AINS 103

Insured

Any person or organization who is insured under an insurance policy.

In an equipment breakdown policy, a closed container that is heated by the direct fire of burning fuel and can withstand internal pressure is a Select one: A. Generator. B. Power transformer. C. Motor. D. Fired pressure vessel.

D. Fired pressure vessel.

Big data

Sets of data that are too large to be gathered and analyzed by traditional methods.

Cyber risk

The possibility that data will end up in the possession of a party who is not authorized to have that data and who can use it in a manner that is harmful to the individual or organization that is the subject of the data and/or the party that collected and stored the data.

Intellectual property

The product of human intelligence that has economic value.

Bailee

The party temporarily possessing the personal property in a bailment.

Enterprise risk management

An approach to managing all of an organization's key business risks and opportunities with the intent of maximizing shareholder value. Also known as enterprise-wide risk management.

Modular policy

An insurance policy that consists of several different documents, none of which by itself forms a complete policy.

Coinsurance

An insurance-to-value provision in many property insurance policies providing that if the property is underinsured, the amount that an insurer will pay for a covered loss is reduced.

Reputation

An intangible asset, a key determinant of future business prospects, resulting from a collection of perceptions and opinions, past and present, about an organization that resides in the consciousness of its stakeholders.

Liability loss exposure

Any condition or situation that presents the possibility of a claim alleging legal responsibility of a person or business for injury or damage suffered by another party.

Personal loss exposure

Any condition or situation that presents the possibility of a financial loss to an individual or a family by such causes as death, sickness, injury, or unemployment.

Employee leasing

An arrangement in which a third party provides a firm with employees for a fee.

Nonowned auto

An auto defined by the Business Auto Coverage Form as not owned, leased, hired, rented, or borrowed by the named insured.

Fired pressure vessel

A closed container that is heated by the direct fire of burning fuel and can withstand internal pressure.

Property loss exposure

A condition that presents the possibility that a person or an organization will sustain a loss resulting from damage (including destruction, taking, or loss of use) to property in which that person or organization has a financial interest.

Smart product

An innovative item that uses sensors; wireless sensor networks; and data collection, transmission, and analysis to further enable the item to be faster, more useful, or otherwise improved.

Business Auto Coverage Form

A coverage form, filed by ISO, that covers liability arising out of the ownership, maintenance, or use of autos and physical damage to autos owned, leased, or hired by the named insured.

Boiler

A fired pressure vessel constructed of cast iron or steel in which water is heated to produce steam or hot water.

Dual capacity

A legal doctrine giving the employee the right to sue the employer when the employer acts in a capacity other than that of employer.

Liability

A legal responsibility for the consequences of an act or omission.

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? Select one: A. $0 B. $1,600 C. $1,700 D. $1,850

A. $0

Excess and umbrella liability coverages provide additional coverages for liability exposures in which it may be problematic to determine the Select one: A. Maximum probable loss. B. Legal liability. C. Total aggregate loss. D. Minimum aggregate loss.

A. Maximum probable loss.

Occurrence

An accident, including continuous or repeated exposure to substantially the same general harmful conditions.

Which one of the following statements about excess liability insurance coverage and umbrella liability insurance coverage is most accurate? Select one: A. Umbrella liability policies typically provide primary coverage for certain types of losses not covered by underlying insurance, while excess liability policies typically do not. B. Excess liability policies typically provide primary coverage for certain types of losses not covered by underlying insurance, while umbrella liability policies typically do not. C. Both excess liability policies and umbrella liability policies typically provide primary coverage for certain types of losses not covered by underlying insurance. D. Neither excess liability policies nor umbrella liability policies would provide primary coverage for a loss unless it was already covered by a primary insurance policy.

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

Worldwide Warehousing has a Building and Personal Property Coverage Form (BPP) with a $1,000,000 limit on a building and a $5,000 deductible. The warehouse suffers a $1,010,000 fire loss. Which one of the following amounts will Worldwide's insurer pay? Select one: A. $ 995,000 B. $1,000,000 C. $1,005,000 D. $1,010,000

B. $1,000,000

Classic Cashmere Shop (CCS) is insured by a commercial package policy. The Business Income (and Extra Expense) Coverage Form (BIC) has a $900,000 limit of insurance and an 80 percent coinsurance provision. CCS experienced a fire loss which resulted in a $300,000 loss of business income. How much will the insurer pay for this BIC loss if the coinsurance basis at the time of the loss was $1,500,000? Select one: A. $160,000 B. $225,000 C. $240,000 D. $300,000

B. $225,000

Dollar Donut Shop (DDS) is located in a shopping center with a number of other retail businesses. One day a grease fire started at DDS, and spread to Tony's Restaurant next door. Both locations were damaged and a number of individuals were injured during the evacuation process. Assuming that DDS is found to be liable for the fire, which one of the following would be covered under Coverage A of DDS' commercial general liability (CGL) policy? Select one: A. The burns suffered by a DDS employee B. The property damage to Tony's Restaurant C. The property damage to DDS D. The slander suit for falsely accusing Tony of starting the fire

B. The property damage to Tony's Restaurant

One way in which producers can help clients identify supply chain risk is through Select one: A. Single-source vendors. B. The use of flowcharts. C. Outsourcing. D. Market globalization.

B. The use of flowcharts.

A policy that covers damage to customer's goods while in the possession of the insured, regardless of liability is Select one: A. An installation policy. B. A bailee liability policy C. A bailees' customers policy. D. A dealer's policy.

C. A bailees' customers policy.

Due to the difficulty in determining the maximum possible loss for liability claims, insureds need Select one: A. Extensive loss control to avoid hazardous losses. B. Separate premises and product liability policies. C. Excess limits provided by an excess or umbrella liability policy. D. To implement a liability deductible.

C. Excess limits provided by an excess or umbrella liability policy.

Umbrella liability insurance Select one: A. Is an all-risk coverage for property damage. B. Provides primary coverage if underlying limits have not been maintained. C. May cover some claims that are not covered by underlying liability insurance. D. Limits may not exceed the limits provided by other liability insurance coverages.

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

Which one of the following methods of data analytics can help insurers detect potential claims fraud by identifying connections and relationships among claimants with similar injuries? Select one: A. Algorithm analysis B. Process mining C. Social network analysis D. Subrogation analysis

C. Social network analysis

Commercial property coverage part

Commercial package policy (CPP) coverage component that provides a broad range of coverages to "middle-market" or larger firms to insure buildings and business personal property.

Which one of the following perils would be covered under the commercial property policy broad form but not covered under the basic form? Select one: A. Damage due to explosion. B. Damage due to vehicles C. Damage due to vandalism D. Damage due to weight of snow

D. Damage due to weight of snow

Which one of the following types of contractors are usually ineligible for coverage under a businessowners policy (BOP)? Select one: A. Plumbers B. Carpenters C. Painting contractors D. General contractors

D. General contractors

Automobile liability exposures can result from Select one: A. Damage to or destruction of an owned vehicle. B. Loss of use of an owned automobile. C. Workers compensation laws. D. Hiring or borrowing an automobile.

D. Hiring or borrowing an automobile.

Which one of the following is a category of business personal property? Select one: A. Outdoor fixtures B. Permanently installed equipment C. Completed additions D. Office equipment

D. Office equipment

The businessowners policy (BOP) packages basic coverages and uses simplified rating procedures, allowing insurers to do which one of the following? Select one: A. Eliminate the need for endorsements B. Collect more premium C. Meet all of a business owner's insurance needs with one policy D. Streamline the underwriting process

D. Streamline the underwriting process

An insured is planning on transporting a valuable turbine from its place of manufacture to a power plant across the country. What type of inland marine policy would best meet the insurance needs to cover this cargo during the trip? Select one: A. Annual transit policy B. Open cargo policy C. Parcel post policy D. Trip transit policy

D. Trip transit policy

Occupational disease

Disease thought to be caused by work or the work environment.

Instrumentalities of transportation and communication

Equipment and structures used to transmit communications and transport property, such as bridges, tunnels, piers, wharves, pipelines, cranes and other equipment for loading and unloading, transmission lines, and radio and television equipment.

Continuing expenses

Expenses that continue to be incurred during a business interruption.

