AINS 103 Exam Review

An insured keeps his truck in a garage. A deer gets trapped in the garage and, in an attempt to escape, climbs on top of the truck, breaking the windshield and causing several dents in the hood. The insured's Business Auto Coverage Form (BACF) provides physical damage coverage for specified causes of loss with a $100 deductible and collision with a $250 deductible. It will cost the insured $750 to replace the broken windshield and $1,200 to repair the dents. How much, if anything, will the business auto insurer pay for this loss?

$0

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?

$275K

Robert, a single father of two, owns a painting business. While driving his insured van on the job, Robert is involved in a serious accident and spends several days in the hospital. Robert incurs the following expenses. $4,000 Lost wages$6,000 Payment for a nanny to watch his two children$5,000 Cost to replace the painting equipment he was hauling$30,000 Medical bills Assuming Robert has adequate limits and a typical personal injury protection (PIP) endorsement to his Business Auto Coverage Form, how much of the above will be paid by Robert's auto insurer?

$40K PIP will pay all the expenses except for the loss of equipment, which is a property damage claim.

To be covered under a workers compensation statute, an injury or disease (in most states) must meet which one of the following requirements?

A. Arise out of employees' job-related injuries and diseases

NH Manufacturing insures its building and personal property under the commercial property coverage part of a commercial package policy (CPP). During a blizzard, a portion of the building's roof collapsed from the weight of snow. The risk manager pulled out the CPP to make sure that the building was covered for this type of loss. Which one of the following components of the commercial property coverage part would provide the risk manager with information on the covered perils?

A. Causes of loss form

Anita is the claims manager for the Mid-Atlantic region. She knows that the longer that liability claims stay open, the higher the final settlement cost. Anita wants to use data analytics to help her predict the final settlement amount of slip and falls claims that remain open for more one year. She would also like to see how much the amount varies in the different geographic areas within her territory. Which one of the following methods would help Anita predict the cost of the claims with those attributes?

A. Cluster analysis

JG Painting is insured under a monoline commercial auto policy. The business is located in Pennsylvania, but also does work in New Jersey and Delaware. Which one of the following would be used to add PIP insurance coverage to an auto policy?

A. Endorsements

The Grandfather Clock Company (GCC) ships clocks all over the U.S. It ships frequently over 10,000 shipments each year and ships its goods by common carrier. All of its shipping contracts say "FOB, buyer's address." GCC believes that it needs insurance for the risk that its clocks will be damaged during shipment. Which one of the following is the best insurance advice for GCC?

A. GCC needs insurance and should purchase an annual transit policy.

Austin cut his finger while working at a jobsite for Walsh Builders. He had to go to a hospital, where he received 5 stitches and a tetanus vaccine. When he received the hospital bill for $990, Austin made a claim under Coverage C—Medical Payments of Walsh Builders' CGL policy. Which one of the following reasons would the CGL insurer use for denying Austin's claim?

A. He is entitled to workers compensation benefits.

Which one of the following lists the two distinct benefits of enterprise risk management (ERM)?

A. Improved decision making and better communication

Under Coverage A of the commercial general liability coverage form (CGL), property damage would include all of the following, EXCEPT:

A. Infringement of copyright

Which one of the following statements about the BOP is true?

A. It is designed for small to mid-sized business.

The Coverage B—Personal and Advertising Injury Liability of the Commercial General Liability (CGL) Coverage Form parallels the Coverage A insuring agreement, but personal and advertising injury applies to an

A. Offense arising out of the named insured's business.

To what extent are extra expenses covered under the ISO Business Income Coverage (without Extra Expense) Coverage Form?

A. Only to the extent that they actually reduce the business income loss

Which one of the following entities would likely have the greatest completed operations loss exposure?

A. Paul the plumber

Danforth Grocery Store specializes in fresh produce and is open 24 hours year-round. The store has contracts with suppliers to deliver produce and foods by 5:00 a.m. daily, so the parking area at the rear of the store is congested from 4:30 a.m. to 5:30 a.m. Customer traffic is heaviest from 7:00 a.m. to 9:00 a.m. and again from 3:00 p.m. to 6:00 p.m. The store has had six slip-and-fall claims from customers in the past year. Danforth Grocery Store is most exposed to which one of the following types of liability loss?

A. Premises liability

Considering the claims process, which one of the following data analysis methods begins with data analysis of claims activity logs to identify steps taken for claims and the timing of them?

