AINS 103 Final Exam Questions
100%Well Answered.
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.
