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AINS 103: Practice Quiz-All Chapters Exam/134 Questions and answers
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AINS 103: Practice Quiz-All ChaptersExam/134 Questions and answers
For most businesses, which peril poses the greatest risk of a large or total
property loss? - -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? - -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? - -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? - -Premises
and operations liability.
-Inland marine insurance is insurance that covers: - -Many different classes
of property that typically involve an element of transportation on land.
-Workers compensation benefits include which one of the following? - -
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...? - -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: - -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? - -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? - -$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? - -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)? - -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? - -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? - -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? - -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? - -$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? - -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? - -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: - -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? -
-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? - -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
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