A. Process mining

Which one of the following is the first step in the enterprise risk management (ERM) process?

A. Scan the environment

In an effort to control its loss exposures, Furlong Distributing uses a network of objects that transmit data to each other and to central hubs through the internet. This network is known as

A. The Internet of Things.

Business income insurance covers which one of the following types of losses that could result from a fire?

A. The extra expenses for renting a temporary office

The medical expense coverage under Business Section II-Liability Coverage of the ISO businessowners policy (BOP) would cover small and reasonable medical claims for which one of the following?

A. Volunteer workers at the insured organization

Karma Tea Shop (KTS) has three locations in Boston. The business is insured by a commercial package policy with the Business Income (and Extra Expense) Coverage Form (BIC). The BIC has a $300,000 limit of insurance which applies to all three locations and a 70 percent coinsurance provision. The business income insurance for KTS is written on a

B. Blanket basis.

Which one of the following policies would respond to a furnace explosion?

B. Commercial property policy

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?

B. Cost to rent temporary office space

A private company posted a video on the internet introducing a new product. The music used in the video was from a copyrighted song. When the company sought coverage under Part B of their Commercial General Liability (CGL) Coverage Form after a claim was filed against them for damages, coverage will most likely be excluded based on which one of the following exclusions?

B. Coverage for infringement of copyright, patent, trademarks, or trade secret are excluded unless it occurs in an advertisement exclusion

Shelton Industries is insured under a commercial property policy and an equipment breakdown policy. The company has two claims while both policies are in force. The first claim is for a furnace explosion and the second claim is for an explosion of unfired pressure vessels. Which one of the following explains how these losses would be covered under the policies?

B. Each loss would be covered under the commercial property policy only.

The Commercial General Liability (CGL) Coverage B—Personal and Advertising Injury Liability provides coverage for which one of the following?

B. False arrest

Which one of the following is a policy that covers the crime loss exposures of financial institutions such as banks, savings and loan institutions, and insurance companies?

B. Financial institution bond

Sam is a risk manager and is reviewing his insurance program and coverage options with his insurance broker. Because of fluctuations in sales due to seasonal marketing promotions, the insurance broker recommends adding Inflation Guard optional coverage to Sam's Building and Personal Property Coverage Form (BPP). If Sam adds Inflation Guard as an optional coverage which one of the following is true?

B. It automatically increases the limit of insurance by the percentage of annual increase shown in the declarations.

The Property Custody Company (PCC) stores customer property for a fee. PCC is insured under a bailees' customers policy. One day, due to the negligence of an unrelated party and not due to any negligence of PCC, property owned by one of PCC's customers is destroyed while in PCC's custody. Which one of the following describes how PCC's insurer will handle the claim for the damage to PCC's customer's property under PCC's bailees' customers policy?

B. It will pay the claim because PCC's policy covers damage to customers' goods in its possession regardless of negligence.

Employers liability insurance covers an employer against which one of the following?

B. Its liability for an employee's occupational injury or disease that is not covered by a workers compensation statute

With advancements in technology, underwriting data is becoming increasingly abundant and more reliable. These technological advancements changed underwriting in which one of the following ways?

B. More insurers are turning to automated systems.

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). Which one of the following is correct regarding whether the medical expenses will be covered under Coverage C—Medical Payments of the CGL?

B. No, because the medical expenses must be incurred and reported to the insurer within one year after the date of the accident.

Grace is injured at work, and her job responsibilities are reduced for 30 days, after which time she is permanently restricted by her doctor from lifting greater than 25 pounds. This will eliminate one of her job duties which is reassigned to another employee. Grace has which one of the following types of workers compensation disabilities?

B. Permanent partial disability

Radley Contracting Company is installing new signage on the front of a building. George, a passerby walking near the building is injured when a Radley employee accidentally drops a tool from a crane. George likely has the ability to assert which one the following types of claim?

B. Premises and operations liability

Springer's Attire is insured under an unendorsed businessowners policy (BOP). The building suffered significant damage when it was struck by lightning. Building codes require that the building must be brought into compliance with current code when the repair work is done. Bringing the building into compliance with current codes will increase the cost of the repair by $50,000. Which one of the following correctly explains how Springer's Attire's BOP will respond to the loss?

B. The additional $50,000 would not be fully covered. The Ordinance or Law exclusion eliminates coverage for the cost to upgrade the building to current building codes and ordinances after a loss.