Extra expenses

Expenses, in addition to ordinary expenses, that an organization incurs to mitigate the effects of a business interruption.

Inland marine insurance

Insurance that covers many different classes of property that typically involve an element of transportation on land.

Business income coverage

Insurance that covers the reduction in an organization's income when operations are interrupted by damage to property caused by a covered peril.

Business income insurance

Insurance that covers the reduction in an organization's income when operations are interrupted by damage to property caused by a covered peril.

Ocean marine insurance

Insurance that covers vessels and their cargoes, including various vessel-related liability exposures.

Business interruption

Loss of revenue that a business or another organization sustains because its operations are suspended as a result of physical injury to its property.

Profit

Net income that results when revenues exceed expenses.

Peril

The cause of a loss.

Reputational risk

The risk that negative publicity, whether true or not, will damage a company's reputation and its ability to operate its business.

Social network analysis

The study of the connections and relationships among people in a network.

Adverse selection

The tendency of those most likely to experience loss to be the most likely to purchase insurance.

Process mining

The use of exploratory data analysis to provide insights about a business process and identify potential improvements.

Telematics

The use of technological devices to transmit data via wireless communication and GPS tracking.

Supplementary payment

Various expenses the insurer agrees to pay under a liability insurance policy (in addition to the liability limits) for items such as premiums on bail bonds and appeal bonds, loss of the insured's earnings because of attendance at trials, and other reasonable expenses incurred by the insured at the insurer's request.

Allen, a sole proprietor, is crossing the street when he is struck by a passing uninsured auto. He sustains $2,500 in medical bills and $1,000 in lost wages. Allen's business auto policy has $100,000 liability limit and $5,000 medical payments limit. Assuming there is no other coverage, how much will his business auto policy pay? Select one: A. $2,500 B. $3,500 C. $5,500 D. $6,500

A. $2,500

Which one of the following would qualify as an uninsured motorist pursuant to a uninsured motorist UM endorsement on a business auto policy? Select one: A. A hit-and-run driver B. The driver of a government-owned vehicle C. A driver who denies liability for an accident D. A driver whose liability policy limits are less than the insured's liability policy limits

A. A hit-and-run driver

Which one of the following claims would be covered under Coverage B—Personal and Advertising Injury Liability of the Commercial General Liability Coverage Form (CGL)? Select one: A. A store manager accuses a young man of shoplifting, apprehends him, and locks him in a storage room until the police arrive. When it is discovered that the young man is innocent, he files a claim against the store. B. An insured is sued for slashing the tires of a competitor's trucks and causing the competitor to lose business. The competitor submits a claim for his loss of business. C. A landlord of a commercial building argues with a tenant, enters the tenant's store after hours and damages the tenant's merchandise. The tenant files a claim for his damaged merchandise. D. When a new restaurant opens down the street, the insured submits a false story to the newspaper stating that the restaurant is infested by rats. The insured is sued for the false statements.

A. A store manager accuses a young man of shoplifting, apprehends him, and locks him in a storage room until the police arrive. When it is discovered that the young man is innocent, he files a claim against the store.

Under the Commercial General Liability (CGL) Coverage Form, medical payments coverage applies to which one of the following? Select one: A. A volunteer worker of the named insured. B. Anyone hired to do work for an insured or for a tenant of an insured. C. A person injured on that part of the named insured's premises that the person normally occupies. D. A person injured while taking part in athletic contests.

A. A volunteer worker of the named insured.

In equipment breakdown insurance, a fired pressure vessel constructed of cast iron or steel in which water is heated to produce steam or hot water is a Select one: A. Boiler. B. Compressor. C. Gear set. D. Turbine.

A. Boiler.

There are several types of breakdown losses to fired pressure vessels. Which one of the following is an example of this type of loss? Select one: A. Bulging B. Shorting of windings C. Electrical disturbance D. Moisture excess

A. Bulging

The owners of BB Hotel wanted to make sure that they were covered for damage to the air conditioning and refrigeration equipment. In equipment breakdown insurance, air conditioning and refrigeration equipment includes components such as Select one: A. Coils. B. Liquefied gas tanks. C. Distribution panels. D. Circuit breakers.

A. Coils.

A motor truck cargo liability policy Select one: A. Covers a trucking company's liability for damage to goods of others while being transported by the trucker. B. Covers property in the care, custody or control of a governmental agency. C. Provides broad coverage for parcel post shipments throughout the United States, Canada, and Mexico. D. Covers cargo either on an inland marine policy or an ocean marine policy.

A. Covers a trucking company's liability for damage to goods of others while being transported by the trucker.

Policies for the crime loss exposure for financial institutions are called "bonds" because Select one: A. Employee dishonesty, a key coverage, was traditionally called a "fidelity bond." B. Many insurers have developed their own forms. C. They do not resemble typical insurance policies. D. Forgery or alteration, a key coverage, was traditionally called a "fidelity bond."

A. Employee dishonesty, a key coverage, was traditionally called a "fidelity bond."

The Commercial General Liability (CGL) Coverage B—Personal and Advertising Injury Liability provides coverage for which one of the following? Select one: A. False arrest B. Knowing violation of rights of another C. Contractual liability D. Criminal acts

A. False arrest

Which one of the following lists the two distinct benefits of enterprise risk management (ERM)? Select one: A. Improved decision making and better communication B. Increased profitability and increased economic efficiency C. The embracing of risk and a spirit of cooperation D. Compliance with legal requirements and compliance with regulatory requirements

A. Improved decision making and better communication

Anna was excited after a good meeting with the owners of Tully Apartments. The building was a ten-story building with two retail shops on the first floor, and apartments above. The building was close to 50 years old, but in very good condition. Anna knew that apartments were eligible for the businessowners policy (BOP), so she thought that she would be able to offer a complete coverage package at a good price. After submitting the BOP application, she was surprised to learn from her underwriter that Tully Apartments was not eligible for BOP coverage. Which one of the following is the reason that Tully Apartments was ineligible for the BOP? Select one: A. It exceeds the height limit for apartments. B. Its monthly rents exceed the receipts limit for the BOP. C. It exceeds the building age limit for apartments. D. It has two retail occupants.

A. It exceeds the height limit for apartments.

Which one of the following risk categories is generally eligible for coverage under a businessowners policy (BOP)? A. Office buildings B. Financial institutions C. Bars and pubs D. Automobile dealers

A. Office buildings

By automatically including basic coverages for all insureds, the businessowners policy (BOP) helps the insurer Select one: A. Reduce adverse selection. B. Cover complex loss exposures. C. Eliminate the underwriting process. D. Collect additional premium.

A. Reduce adverse selection.

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 Select one: A. The Internet of Things. B. Social media. C. A big data network. D. Artificial intelligence.

A. The Internet of Things.

If the insured expands operations into a new state, which one of the following statements is true? Select one: A. The insured must notify the insurer within thirty days or else no coverage will apply for that state. B. Coverage under the WC&EL Policy is suspended due to nondisclosure of a material fact. C. Insurance automatically extends coverage to those operations. D. The insured must immediately request the insurer to add other states insurance to the policy by endorsement.

A. The insured must notify the insurer within thirty days or else no coverage will apply for that state.

Personal property

All tangible or intangible property that is not real property.

