Paul the plumber s s s s s
10. A carrier that is prevented by an accident from delivering the cargo aboard its
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ship may face an exposure called loss of freight, which is: The compensation the c
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arrier receives for transporting cargo.
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11. Which one of the following statements is correct with respect to the Build-
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sing and Personal Property Coverage Form (BPP) deductible?: If an occurrence in
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volves a loss that affects more than one category of covered property and a separate l
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imit of insurance applies to each category, losses to all categories are totaled and the
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deductible applied to that total amount. s s s s s
1s/s20
, AINS 103 TEST s s
12. Which one of the following statements is correct with respect to the Build-
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sing and Personal Property Coverage Form (BPP)?: Due to coverage extensions, it i
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s possible for the total payment for one loss to exceed the policy limit.
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13. Which one of the following would be considered an extra expense under th
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e Business Income (and Extra Expense) Coverage Form of the commercial pac
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kage policy?: The increased cost of rent at a temporary location
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14. Dooley's Restaurant is insured under a commercial package policy (CPP) w s s s s s s s s s s
ith the Business Income (with Extra Expense) Coverage Form.The business suf
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fered a $400,000 loss of business income when it was forced to suspend operat
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ions after flood waters damaged the basement and first floor of the restaurant.
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Which one of the following is an acceptable reason for the CPP insurer to deny t
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he business income claim?: The policy's covered causes of loss did not include flood
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.
15. Lucy's Bakery is insured under a commercial package policy with the B
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usiness Income (and Extra Expense) Coverage Form. A fire loss caused sig
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nificant damage to the building. When Lucy learned that it would take 9 mon
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ths to repair the building, she decided to temporarily relocate to a
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nearby rental location. All of the following would be considered covered extra ex
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penses under the Business Income (and Extra Expense) Coverage Form, EXC
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EPT:: The salary of the assistant baker and cake decorator
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16. Richard's Clothing Store has a $500,000 Business Income (and Extra Expen s s s s s s s s s s
se) Coverage Form on which there is an 80 percent coinsurance clause. A fire sw
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ept through the store. Richard's Clothing Store estimates that its net income pl
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us all operating expenses for the policy period would have been
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$1,875,000. The estimated business income loss is $300,000. How much will the
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insurer pay?: $100,000 s s
17. Suzanne is a commercial lines underwriter. Which one of the following co s s s s s s s s s s s
mponents of the general liability coverage forms would she use to tailor the f
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orm to meet the specialized needs of an insured?: Endorsements
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18. Under Coverage A of the commercial general liability coverage form (CGL), pr
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operty damage would include all of the following, EXCEPT:: Infringement of copy
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right
19. Leslie suffered a severe burn to her hand when her microwave oven manuf
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actured by LH Appliances caught fire. The fire also caused damage to her kitch
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en cabinets. Two years later, Leslie decided to file a suit against the manufactur
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er when she learned that microwaves manufactured by LH Appli-
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sances had been found responsible for several other fires. LH Appliances was in
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sured by an occurrence version of the commercial general liability (CGL) cover
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age form with no deductible or endorsements.Which one of the following
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2s/s20
, AINS 103 TEST s s
correctly describes how LH Appliances' CGL will apply to the claim?: The CGL wil
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l defend the insured, and pay both for both the bodily injury and damages to the cabine
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ts if found liable.
s s s
20. Chuckie's chicken distributor researches the benefits of consuming chick- s s s s s s s s
sen versus consuming beef. In November 2011, Chuckie's publishes a brochure o
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utlining the potential health hazards of consuming beef and explaining why chi
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cken is a healthier alternative. Chuckie continues to publish and distribute the s
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ame brochure for six months. In March 2012, several beef distributors file a suit a
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gainst Chuckie's for personal and advertising injury. Which one of the followin
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g exclusions would apply to this claim under Coverage B of Chuckie's Commerc
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ial General Liability Coverage Form (CGL) with a policy period of January 2012
s s s s s s s s s s s s s
- January 2013?: Material published prior to the policy period
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21. Which one of the following claims would be covered under Coverage B— s s s s s s s s s s s
Personal and Advertising Injury Liability of the Commercial General Liabil-s s s s s s s s s
sity Coverage Form (CGL)?: A store manager accuses a young man of shoplifting, a
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pprehends him, and locks him in a storage room until the police arrive. When it is disco
s s s s s s s s s s s s s s s s
vered that the young man is innocent, he files a claim against the store.
s s s s s s s s s s s s s
22. Shady Stories, a tabloid newspaper, prints a false story about a local politi- s s s s s s s s s s s s
scian. Shady knows the story is false but thinks it will sell a lot of papers. The pol
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itician claims damages from Shady. Shady's Commercial General Liability (CG
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L) Coverage Form excludes coverage for this loss because the claim arose out of
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which one of the following?: Written material that was known to be false
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23. Austin cut his finger while working at a jobsite for Walsh Builders. He had to s s s s s s s s s s s s s s s
go to a hospital, where he received 5 stitches and a tetanus vaccine. When he re
s s s s s s s s s s s s s s s
ceived the hospital bill for $990, Austin made a claim under Coverage C—
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Medical Payments of Walsh Builders' CGL policy. Which one of the fol-
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slowing reasons would the CGL insurer use for denying Austin's claim?: He is e
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ntitled to workers compensation benefits. s s s s
24. Which one of the following statements is true regarding Coverage C—Med- s s s s s s s s s s
sical Payments of the Commercial General Liability policy?: Medical payments c
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overage is a means of making prompt settlements. s s s s s s s
25. JG Painting is insured under a monoline commercial auto policy. The bus
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iness is located in Pennsylvania, but also does work in New Jersey and Delaw
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are. Which one of the following would be used to add PIP insurance coverage
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sto an auto policy?: Endorsements
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26. The Morlyn Corporation has a Business Auto Coverage Form (BACF) that p
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rovides liability coverage for any auto. In addition to the named insured, which
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one of the following would also be an insured under Morlyn's BACF
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3s/s20
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