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

B. The compensation the carrier receives for transporting cargo.

The Random Bookstore (Random) is covered by an unendorsed Commercial General Liability (CGL) Coverage Form. A customer in the store tripped over her untied shoelace and fell, breaking her right arm. Which one of the following is a reason Random's insurer might refuse to pay any damages under Random's CGL policy?

B. The insured must be legally obligated before the insurer has the duty of paying.

The Paoli Power Shop has its building and business personal property insured under a businessowners policy (BOP). Torrential rainstorms caused a nearby river to overflow its banks and flood the area. The flood caused significant water damage to both the building and personal property. Which one of the following would be true under the BOP?

B. The water damage would not be covered

There can be adverse financial consequences following the loss of or damage to property including a reduction in property value. Which one of the following statements is correct with respect to a reduction in value?

C. A rare glass statute that is repaired after being damaged is likely to have declined in value.

The Malvern Company is a small business insured under a businessowners policy (BOP) for both building and business personal property. Which one of the following would be covered under the definition of a building under The Malvern Company's BOP?

C. Air conditioning equipment attached to the building

The claims manager for Providence Mall knows the longer liability claims are open, the higher the demand and claim cost. The manager wants to use data analytics to predict the final settlement amount of bodily injury claims that are open over two years. The manager would also like to examine how much the amount varies based on the different areas in the mall and which stores have claims from injury occurring within the store. Which one of the following methods would help predict the cost of the claims with those attributes?

C. Cluster analysis

Which one of the following statements about Inflation Guard optional coverage of the Building and Personal Property Coverage Form (BPP) is true?

C. It is automatically increases the limit of insurance by the percentage of annual increase shown in the declarations.

Jenn is a producer for Goshen Mutual. She is trying to determine if a new prospect, Mr. Cooper's Café is eligible for the businessowners policy (BOP). Mr. Cooper's Café is a small restaurant located on the first floor of an office building, serving only breakfast and lunch. Cooking on the premises is limited to coffee makers, a grill, and microwave appliances. It has seating for 10-15 people, and large refrigerated cases with food, beer and wine to-go. Which one of the following factors about Mr. Cooper's Café would make it ineligible for BOP coverage?

C. It sells beer and wine.

Chuckie's chicken distributor researches the benefits of consuming chicken versus consuming beef. In November 2011, Chuckie's publishes a brochure outlining the potential health hazards of consuming beef and explaining why chicken is a healthier alternative. Chuckie continues to publish and distribute the same brochure for six months. In March 2012, several beef distributors file a suit against Chuckie's for personal and advertising injury. Which one of the following exclusions would apply to this claim under Coverage B of Chuckie's Commercial General Liability Coverage Form (CGL) with a policy period of January 2012 - January 2013?

C. Material published prior to the policy period

Umbrella liability insurance

C. May cover some claims that are not covered by underlying liability insurance.

Ava is Regional Manager for Goshen Mutual. She is looking over the past auto losses for Disposal Inc. She is tracking the experience of their drivers, the location of accidents, and the severity of the injury to their employees and the public. She is trying to determine the frequency and severity of the auto exposure for Disposal and to use the future models to suggest where Disposal allocates their loss prevention resources. Which one of the following forms of analysis is Ava using to help Disposal address their auto exposure?

C. Predictive Modeling

In property insurance, the term "property in transit" refers to which one of the following?

C. Property while being transported by trucks, cars, buses, trains, airplanes, and ships

Large Manufacturer, Inc. needs to move its expensive three ton piece of equipment that it manufactured from its manufacturing plant to the buyer's premises some 50 miles away. Which one of the following is the best way to insure this equipment for the move?

C. Purchase trip transit insurance

Under the Commercial General Liability (CGL) Coverage Form, medical payments coverage applies to which one of the following situations?

C. Sara is a volunteer helping the named insured clean up their grounds.

Rose's Flower Shop has its building and business personal property insured under a businessowners policy (BOP). The building was struck by lightning and the resulting fire caused significant damage to both the building and personal property. Which one of the following would be excluded under the BOP?

C. The cost of upgrades due to local ordinances

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?

C. The increased cost of rent at a temporary location

When Sylvester Properties suffered a $500,000 loss of business income, it filed a claim under the Business Income (and Extra Expense) Coverage Form (BIC) of its commercial package policy. In order for the loss to be covered, the loss of business income must be due to a necessary suspension in operations caused by a direct physical loss or damage to property at the premises for which BIC is shown in the policy declarations. Which one of the following is also part of the criteria for the loss to be covered?