The Liquor Liability exclusion would apply to which one of the following businesses insured by an ISO businessowners policy? Select one: A. An accounting office that serves beer and wine at its company picnic B. A convenience store that sells beer C. A bridal shop that offers champagne to the bridal party during a fitting D. A motel that offers customers a free happy hour every Friday

B. A convenience store that sells beer

The Business Auto Declarations and Coverage Form would be appropriate for which one of the following businesses? Select one: A. A bus company that transports students B. A heating and air-conditioning contractor C. A trucking company that transports produce D. A car dealership that also does repairs

B. A heating and air-conditioning contractor

Which one of the following is an example of a loss covered by Employers Liability Insurance? Select one: A. An employee sues an employer for damages arising out of demotion, evaluation, harassment, discrimination, or termination B. An injured employee sues a third party who, in turn, sues the injured person's employer for negligence that resulted in the injury C. An employee files a claim due to injuries from a product manufactured by their employer in a state that rejects the dual capacity doctrine D. An employee is injured in an employment-related accident that occurs outside of the United States, its territories and possessions, or Canada

B. An injured employee sues a third party who, in turn, sues the injured person's employer for negligence that resulted in the injury

Which one of the following types of loss exposure is typically covered by a businessowners policy (BOP)? Select one: A. Professional liability B. Business personal property C. Workers compensation D. Commercial auto

B. Business personal property

Monica and her girlfriend were shopping at Allen Leather Shop. When they were leaving, the store's security guard stopped Monica and wrongly accused her of shoplifting. Which one of the following coverages under Allen Leather Shop's commercial general liability coverage form would provide coverage if Monica filed a suit against the store? Select one: A. Coverage A B. Coverage B C. Coverage C D. Coverage D

B. Coverage B

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? Select one: A. Each loss would be covered under both the commercial property policy and the equipment breakdown policy. B. Each loss would be covered under the commercial property policy only. C. Each loss would be covered under the equipment breakdown policy only. D. Neither policy provides coverage for any of the losses.

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

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? Select one: A. Declarations B. Endorsements C. Coverage Forms D. Classifications

B. Endorsements

The insurance agent recommended that Sentry Factory purchase a trip transit policy for its exposure. Trip transit insurance is used to Select one: A. Cover property solely by parcel post or the United State Post Office. B. Insure property such as a valuable piece of equipment moved from its place of manufacture to its place of use. C. Cover a trucking company's liability for damage to cargo of others being transported by the trucking company. D. Insure firms that transport their own property on their own vehicles.

B. Insure property such as a valuable piece of equipment moved from its place of manufacture to its place of use.

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: Select one: A. Employees B. Stockholders C. Spouses of the partners D. Partners

B. Stockholders

Which one of the following statements is true about an excess liability policy? Select one: A. It cannot be used to provide a layer of coverage over an umbrella policy. B. It provides coverage no broader than is provided by underlying polices. C. It provides broader coverage than is provided by underlying policies. D. It can be used for general liability but not for auto liability.

B. It provides coverage no broader than is provided by underlying polices.

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? Select one: A. It has seating for 15 people. B. It sells beer and wine. C. It is located in an office building. D. It does some cooking on premises

B. It sells beer and wine.

Adam, the risk manager for Carmichael Health Care, has determined that the company needs liability insurance of $100 million. However, he cannot find any one insurer that will write a policy of $100 million. The final insurance arrangement that Adam submitted to the officers at Carmichael Health Care is as follows: Insurer A: $10 million Insurer B: $20 million Insurer C: $30 million Insurer D: $40 million This insurance arrangement is referred to as Select one: A. Growing. B. Layering. C. Multi-company. D. Multi-limit.

B. Layering.

In equipment breakdown insurance, an example of a piece of mechanical equipment is a Select one: A. Switchboard. B. Turbine. C. Circuit breaker. D. Steam-jacketed vessel.

B. Turbine.

Which one of the following describes one of the coverages provided by a Workers Compensation and Employers Liability Insurance Policy (WC&EL)? Select one: A. Providing an alternative to major medical insurance as an employee benefit B. Payment of benefits as required by a state's workers compensation law C. Voluntary benefits to an injured employee D. Payment for damages to a visitor hurt at the employer's location

B. Payment of benefits as required by a state's workers compensation law

Which one of the following statements regarding process mining is true? Select one: A. Process mining cannot usually be applied effectively to the claims handling process. B. Process mining differs from typical data mining in that process mining applies results to an entire process. C. Process mining is applied to claims to verify whether the settlement amount was correct. D. Process mining is the same as typical data mining in that both apply results to a specific area.

B. Process mining differs from typical data mining in that process mining applies results to an entire process.

During a mid-year review of one of her large accounts, Annette noticed that the frequency and severity of auto losses had been trending downward over the past 18 months. When she consulted with the account's risk management team, she learned that the insured had installed telematics devices in many of their vehicles. This information would help support Annette's decision to Select one: A. Add a special endorsement to the policy. B. Propose a premium reduction at renewal time. C. Propose a premium increase at renewal time. D. Increase the physical damage deductible.

B. Propose a premium reduction at renewal time.

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? Select one: A. Purchase motor truck cargo insurance B. Purchase trip transit insurance C. Purchase annual transit insurance D. Purchase open cargo insurance

B. Purchase trip transit insurance

Which one of the following is the first step in the enterprise risk management (ERM) process? Select one: A. Identify risks B. Scan the environment C. Analyze risks D. Monitor and assure

B. Scan the environment

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? Select one: A. Kelly Plumbing B. Springfield Bank C. Rose's Dress Shop D. Ted's Coffee Shop

B. Springfield Bank

Which one of the following explains why an employer needs employer's liability insurance in addition to workers compensation insurance and a commercial general liability (CGL) insurance policy? Select one: A. To provide additional amounts of coverage B. To cover claims not covered by workers compensation statute C. To meet monetary requirements D. To meet statutory requirements for payments to workers injured on the job

B. To cover claims not covered by workers compensation statute

Inland and ocean marine policies provide coverage for transportation loss exposures. For an insured that would be considered an infrequent shipper, which one of the following would be the best type of inland/ocean marine insurance to cover this insured's shipping exposure? Select one: A. Open cargo insurance B. Trip transit insurance C. Motor truck cargo insurance D. Annual transit insurance

B. Trip transit insurance

Coverage will apply under the liability insuring agreement of the Business Auto Coverage Form (BACF) for bodily injury or property damage Select one: A. To a fellow employee. B. Intended by the insured. C. Caused by an accident. D. Assumed by the insured.

C. Caused by an accident.

The Coverage B—Personal and Advertising Injury Liability insuring agreement parallels the Coverage A— Bodily Injury and Property Damage Liability insuring agreement in that the insurer agrees to Select one: A. Pay for damages that arise from false arrest, detention or imprisonment. B. Provide coverage for liability assumed under contract. C. Defend the insured against any suit seeking such damages. D. Pay for medical expenses such as ambulance, hospital and professional nursing care.

C. Defend the insured against any suit seeking such damages.

Many insurers have embraced the use of data mining in the claims process because of its ability to help do which one of the following? Select one: A. Investigate the accident scene B. Reach a quick settlement C. Detect fraudulent claims D. Increase subrogation amounts

C. Detect fraudulent claims

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 the $3,800 under Coverage C—Medical Payments of Shelton Manufacturing's CGL policy. The claim will not be paid under Coverage C - Medical Payments because Select one: A. Greg is entitled to workers compensation benefits. B. The injury occurred away from the insured's premises. C. Greg was injured during physical exercise, games, or sports contests. D. The amount is above the standard Coverage C limit.

C. Greg was injured during physical exercise, games, or sports contests.

There are a number of reasons that organizations find that they need excess or umbrella liability insurance. Which one of the following statements most accurately describes how organizations go about establishing their need for excess or umbrella liability insurance? Select one: A. Insureds must first establish an accurate measure of their maximum possible loss for liability exposures before they can even consider purchasing umbrella or excess liability insurance. B. Excess liability insurance is usually purchased as a supplement to an existing primary insurance layer, while umbrella liability insurance is usually used as a primary layer. C. Insureds often purchase excess or liability insurance coverage because their primary insurers are unwilling to provide adequate limits within the primary insurance layer. D. For those insureds that wish to increase their retentions, excess liability insurance is more suitable for use as a supplement to self-insured retentions than umbrella liability insurance.

C. Insureds often purchase excess or liability insurance coverage because their primary insurers are unwilling to provide adequate limits within the primary insurance layer.

The Auto Medical Payments Coverage endorsement to the business auto policy provides coverage for Select one: A. Medical, rehabilitation, income loss, substitute services, and death benefits specified by auto no-fault laws. B. Bodily injury, including pain and suffering, suffered by another person injured as a result of a covered auto accident. C. Reasonable and necessary medical and funeral expenses incurred by a person injured while occupying a covered auto. D. Bodily injury, including pain and suffering, suffered by the insured in a covered auto accident.

