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AINS 103 Practice Quiz with well answered questons-All Chapters
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AINS 103 Practice Quiz with well answered questons-All Chapters
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AINS 103 Practice Quiz with wellanswered questons-All Chapters
For most businesses, which peril poses the greatest risk of a large or total property loss?
- .......🔷ANSWERS🔶......✔✔ For most businesses, fire poses the greatest risk of a large or
total property loss.
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.
An electrical contractor was hired to install a new 100-amp fuse box in the Smith's home.
During installation, the contractor inadvertently left a small screwdriver in a duct space
behind the panel. Three weeks later, the screwdriver caused an electrical short which led to
a fire. Which one of the following loss exposures best categorizes the electrical contractor's
legal liability exposure for the fire damages? - .......🔷ANSWERS🔶......✔✔ Completed
operations liability.
Upon entering a restaurant, a customer grasped a handrail that 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.
Inland marine insurance is insurance that covers: - .......🔷ANSWERS🔶......✔✔ Many
different classes of property that typically involve an element of transportation on land.
Workers compensation benefits include which one of the following?
- .......🔷ANSWERS🔶......✔✔ Rehabilitation benefits.
,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, and a company official bribed a key regulator to get the drug approved.
These revelations led to a sharp decline in sales of all of 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.
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 viruses.
Sally is a commercial property claims adjuster. When she is 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 amount of coverage provided. Which one of the following components of the
commercial property part will provide Sally with this information?
- .......🔷ANSWERS🔶......✔✔ The commercial property declarations page contains
information such as a description of the property insured, the kinds and amounts of
coverage provided, and any optional coverages, among other information.
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. $310,000 - $1,500 = $308,500, which exceeds the
BPP limit. The insurer will pay $275,000. The deductible is subtracted from the loss, not the
limit.
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 is a covered
cause of loss under the basic form. All the others are additional causes of loss covered by the
broad form (and they are also covered under the special form).
, Which one of the following is correct with respect to the Increased Cost of Construction
additional coverage of the Building and Personal Property Coverage Form (BPP)?
- .......🔷ANSWERS🔶......✔✔ It provides a small amount of insurance to cover the
increased cost to comply with ordinances or laws regulating the repair, rebuilding, or
replacement of covered buildings.
Which one of the following would be considered an extra expense under the Business
Income (and Extra Expense) Coverage Form of the commercial package policy?
- .......🔷ANSWERS🔶......✔✔ The increased cost of rent at a temporary location.
Dooley's Restaurant is insured under a commercial package policy (CPP) with the Business
Income (with Extra Expense) Coverage Form. The business suffered a $400,000 loss of
business income when it was forced to suspend operations after flood waters damaged the
basement and first floor of the restaurant. Which one of the following is an acceptable
reason for the CPP insurer to deny the business income claim?
- .......🔷ANSWERS🔶......✔✔ The policy's covered causes of loss did not include flood.
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.
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 operating expenses for the
policy period would have been $1,875,000. The estimated business income loss is $300,000.
How much will the insurer pay? - .......🔷ANSWERS🔶......✔✔ $100,000. The coinsurance
factor would be the amount of insurance carried ($500,000) divided by the amount of
insurance required (80 percent of $1,875,000). The factor is 1/3. This, multiplied by the loss,
yields $100,000 that the insurer will pay.
Joe's Cleaning Service is having a very good year, with close to a 30 percent increase in sales.
Joe is wondering if this growth will affect his general liability premium at the end of the
policy period. Which one of the following sections of the general liability coverage form will
provide this information? - .......🔷ANSWERS🔶......✔✔ The CGL declarations form will
include rating and premium auditing information.
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