C. The loss or damage must be caused by a covered cause of loss.

Which one of the following statements about excess liability insurance coverage and umbrella liability insurance coverage is most accurate?

C. Umbrella liability policies typically provide primary coverage for certain types of losses not covered by underlying insurance, while excess liability policies typically do not.

An animal damaged the interior of an insured's automobile while it was parked with the windows down. Which one of the following types of physical damage coverage under the Business Auto Coverage Form (BACF) would cover this loss?

Comprehensive

While performing duties for the business, all of the following would be an insured under Business Liability Coverage of a partnership's businessowners policy (BOP), EXCEPT:

D. All executive officers of an LLC

Which one of the following is the main source of the data used in the process mining of the claims process?

D. Claim activity logs

Lawn Chemical Company applies fertilizer and weed killer to lawns and shrubs. Which one of the following is a liability loss exposure to which Lawn Chemical Company likely has a significant exposure?

D. Completed operations liability

Which one of the following would be covered under the Extra Expense insuring agreement of the Business Income (and Extra Expense) Coverage Form?

D. Costs to move to a temporary location

An email was sent to a company's employees containing a harmful attachment. Several employees opened the attachment which allowed hackers to obtain customer contact information. This cyber risk loss is

D. Damage to intangible property.

Michael is a general liability claims adjuster for Goshen Mutual. He wants to see if an insured has any endorsements that apply to its general liability policy. Which one of the following sections of the coverage form would provide this information for Michael?

D. Declarations

A company owns land that is used as a softball diamond and recreational park for hosting employee picnics. Once a year the company also allows a non-profit organization to hold a softball game on these premises. During this year's softball game, the director of the non-profit was injured when a softball hit him in the head. He asked the company that owns the land to pay for his trip to the emergency room. The company's unendorsed Commercial General Liability policy

D. Does not cover the director's injuries sustained because they happened during an athletic event.

The unauthorized intrusion into a company's computer network resulting in damage to intellectual property is best classified as which one of the following types of cyber liability exposures?

D. Intangible property

The Jackson Motor Company (JMC) is a commercial trucking company that provides shipment services for a number of manufacturers throughout the US. It has a good safety record, but believes that it needs insurance to protect it from its possible legal liability for damage to the cargo of its customers during shipment by its vehicles. Which one of the following inland marine insurance policies is most appropriate for JMC?

D. Motor truck cargo liability policy

Which one of the following best describes an advantage to insurers of nonfiled classes compared with filed classes of inland marine insurance?

D. Nonfiled classes allow for the customization of policy provisions and rates for a small number of individual insureds.

Entities eligible for financial institution bonds are

D. Not eligible for the ISO Commercial Crime Program.

With advancements in technology, underwriting data is becoming increasingly abundant and more reliable. Which one of the following is an example of how technological advancements are changing underwriting?

D. Olivia has been asked to spend the next week analyzing unique risks presented by specialized accounts.

The Workers Compensation and Employers Liability Insurance Policy provides that the insured is responsible to reimburse the insurer in which one of the following situations?

D. Penalties levied under a workers compensation law against the insured for noncompliance with health and safety laws and regulations.

Joshua owns a mid-sized contracting company and was considering a job on a multi-million dollar project. Due to the size of the project, Joshua had difficulty determining the maximum possible loss. Considering the size of the project, Joshua should do which one of the following?

D. Purchase excess limits provided by an excess or umbrella liability policy.

Hank is a new commercial insurance producer. He is walking down the main street of Springfield trying to determine which businesses might be eligible for the businessowners policy (BOP) and which would not be eligible. Which one of the following main street businesses would be ineligible for BOP coverage?

D. Springfield Bank

A carrier is prevented from delivering cargo aboard its ship due to an accident that occurred while at sea. One of the losses the carrier may face is loss of freight. Loss of freight refers to which one of the following?

D. The compensation the carrier receives for transporting cargo.

The Neopolitan is insured under a businessowners policy (BOP) for both building and business personal property. Which one of the following would be covered under the definition of a building under The Neopolitan's BOP?

D. The outdoor lighting fixtures

Which one of the following is an example of intangible property exposed to theft resulting from a cyber attack?

D. Trade secrets

Injury arising out of which one of the following offenses could be covered under Coverage B of the Commercial General Liability policy?

D. Wrongful eviction

Which one of the following is one of the covered causes of loss in the commercial property policy Causes of Loss—Basic form?

Vandalism