C. Reasonable and necessary medical and funeral expenses incurred by a person injured while occupying a covered auto.

A not-for-profit public interest group posted a newspaper editorial on its electronic chatroom that falsely accused a local politician of criminal activity. The public interest group is insured under an unendorsed Commercial General Liability (CGL) policy. The politician who was falsely accused filed suit against the public interest group for libel. Which one of these statements best describes the probable response the public interest group will receive from its insurer after the insurer reviews these facts? Select one: A. The claim will be covered because the territory of Coverage B of the CGL policy is worldwide for personal and advertising injury offenses that take place through the Internet. B. The claim will be denied because Coverage B of the CGL policy excludes criminal acts arising out of a criminal act committed by or at the direction of the insured. C. The claim will be denied because Coverage B of the CGL policy excludes any injury arising out of an electronic chatroom or electronic bulletin board. D. The claim will be covered because libel is a covered offense under Coverage B of the CGL policy.

C. The claim will be denied because Coverage B of the CGL policy excludes any injury arising out of an electronic chatroom or electronic bulletin board.

Julian is the owner of The Clock Shop, a retail store selling a wide variety of clocks for the home and office. He leases the space in a shopping center that contains three other retail stores. The Clock Shop is covered under a businessowners policy (BOP) with a $200,000 limit of insurance for its business personal property and a $1,000 deductible. Julian did not purchase any optional coverages. One evening a fire broke out in one of the neighboring stores, and spread to The Clock Shop. The Clock Shop claimed the following damages: Description Amount Damage to merchandise on display and in storage $50,000 Damage to a computer and printer in the office area $4,500 Damage to a personalized sign attached to the building $900 How much will the BOP insurer pay for this loss? Select one: A. $49,000 B. $49,900 C. $54,000 D. $54,400

D. $54,400

Zelda has an automobile accident that is covered by a Business Auto Coverage Form. The accident results in a pollution expense due to gasoline spilling from the covered auto, as well as property damage and bodily injury to a third party. The cost for the bodily injury is $1,000 along with $2,000 property damage. The pollution clean-up cost is $5,000. Ignoring any deductible that may apply, how much will Zelda's insurer pay for these losses? Select one: A. $0 B. $1,000 C. $3,000 D. $8,000

D. $8,000

In the liability coverage agreement of the Business Auto Coverage Form (BACF), the insurer expresses its three distinct duties. Which one of the following identifies one of those duties? Select one: A. A duty to insure all vehicles owned by the named insured B. A duty to comply with laws and regulations C. A duty to renew the policy D. A duty to pay covered pollution cost

D. A duty to pay covered pollution cost

Erik is a liability claims representative. He became suspicious of a slip and fall claim that he was handling, because the claimant kept pushing for a quick settlement despite having little documentation for the medical expenses being claimed. Erik referred the claim to the insurer's special investigation unit (SIU). The SIU would likely use which one of the following forms of data analytics to further investigate the claim? Select one: A. Cluster analysis B. Physical analysis C. Process mining D. Data mining

D. Data mining

Which one of the following is the first component of a businessowners policy (BOP)? Select one: A. Coverage form B. Endorsements C. Conditions D. Declarations

D. Declarations

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? Select one: A. Extended Reporting Period B. Limits of Insurance C. Endorsements D. Declarations Form

D. Declarations Form

Lynch Accounting recently purchased a new computer system which controls the desktop computers, phone lines, fax lines, copiers/scanners and alarm systems. The city upgraded the electrical lines and an electrical overload damaged the computer's motherboard. Which one of the following policies would most fully respond to the loss? Select one: A. General liability B. Extended warranty C. Commercial property D. Equipment breakdown

D. Equipment breakdown

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? Select one: A. Standard Form number 381 B. Fidelity bond C. Commercial General Liability Crime Form D. Financial institution bond

D. Financial institution bond

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? Select one: A. GCC doesn't need insurance—the common carrier is liable for all loss or damage to the goods shipped by GCC. B. GCC doesn't need insurance—the buyer assumes the risk of shipment. C. GCC needs insurance and should obtain a trip transit policy. D. GCC needs insurance and should purchase an annual transit policy.

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

Under Coverage A of the commercial general liability coverage form (CGL), property damage would include all of the following, EXCEPT: Select one: A. Loss of use of tangible property B. Destruction of tangible property C. Physical injury to tangible property D. Infringement of copyright

D. Infringement of copyright

Which one of the following statements about the BOP is true? Select one: A. It provides liability coverage only. B. It provides property coverage only. C. It is designed for large businesses. D. It is designed for small to mid-sized business.

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

In which one of the following ways does process mining differs from other data analysis techniques used by insurers? Select one: A. It is used primarily to detect fraud. B. It looks only at improving the customer experience. C. It relies on social media to do its analysis. D. It looks at the entire process rather than one specific area.

D. It looks at the entire process rather than one specific area.

Commercial package policy (CPP)

Policy that covers two or more lines of business by combining ISO's commercial lines coverage parts.

Amanda is the workers compensation (WC) claims manager for Stanton Insurance. She has just reviewed a report that shows the average time to handle a WC claim, from acknowledging the claim to concluding the claim, has increased by 2 days. She wants an analysis of the entire claim process, showing the duration of each activity, so she can identify areas for improvement and set benchmarks. Which one of the following forms of data analytics should provide Amanda with this information? Select one: A. Fraud detection analysis B. Cluster analysis C. Social network mining D. Process mining

D. Process mining

Christian is the claims manager at Goshen Mutual. He has a goal to improve the average time from acknowledgement to settlement for auto claims. Christian is using a data analysis method that will analyze claims activity logs for the prior year to help him set benchmarks for the various activities in the claims process. Which one of the following data analysis methods is Christian using? Select one: A. Cluster analysis B. Regression analysis C. Data mining D. Process mining

D. Process mining

Loss-Sustained Form

Form that covers losses actually sustained during the policy period and discovered no later than one year after policy expiration.

Fraud

An intentional misrepresentation resulting in harm to a person or an organization.

Loss exposure

Any condition or situation that presents a possibility of loss, whether or not an actual loss occurs.

Cyber risk loss exposure

Any condition that presents the possibility of financial loss to an organization from property, net income, or liability losses as a consequence of advanced technology transmissions, operations, maintenance, development, or support.

Fixture

Any personal property affixed to real property in such a way as to become part of the real property.

Building

As defined in the BPP, the building described in the policy; the building's completed additions; fixtures, including outdoor fixtures; permanently installed machinery and equipment; and personal property owned by the insured that is used to maintain or service the building or its premises.

The Morlyn Corporation has a Business Auto Coverage Form (BACF) that provides liability coverage for any auto. In addition to the named insured, which one of the following would also be an insured under Morlyn's BACF when driving a covered auto? Select one: A. An owner of a private passenger auto that Morlyn borrows B. An employee driving his or her personally owned car on an errand for Morlyn C. An employee of an independent service station that is test driving a covered auto after a tune up D. An employee driving a vehicle leased by Morlyn for business purposes

D. An employee driving a vehicle leased by Morlyn for business purposes

Business personal property

Stock, furniture, fixtures, equipment and machinery, tenant's improvements and betterments, and other personal property owned by the insured.

Real property (realty)

Tangible property consisting of land, all structures permanently attached to the land, and whatever is growing on the land.

Data mining

The analysis of large amounts of data to find new relationships and patterns that will assist in developing business solutions.

Loss exposure

The analysis of large amounts of data to find new relationships and patterns that will assist in developing business solutions.

Claims-made coverage trigger

The event that triggers coverage under a claims-made coverage form; the first making of a claim against any insured during either the policy period or an extended reporting period.

Occurrence coverage trigger

The event that triggers coverage under an occurrence coverage form: injury or damage that occurs during the policy period.

Aggregate limit

The maximum amount an insurer will pay for all covered losses during the covered policy period.

Supply chain

The network of external stakeholders on which an organization relies for goods and services.

