EMILLECT 2024/2025 ACADEMIC YEAR ©2024 EMILLECT. ALL RIGHTS RESERVED FIRST PUBLISH OCTOBER, 2024
ains 23 Exam Practice Questions and
Answers
Which one of the statements is correct with respect to the Building and Personal Property
Coverage Form (BPP)? - Answer✔✔-Some property, such as building foundations below the
lowest basement floor, is excluded because it may not be subject to loss by the perils insured
against.
Which one of the following Additional Coverages is covered under the Causes of Loss—Special
Form but not under the Causes of Loss—Broad Form? - Answer✔✔-Property in Transit
Which one of the following statements is correct regarding the Additional Covered Property
endorsement to the Building and Personal Property Coverage Form, also referred to as the BPP?
- Answer✔✔-Almost all types of property that are excluded in the BPP can be insured.
Adjacent properties can increase the probability of loss to the insured's building and contents.
When rating commercial property exposures, the term used to refer to the hazard posed by
adjacent or surrounding properties is - Answer✔✔-External exposure.
The most widely used financial institution bond is - Answer✔✔-Standard Form No. 24.
Martin's Dry Cleaners (MDC) is insured under a Business Income (and Extra Expense) Coverage
Form with a $1 million Business Income limit of insurance for the dry cleaners location, subject
to option (2) Business Income Other Than "Rental Value". None of the optional coverages of the
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Business Income (and Extra Expense) are in effect and no endorsements apply to MDC's
Business Income (and Extra Expense) Coverage Form. The one year policy period shown in the
declarations began on July 1, 20X1. On October 1, 20X1, access was denied to MDC for five
weeks by civil authorities because of fire damage to a shop right next door to MDC. The
resulting loss of business income that MDC sustained was $70,000, including a $5,000 loss for
the first 72 hours following the time of action by civil authority. After the first 72 hours, MDC
sustained $11,000 business income loss in week 1, $12,000 business income loss in week 2,
$13,000 bu - Answer✔✔-$50,000 of Martins dry cleaners business income would be covered
under the Business Income (and Extra Expense) Coverage Form. Coverage applies up to a
maximum of four consecutive weeks after the time of the action.
ABC Brokerage Company (ABC) is covered by an Insurance Services Office (ISO) Commercial
Crime Coverage Form written on a loss sustained basis. The policy was written to replace an
identical policy with another insurer that had expired, and there was no lapse in coverage. ABC
recently discovered a covered loss that occurred during the prior insurer's policy term. Which
one of the following would be true for the current insurer? - Answer✔✔-It will pay the lesser of
what would be covered under the present insurance or the prior insurance if it had remained in
effect.
ABC, Inc., is a large, national retailer that sells a variety of consumer goods. ABC carries a
Commercial Package Policy that includes Insurance Services Office's Commercial Crime
Coverage Form (Loss Sustained) with the following insuring agreements: Employee Theft;
Forgery or Alteration; Inside the Premises—Theft of Money and Securities; and Inside the
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Premises—Robbery or Safe Burglary of Other Property. The limit of insurance for each one of
these insuring agreements is $100,000 and the deductible per occurrence for each one of these
insuring agreements is $1,000. The policy year is 20X1.
On June 5, 20X1, a thief entered ABC through an open window while the store was closed and
stole $2,500 worth of electronic merchandise. The thief also broke into a safe causing $1,500
damage to the safe and stole $3,000 in cash from the safe.
Under which insuring agreement would the theft of electronic merchandise be covered? -
Answer✔✔-The $2,500 theft of electronic merchandise is not covered under the Inside the
Premises—Theft of Money and Securities insuring agreement, because the stolen property does
not qualify as money or securities. This theft is also not covered under the Inside the
Premises—Robbery and Safe Burglary of Other Property, because the cause of loss does not
meet the policy definition of robbery or burglary.
Which one of the following best describes the protection afforded by the Utility Interruption
insuring agreement of the ISO Equipment Breakdown Protection Coverage Form? - Answer✔✔-
It extends the business income and extra expense coverage to include loss sustained because of
breakdown of equipment owned by a utility or other supplier of electricity, communications, air
conditioning, heating, gas, sewer, water, or steam.
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Which one of the following best describes how forms and rates for filed classes of inland marine
insurance are filed? - Answer✔✔-The Insurance Services Office (ISO) and the American
Association of Insurance Services (AAIS) file forms and rates for many of these classes on behalf
of their member companies.
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 - Answer✔✔-The compensation the carrier receives for
transporting cargo
which one of these does the Coverage A Mobile Equipment exclusion eliminate coverage -
Answer✔✔-The Coverage A Mobile Equipment exclusion eliminates coverage for the
transportation of mobile equipment by an auto that is owned by an insured.
Lucy, the owner of Lucy's Flower Shop, was delivering a vase of flowers to a customer, Mrs.
White. When Mrs. White opened her front door, her dog ran outside, knocking the flowers from
Lucy's hands, and causing the vase to shatter and injure Mrs. White. Although the customer
insisted that she would be fine, Lucy received a medical bill for injuries to Mrs. White two years
later. The medical treatment had been received one week before Lucy received the bill. Lucy
explains the situation to her insurer and requests coverage under her Commercial General
Liability Coverage Form (CGL). Will the medical expenses be covered under Coverage C—
Medical Payments of the CGL? - Answer✔✔-No, because the medical expenses must be
incurred and reported to the insurer within one year after the date of the accident.
The formula used to determine the premium for a Commercial General Liability policy is -
Answer✔✔-Rate x Rate Exposure = Premium.
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