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AINS 103: PRACTICE QUIZ-ALL CHAPTERS, QUESTIONS AND ANSWERS
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AINS 103: PRACTICE QUIZ-ALL CHAPTERS, QUESTIONS AND ANSWERS
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AINS 103: PRACTICE QUIZ-ALL CHAPTERS,QUESTIONS AND ANSWERS
For most businesses, which peril poses the greatest risk of a large or total property
loss? - Answer-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? - Answer-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? - Answer-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? - Answer-Premises and operations liability.
Inland marine insurance is insurance that covers: - Answer-Many different classes of
property that typically involve an element of transportation on land.
Workers compensation benefits include which one of the following? - Answer-
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...? - Answer-
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: - Answer-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? - Answer-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? -
Answer-$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? - Answer-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)? -
Answer-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? -
Answer-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? - Answer-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? - Answer-
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? - Answer-$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? - Answer-The CGL declarations form will
include rating and premium auditing information.
A customer filed a suit against Patsy's Market, claiming that she was injured when she
slipped and fell in the produce section. The customer claimed that she broke her elbow,
had to have surgery, and missed a week of work. The owner of Patsy's Market told its
commercial general liability (CGL) insurer that the produce area was always clean and
that the claim was suspicious. After reviewing the medical bills and video footage from
the market, the insurer concluded that Patsy's Market was probably liable for the
customer's injury. The CGL insurer will most likely attempt to do which one of the
following? - Answer-If the insurer's investigation revealed that Patsy's Market was liable
and that the damages were covered by the policy, it would likely try to negotiate an out
of court settlement.
The Commercial General Liability (CGL) Coverage Form defines the term "occurrence"
as: - Answer-An accident, including continuous or repeated exposure to substantially
the same general harmful conditions.
The Commercial General Liability (CGL) Coverage B—Personal and Advertising Injury
Liability provides coverage for which one of the following? - Answer-The definition of
personal and advertising injury in the CGL policy includes liability arising from false
arrest.
Injury arising out of which one of the following offenses could be covered under
Coverage B of the Commercial General Liability policy? - Answer-Injury arising out of
false arrest could be covered under Coverage B of the Commercial General Liability
policy.
Shady Stories, a tabloid newspaper, prints a false story about a local politician. Shady
knows the story is false but thinks it will sell a lot of papers. The politician claims
damages from Shady. Shady's Commercial General Liability (CGL) Coverage Form
excludes coverage for this loss because the claim arose out of which one of the
following? - Answer-Written material that was known to be false.
Under the Commercial General Liability (CGL) Coverage Form, medical payments
coverage applies to which one of the following? - Answer-A volunteer worker of the
named insured.
Shelton Manufacturing has an annual picnic and softball game for its employees and
their families. During the softball game, Greg (the spouse of an employee) was injured
while sliding into home plate. He was taken to the hospital for x-rays and a cast for his
broken foot. His medical expenses were $3,800. Within 60 days, Greg made a claim for
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