Hope Hardware is insured under a businessowners policy (BOP) with a $250,000 limit for Business Liability Coverage. A customer tripped over a box in one of the aisles, and struck her head on a shelf. The customer filed a suit against Hope Hardware for medical expenses, pain and suffering, and lost wages. The BOP insurer spent $25,000 defending Hope Hardware in court, but the customer ended up being awarded $230,000. The court also assigned $2,500 in prejudgment interest. What is the total amount that Hope Hardware's BOP insurer will pay for this claim? Select one: A. $230,000 B. $250,000 C. $255,000 D. $257,500

D. $257,500

Jack, a customer at Clark's Market, sued the grocery store for damages resulting from bodily injury he sustained when he slipped and fell while shopping in the produce area. Jack broke his elbow and suffered a back injury. Clark's Market is insured under a businessowners policy (BOP) with a $300,000 liability and medical expense limit of insurance. The insurer defended Clark's Market against the suit, but the court awarded Jack $285,000 for his injury and a prejudgment interest of $5,000. The insurer's cost of defending the grocery store was $20,000. What is the total amount that the BOP insurer will pay for this claim? Select one: A. $290,000 B. $300,000 C. $305,000 D. $310,000.

D. $310,000.

Workers Compensation and Employers Liability Insurance Policy (WCEL policy)

The policy used in most states to provide workers compensation and employers liability insurance.

Subrogation

The process by which an insurer can, after it has paid a loss under the policy, recover the amount paid from any party (other than the insured) who caused the loss or is otherwise legally liable for the loss.

Risk management

The process of making and implementing decisions that enable an organization to optimize its level of risk.

The extent of an organization's product of human intelligence that has economic value refers to which one of the following? Select one: A. Business income B. Intellectual property C. Personal property D. Real property

B. Intellectual property

During a business interruption, some of the organization's expenses, called continuing expenses, will continue, and other expenses, called noncontinuing expenses, will not continue. Which one of the following is an example of a continuing expense? Select one: A. Cost to rent temporary office space B. Cost of overnight air shipment of needed repair parts C. Payroll of key employees D. Overtime wages to employees

C. Payroll of key employees

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? Select one: A. Shady's work product B. Breach of an implied warranty C. Written material that was known to be false D. Willful violation of a penal statute

C. Written material that was known to be false

Which one of the following statements is correct with respect to the Building and Personal Property Coverage Form (BPP)? Select one: A. The deductible is subtracted from the policy limit. B. The policy limit is the maximum the insurer will pay over any one year. C. No payments under coverage extensions are made if the limit of insurance in the declarations is paid in full. D. Due to coverage extensions, it is possible for the total payment for one loss to exceed the policy limit.

D. Due to coverage extensions, it is possible for the total payment for one loss to exceed the policy limit.

Which one of the following is a covered cause of loss under the Causes of Loss—Basic Form? Select one: A. Weight of ice, snow, or sleet B. Falling objects C. Water damage D. Sprinkler leakage

D. Sprinkler leakage

Predictive modeling

A process in which historical data based on behaviors and events is blended with multiple variables and used to construct models of anticipated future outcomes.

Umbrella policy

A liability policy that provides excess coverage above underlying policies and may also provide coverage not available in the underlying policies, subject to a self-insured retention.

Internet of Things (IoT)

A network of objects that transmit data to each other and to central hubs through the internet.

Businessowners policy (BOP)

A package policy that combines most of the property and liability coverages needed by small and medium-size businesses.

Independent contractor

A person (or organization) hired to perform services without being subject to the hirer's direction and control regarding work details.

Employee

A person who is (1) currently employed by the insured or an ex-employee terminated within the past 30 days; (2) compensated by the insured by salary, wages, or commissions; and (3) subject to the control and direction of the insured.

Excess liability policy

A policy that covers liability claims in excess of the limits of an underlying policy or a stated retention amount.

Contractors equipment floater

A policy that covers mobile equipment or tools while located anywhere in the coverage territory.

Dealers policy

A policy that covers the inventory and other property of any of the types of dealers that qualify for inland marine coverage (such as jewelers, equipment dealers, fine arts dealers, and furriers).

Workers compensation statute

A statute that obligates employers, regardless of fault, to pay specified medical, disability, rehabilitation, and death benefits for their employees' job-related injuries and diseases.

Workers compensation

A system that pays lost wages, medical and vocational rehabilitation expenses, and death benefits to injured workers or their dependents for employment-related injuries and diseases.

Catastrophe model

A type of computer program that estimates losses from future potential catastrophic events.

Part 2 of the Workers Compensation and Employers Liability Policy (WC&EL) is the employers liability portion of the policy. Under this portion of the policy the insurer would pay for Select one: A. Claims that are not covered by a workers compensation statute. B. Fines or penalties imposed for violation of law. C. Liability assumed under a contract of the insured. D. Damages arising out of employment practices.

A. Claims that are not covered by a workers compensation statute.

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? Select one: A. Cluster analysis B. Data mining C. Process mining D. Fraud analysis

A. Cluster analysis

The Workers Compensation and Employers Liability Insurance Policy provides that the insured will reimburse the insurer for which one of the following? Select one: A. Penalties required under a workers compensation law because of noncompliance with health and safety laws and regulations. B. Benefits paid to employees with pre-existing injuries. C. Common-law liability for occupational injury to employees. D. Any benefits paid even though the employer has failed to comply with policy conditions.

A. Penalties required under a workers compensation law because of noncompliance with health and safety laws and regulations.

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? Select one: A. 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. B. Only $25,000 of the additional $50,000 in cost would be covered. The Increased Cost of Construction additional coverage provides up to $25,000 in coverage for any covered loss. C. The additional $50,000 would be covered. The Ordinance or Law exclusion eliminates coverage for the cost to upgrade the building to current building codes and ordinances, except when it being done as part of the repair after a covered loss. D. The additional $50,000 would be fully covered by the Increased Cost of Construction additional coverage, but only if the building is insured on a replacement cost basis.

A. 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.

Wilson LLC owns an apartment building insured under a businessowners policy (BOP). Which one of the following would be an insured under Business Liability Coverage of Wilson LLC's BOP? Select one: A. The real estate manager who manages the building and grounds would be an insured under Business Liability Coverage of Wilson LLC's BOP while removing snow from the entrance area. B. The employee of a painting contractor hired to paint several apartments in the building would be an insured under Business Liability Coverage of Wilson LLC's BOP. C. The wife of one of the controlling members would be an insured under Business Liability Coverage of Wilson LLC's BOP while she is volunteering at a nearby hospital. D. The disgruntled tenant who started a fire in the building would be an insured under Business Liability Coverage of Wilson LLC's BOP.

A. The real estate manager who manages the building and grounds would be an insured under Business Liability Coverage of Wilson LLC's BOP while removing snow from the entrance area.

Umbrella liability policies are generally considered to afford superior coverage to excess liability policies, because Select one: A. Umbrella policies provide coverages not available in underlying coverages. B. Excess policies are equal to the maximum possible loss. C. Excess policies are written with lower limits. D. Umbrella policies do not have a self-insured retention.

A. Umbrella policies provide coverages not available in underlying coverages.

What, if anything, is a difference between an excess liability policy and an umbrella liability policy? Select one: A. While both policies provide excess limits, an umbrella policy may also provide coverage not available in the underlying policies. B. There is no difference; these are just two terms for the same type of policy. C. Usually an excess liability policy carries a higher premium than an umbrella policy. D. While both policies provide excess limits, an excess policy may also provide coverage not available in the underlying policies.

A. While both policies provide excess limits, an umbrella policy may also provide coverage not available in the underlying policies.

Glorious Gifts is a retail store located in a shopping center along with four other retail tenants. It is insured under a businessowners policy (BOP) with a $300,000 limit for Personal Property and a $1,000 deductible. One day during business hours, a fire started in the pizza shop next door and spread to Glorious Gifts. Everyone was able to escape safely, but Glorious Gifts suffered the following damages: $75,000 in store merchandise, $10,000 in shelving units that had been installed, a $3,000 computer, and $1,500 in cash. How much will the BOP insurer pay? Select one: A. $77,000 B. $87,000 C. $88,000 D. $88,500

B. $87,000

Which one of the following statements is true about the basic differences between excess and umbrella liability policies? Select one: A. An excess policy often drops down to provide additional coverage for the insured, subject to a self-insured retention. B. An umbrella offers not only high limits of liability, but also may provide coverage not provided by the underlying insurance. C. The self-insured retention in an excess liability policy becomes effective when the insured fails to maintain the required underlying liability limits. D. Umbrella liability policies cannot be written over excess policies, but excess liability policies can be written over umbrellas.

B. An umbrella offers not only high limits of liability, but also may provide coverage not provided by the underlying insurance.

Which one of the following is the main source of the data used in the process mining of the claims process? Select one: A. Claims audits B. Claim activity logs C. Financial reports D. Social media networks

B. Claim activity logs

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? Select one: A. The land that the building sits on B. The outdoor lighting fixtures C. Permanently installed fixtures and improvements paid for by tenants D. The security fence that surrounds the building

B. The outdoor lighting fixtures

Raw Goods, an organization that supplies raw materials is evaluating its options to insure a few shipments of goods per year to its distributor. Which one of the following types of inland/ocean marine insurance would likely be most appropriate? Select one: A. Annual transit insurance B. Trip transit insurance C. Motor truck cargo insurance D. Mail insurance

B. Trip transit insurance

One distinction between the umbrella liability policy and the excess liability policy is that an Select one: A. Excess policy includes coverage not provided by the underlying policy. B. Umbrella policy provides broader protection than the underlying policy. C. Excess policy has a self-insured retention and an umbrella policy does not. D. Umbrella policy generally does not provide defense coverage.

B. Umbrella policy provides broader protection than the underlying policy.

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? Select one: A. $30,000 B. $36,000 C. $40,000 D. $45,000

C. $40,000

Hickory Manufacturing has a number of equipment breakdown loss exposures. In an equipment breakdown policy, explosion caused by excessive internal pressure of steam is a breakdown loss that can occur to a Select one: A. Compressed tank. B. Mechanical pump. C. Boiler. D. Distribution panel.

C. Boiler.

The insurance agent advised the owners of Perfect Dry Cleaning that bailees' customers polices cover Select one: A. Legal liability exposure but not goodwill exposure. B. Neither legal liability exposure nor goodwill exposure. C. Both legal liability exposure and goodwill exposure. D. Goodwill exposure but not legal liability exposure.

C. Both legal liability exposure and goodwill exposure.

Harry is a claim representative for Greatview Insurance. He has been assigned a professional liability claim for a policyholder insured under a businessowners policy (BOP). Harry wants to review the policy to confirm the details on the professional liability coverage purchased. Which one of the following components of the insured's BOP should Harry review? Select one: A. Declarations B. Exclusions C. Endorsements D. Coverage Form

C. Endorsements

James is in the process of forming his own brokerage company which will include several employees. James will be best protected by purchasing which one of the following to cover the crime loss exposures of his company? Select one: A. Fidelity Bond. B. Commercial Crime Insurance. C. Financial Institution Bond. D. Surety Bond.

C. Financial Institution Bond.

Employers liability insurance covers an employer against which one of the following? Select one: A. Liability for suits alleging negligence on the part of its employees B. Liability for damages arising out of its employment practices C. Its liability for an employee's occupational injury or disease that is not covered by a workers compensation statute D. Liability for damage to employees' property caused by its negligence

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

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? Select one: A. Defend Patsy's Market in court B. Refuse to defend Patsy's Market based on an exclusion C. Negotiate an out of court settlement D. Deny the claim based on the owner's suspicion

C. Negotiate an out of court settlement

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? Select one: A. The part of the building that was added 5 years ago B. The water damage caused by the firefighters C. The cost of upgrades due to local ordinances D. The part of the building that was struck by the lightning

C. The cost of upgrades due to local ordinances

Which one of the following explains why the same "Workers Compensation and Employers Liability Insurance Policy" is able to be used in all states even though the provisions of the various state laws and the employee benefits have many differences? Select one: A. All states have accepted the provisions put forth by the National Council on Compensation Insurance (NCCI). B. Even though there are differences, the basic laws and benefits are similar in amount and duration. C. The coverage provided by Part 1 obligates the insurer to pay all benefits required of the insured by the workers compensation law or occupational disease law of any state listed in Item 3.A of the Information Page. D. Although a state run program, the federal government provides for uniformity between the various states.

C. The coverage provided by Part 1 obligates the insurer to pay all benefits required of the insured by the workers compensation law or occupational disease law of any state listed in Item 3.A of the Information Page.

An electrical contractor is contemplating how much liability coverage is needed. The contractor believes the $1 million limit on his commercial general liability (CGL) policy is more than adequate for the small jobs that he is completing. Additionally, the contractor should also consider Select one: A. General contractors will most likely not require excess or umbrella coverage and the $1 million CGL limit will satisfy their requirements. B. That its exposures are strictly limited to the buildings or construction sites on which it is working. C. The difficulty in estimating a maximum possible loss and the need for excess or umbrella coverage. D. That the potential for a large loss is remote and not worth the cost of an insurance premium for additional coverages.

C. The difficulty in estimating a maximum possible loss and the need for excess or umbrella coverage.

Brick Bakery is insured under a businessowners policy (BOP) with a $300,000 limit for Building and a $150,000 limit for Personal Property. A fire loss at the bakery resulted in damage to both the building and personal property. Which one of the following would be considered personal property under Brick Bakery's BOP? Select one: A. The heating unit in the basement B. The covered deck attached to the building C. The furniture used for outdoor seating D. The lights on the front of the building

C. The furniture used for outdoor seating

Jack's Sports Shop is insured under a businessowners policy (BOP). When Jack purchased the BOP, he was told that it would cover most of the business insurance exposures, but he would still need to a separate policy for certain exposures. Which one of the following exposures would require Jack to purchase a separate policy? Select one: A. Business personal property B. Employee dishonesty C. Workers compensation D. Personal and advertising injury liability

C. Workers compensation

Artificial intelligence (AI)

Computer processing or output that simulates human reasoning or knowledge.

Underinsured motorists (UIM) coverage

Coverage that applies when a negligent driver has liability insurance at the time of the accident but has limits lower than those of the injured person's coverage.

Personal injury protection

Coverage that pays benefits, regardless of fault, for medical expense, income loss, and other benefits, resulting from bodily injury to occupants of a covered auto.

Uninsured motorist (UM) coverage

Coverage that provides a source of recovery for occupants of a covered auto or for qualifying pedestrians who are injured in an accident caused by an at-fault motorist who does not have the state minimum liability insurance or by a hit-and-run driver.

Money

Currency, coins, bank notes, and sometimes traveler's checks, credit card slips, and money orders held for sale to the public.

Which one of the following is typically covered by a builder's risk policy? Select one: A. Failure to complete on time due to a strike B. Overruns in the cost of construction C. Loss caused by governmental seizure D. Building materials and supplies

D. Building materials and supplies

A customer shopping at Clark's Food Market dropped a bottle of wine at the checkout counter. The bottle broke and cut the customer's leg. The customer required some minor medical attention and a few stitches. Which one of the following coverages under Clark's Commercial General Liability (CGL) coverage form would pay for the customer's expenses? Select one: A. Personal and advertising injury liability coverage B. Liquor liability coverage C. Premises and operations liability coverage D. Medical payments coverage

D. Medical payments coverage

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? Select one: A. Underwriters are spending more time collecting and evaluating data. B. Underwriters are spending less time cultivating relationships and trust with insureds. C. Insurers are seeking assistance from reinsurers. D. More insurers are turning to automated systems.

D. More insurers are turning to automated systems.

Ella is a producer for Westfork Mutual. She recently met with the owners of The White Canary Motel and is trying to determine if it is eligible for the ISO businessowners policy (BOP). Which one of the following facts about The White Canary Motel would prevent it from being eligible for the BOP? Select one: A. The White Canary Motel is a three-story structure. B. The White Canary Motel has a small restaurant with 25 seats and limited cooking. C. The White Canary Motel has a total floor area of 40,000 square feet. D. The White Canary Motel closes from January 1 to March 1 every year.

D. The White Canary Motel closes from January 1 to March 1 every year.

Part 2 of the Workers Compensation and Employers Liability Policy requires which one of the following with respect to covered injuries? Select one: A. The injury must not result from employer negligence. B. The injury must require medical treatment. C. The injury must arise out of and in the course of the worker's employment at one of the insured locations listed in the policy. D. The injury must arise out of employment necessary or incidental to the insured's work in a state or territory listed in the policy.

D. The injury must arise out of employment necessary or incidental to the insured's work in a state or territory listed in the policy.

Which one of the following statements is correct regarding a commercial general liability policy with an occurrence coverage form? Select one: A. All claims against the insured must be filed during the policy period. B. Claims against the insured may be filed during the policy period or the extended reporting period. C. It usually includes an extended reporting period of one year. D. The injury or damage must happen during the policy period.

D. The injury or damage must happen during the policy period.

One distinguishing feature between umbrella liability insurance and excess liability insurance is that Select one: A. Excess liability carries a larger deductible than umbrella liability. B. Excess liability policies include defense costs while umbrella liability policies do not. C. Excess liability insurance is a form of reinsurance while umbrella liability insurance is primary insurance. D. Umbrella liability coverage may be subject to a self-insured retention.

D. Umbrella liability coverage may be subject to a self-insured retention.

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? Select one: A. Injured customers requiring hospitalization. B. The insured's spouse C. Employees of the insured organization D. Volunteer workers at the insured organization

D. Volunteer workers at the insured organization

Discovery Form

Form that covers losses discovered during the policy period even though they may have occurred before the policy period.

Employers liability insurance

Insurance that protects an employer against employee injury claims that are not covered by workers compensation laws.

Workers compensation insurance

Insurance that provides coverage for benefits an employer is obligated to pay under workers compensation laws.

Marine insurance

Insurance that, in the U.S., includes both ocean and inland marine coverage and, in the rest of the world, is limited to insurance for vessels and cargo.

Prejudgment interest

Interest that may accrue on damages before a judgment has been rendered.

Bodily injury

Physical injury to a person, including sickness, disease, and death.

Property damage

Physical injury to, destruction of, or loss of use of tangible property.

Trip transit policy

Policy that covers a particular shipment of goods specified in the policy.

Motor truck cargo liability policy

Policy that covers a trucker's liability for damage to cargo of others being transported by the trucker.

Annual transit policy

Policy that covers all shipments made or received by the insured throughout a one-year policy period.

Monoline policy

Policy that covers only one line of business.

Medical payments

Reasonable expenses incurred for necessary medical and funeral services because of bodily injury.

Leased workers

Workers provided by a business, whose primary job is to provide such workers, to another business.

Securities

Written instruments representing either money or other property, such as stocks and bonds.

In business income insurance, the expenses that an organization would not have incurred if the business interruption had not occurred are called Select one: A. Continuing expenses. B. Contingent expenses. C. Excludable expenses. D. Extra expenses.

D. Extra expenses.

Dan owns a bike repair shop which is located on the first floor of a 3 story building owned by Jane. Jane uses the third floor for her own business and rents out the second floor to a graphic design studio. While doing some bike repair work, Dan accidentally started a fire which spread throughout the entire building. The damage from the fire consisted of : i) damage to Dan's business personal property - $250,000; ii) damage to the bike repair shop building rented to Dan - $125,000; iii) damage to the remainder of the building - $200,000; and iv) bodily injury to a customer of the graphic design studio on the 2nd floor - $300,000. Dan's bike repair shop is insured by a Commercial General Liability policy (occurrence version) with no deductible and no endorsements. The insurer has determined that Dan is legally liable for all the damages. The policy's each occurrence limit is $1,000,000; the Damage to Premises Rented to You limit is $100,000; and the policy's general aggregate is $2,000,000. Under the Commercial General Liability policy, how much will the insurer pay for Dan's business personal property? Select one: A. $0 B. $25,000 C. $125,000 D. $250,000

A. $0

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? Select one: A. $100,000 B. $200,000 C. $300,000 D. $375,000

A. $100,000

A building contractor uses lower grade materials than called for in the specifications for an office building. A year after the building was completed, a balcony collapses, injuring several employees and customers and causing damage to the building and contents. For the building construction company, this is an example of Select one: A. A completed operations liability exposure. B. An operations liability exposure. C. A premises liability exposure. D. A products liability exposure.

A. A completed operations liability exposure.

Which one of the following is an example of injury or damage arising from an occurrence that would be covered by the products and completed operations liability portion of the Commercial General Liability (CGL) Coverage Form? Select one: A. A defective gas range manufactured by the insured explodes causing injury. B. A customer's house is set on fire while the insured is doing plumbing work. C. A dissatisfied customer sues an insured for slander. D. A customer is injured when she slips on a wet floor in a store.

A. A defective gas range manufactured by the insured explodes causing injury

Perils are an important aspect of property insurance. Which one of the following statements is correct with respect to perils? Select one: A. A peril is the actual means by which property is damaged or destroyed such as fire, lightning, windstorm, hail, or theft. B. In order to be covered by an insurance policy, a peril must be defined and described in that policy. C. Property insurance policies can cover specific perils and cannot exclude other perils. D. A peril is anything that increases the frequency or the severity of a loss.

A. A peril is the actual means by which property is damaged or destroyed such as fire, lightning, windstorm, hail, or theft.

The commercial property coverage part of a commercial package policy contains one or more commercial property coverage forms. Each coverage form typically includes all of the following, EXCEPT: Select one: A. A range of covered peril B. What property is covered and property that is not covered C. An insuring agreement D. Definitions and provisions

A. A range of covered peril

The loss of or damage to property can have adverse financial consequences including reduced property value. Which one of the following statements is correct with respect to a reduction in value? Select one: A. A valuable painting that is repaired after being damaged is likely to have declined in value. B. For insurance purposes, the dollar amount of a reduction in value is the same regardless of the valuation measure used. C. When property is lost or destroyed, the limit of insurance is deemed to be the amount of the reduction in value. D. If a cell phone is lost or stolen, its decline in value is measured as its replacement cost minus its salvage value.

A. A valuable painting that is repaired after being damaged is likely to have declined in value.

A commercial building may contain furniture, machinery and equipment and finished products. Which one of the following is the term generally used in property insurance policies to refer to all these types of property? Select one: A. Business personal property B. Stock C. Inventory D. Commercial property

A. Business personal property

The commercial property policy Causes of Loss Form that provides coverage for "risks of direct physical loss," unless excluded or limited by the policy is called the Select one: A. Causes of Loss—Special Form. B. Causes of Loss—All Risks Form. C. Causes of Loss—Basic Form. D. Causes of Loss—Broad Form.

A. Causes of Loss—Special Form.

Hill Top Wholesale experienced a loss from a fire at its warehouse. When the owner, Joann, called to report the loss to the commercial property insurer, she was reminded of certain obligations that the insured must meet in order for the coverage to apply. There are also certain rules that the insurer must follow. Which one of the following components of the commercial property coverage part of the commercial package policy would include these obligations and rules? Select one: A. Commercial property conditions B. Commercial property declarations C. Building and personal property coverage form D. Causes of loss form

A. Commercial property conditions

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? Select one: A. Commercial property declarations page B. Building and personal property coverage form C. Causes of loss form D. Commercial property conditions

A. Commercial property declarations page

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? Select one: A. Cost to rent temporary office space B. Insurance premiums C. Debt repayments D. Payroll of key employees

A. Cost to rent temporary office space

Cyber risk intellectual property loss exposures include Select one: A. Cyber extortion of trade secrets. B. Personal and advertising injury liability. C. Loss to tangible property. D. Property damage liability.

A. Cyber extortion of trade secrets.

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 Select one: A. Damage to intangible property. B. Damage to personal property. C. Damage to tangible property. D. Errors and omissions liability.

A. Damage to intangible property.

Hager Incorporated insures its building and business personal property under the Building and Personal Property Coverage Form (BPP). The company suffered a fire loss that destroyed a significant portion of the building and damaged the fence surrounding the building. Assuming that the building is insured for at least 80 percent of its value, coverage extensions under the BPP would provide coverage for which one of the following? Select one: A. Damage to the fence surrounding the building B. The cost to remove debris from the portion of the building that was destroyed C. Increased cost of construction to comply with new ordinances or laws D. The cost to remove pollutants from the neighboring creek

A. Damage to the fence surrounding the building

Suzanne is a commercial lines underwriter. Which one of the following components of the general liability coverage forms would she use to tailor the form to meet the specialized needs of an insured? Select one: A. Endorsements B. Definitions C. Conditions D. Limits of Insurance

A. Endorsements

Injury arising out of which one of the following offenses could be covered under Coverage B of the Commercial General Liability policy? Select one: A. False arrest B. Breach of contract C. Vandalism D. Lawful prosecution

A. False arrest

Which one of the following statements is true regarding the Business Income (without Extra Expense) Coverage Form? Select one: A. It covers only extra expenses that reduce the business income loss. B. It does not cover any extra expenses. C. It covers only extra expenses incurred within 48 hours of the loss. D. It covers extra expenses only for businesses that must continue their operations as any cost.

A. It covers only extra expenses that reduce the business income loss.

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 Select one: A. Loss or damage caused by computer viruses. B. Fire damage to clothing items currently listed for sale online. C. Lightning damage to the computer system used for internet sales. D. Theft of clothing items in their store.

A. Loss or damage caused by computer viruses.

The management of Maryland Marine Co. (MMC) must ensure that proper coverage is obtained for work-related injuries. The employee population of MMC is a mixture of full-time and part-time employees as well as some casual employees for one-time tasks. Much of MMC's work is done by independent contractors and temporary employees during peak seasons. Which one of the following statements about these persons is true? Select one: A. Many states workers compensation statutes exclude casual labor (temporary employees). B. Injuries to MMC's full-time ship captains are likely to be covered under state workers compensation laws. C. Temporary employees are considered employees of MMC rather than employees of the firm supplying them to MMC. D. The independent contractors are automatically employees under common law.

A. Many states workers compensation statutes exclude casual labor (temporary employees).

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 Select one: A. Offense arising out of the named insured's business. B. Accident arising from the insured's business. C. Occurrence arising out the named insured's business. D. Physical injury arising from the insured's business.

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

Which one of the following entities would likely have the greatest completed operations loss exposure? Select one: A. Paul the plumber B. Doris the physician C. Moe the manufacturer D. Sam the accountant

A. Paul the plumber

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? Select one: A. Premises and operations liability B. Personal and advertising injury liability C. Absolute liability D. Products and completed operations liability

A. Premises and operations liability

Forrest Hill Grill (FHG) operates its business out of two locations. One location is a restaurant which has seating for 30 people and serves alcohol. The other location is strictly a take-out and catering operation. FHG's Business Income (and Extra Expense) Coverage Form is written with a separate limit of insurance for each location. The business income coverage is written on a Select one: A. Specific basis. B. Per building basis. C. Per location basis. D. Blanket basis.

A. Specific basis.

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 Select one: A. The compensation the carrier receives for transporting cargo. B. A penalty the carrier pays the shipper for nondelivery. C. The liability for loss or damage to the cargo entrusted to it. D. The cost of disposing of undeliverable goods.

A. The compensation the carrier receives for transporting cargo.

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? Select one: A. The loss or damage must be caused by a covered cause of loss. B. The suspension of operations must be less than a year. C. The insured must continue operations at a new location. D. The suspension of operations must be greater than 60 days.

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

BBC Manufacturing (BBC) has an unendorsed Commercial General Liability (CGL) Coverage Form. BBC has expanded its sales outside the United States. Due to injuries from alleged defective products of BBC, lawsuits are brought in Europe, Mexico, Canada and Puerto Rico. Which one of the following statements describes the extent for which BBC's insurer will provide coverage or defense in these jurisdictions? Select one: A. There is coverage and defense for Canada and Puerto Rico, since these are covered territories. B. There is coverage and defense for all but the European suits since Europe is not part of the territory covered. C. There is coverage and defense for the Puerto Rico lawsuit only as it is a territory of the United States. D. There is no coverage or defense, as none of these jurisdictions meet the territorial requirement.

A. There is coverage and defense for Canada and Puerto Rico, since these are covered territories.

Which one of the following is one of the covered causes of loss in the commercial property policy Causes of Loss—Basic form? Select one: A. Vandalism B. Falling objects C. Water damage D. Weight of ice

A. Vandalism

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? Select one: A. $273,500 B. $275,000 C. $308,500 D. $310,000

B. $275,000

When trying to determine the building property limit for the Building and Personal Property Coverage Form (BPP), the owner of GGR Properties expressed a concern about the requirement to carry a certain percentage of insurance relative to the value of the covered property. The insurance producer advised the insured that the BPP has an optional coverage that would suspend this requirement. Which one of the following BPP optional coverages is the producer recommending? Select one: A. Replacement Cost option B. Agreed Value option C. Inflation Guard option D. Actual Cash Value option

B. Agreed Value option

The Commercial General Liability (CGL) Coverage Form defines the term "occurrence" as Select one: A. An incident, sudden and accidental in nature, causing bodily injury or property damage. B. An accident, including continuous or repeated exposure to substantially the same general harmful conditions. C. An accident, causing bodily injury or property damage, that occurs suddenly. D. An incident resulting from repeated exposure to substantially the same general harmful conditions.

B. An accident, including continuous or repeated exposure to substantially the same general harmful conditions.

Stanton Industries insures its building and business personal property under the commercial property coverage part of a commercial package policy. Anthony is the new risk manager for Stanton Industries. He wants to look at the policy to review the property insured, the kinds and amounts of coverage provided, and any optional coverages. Which one of the following component parts of the commercial property part would provide Anthony with this information? Select one: A. Commercial property conditions B. Commercial property declarations C. Coverage form D. Causes of loss form

B. Commercial property declarations

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? Select one: A. Products liability B. Completed operations liability C. Property damage liability D. Liability for operations by others

B. Completed operations liability

Which one of the following loss exposures exist when a business can be held legally liable for bodily injury or property damage caused by their repair or contracting work? Select one: A. Operations liability B. Completed operations liability C. Workers' compensation liability D. Products liability

B. Completed operations liability

A vehicle owner had a tire store install four new wheels and tires on the vehicle. On the way home from the store, one of the wheels came off, causing the vehicle to accidentally run off the road and strike a tree. The vehicle owner sued the tire store for failing to properly tighten the lug nuts on the vehicle. The loss exposure faced by the tire store in this case is known as Select one: A. Employers liability. B. Completed operations liability. C. Automobile liability. D. Products liability.

B. Completed operations liability.

John purchased a new lawnmower two years ago. After significant use, the lawnmower needed servicing. A repairman sharpened the blade, but he failed to reattach it properly to the lawnmower. When John was using the lawnmower, the blade flew off and seriously injured John's daughter. From the standpoint of a commercial liability loss for the repair shop, this is an example of Select one: A. Products liability. B. Completed operations liability. C. Premises and operations liability. D. Liability for operations by others.

B. Completed operations liability.

Telephone Company installs fiber-optic cable using a trenching machine that digs a trench, buries the cable, fills in the trench, and reseeds, all in one pass. The trenching machine can install cable in a fifty-home neighborhood in one day. A day after the trenching machine passes by, a member of the community steps on the trenched area, sinks in, and breaks his leg. This is an example of a liability loss exposure arising out of Select one: A. Premises. B. Completed operations. C. Professional. D. Products.

B. Completed operations.

Property insurance policies use the term "personal property" to refer to the Select one: A. Property in transit. B. Contents in and around a building. C. Buildings not attached to the main building. D. Company's copyrights and trademarks.

B. Contents in and around a building.

Which one of the following components of the commercial property part of a commercial package policy can be used to tailor the coverage to meet the specialized needs of a particular insured or eliminate exposure that the underwriter is unwilling to insure? Select one: A. Commercial property declarations B. Endorsements C. Commercial property conditions D. Causes of loss form

B. Endorsements

Which one of the following statements is correct with regard to the Building and Personal Property Coverage Form (BPP)? Select one: A. Insureds cannot obtain any coverage under the BPP or its optional coverages for leased photocopiers, computers, phone systems, and other equipment. B. Insureds who have selected the replacement cost option may also elect to have the personal property of others valued at replacement cost. C. Under the extension of replacement cost to personal property of others, the amount of a loss is calculated according to a formula included in the additional coverage wording. D. If an insured extends replacement cost to the personal property of others, the amount of a loss is calculated as the replacement cost of that property, even if that amount exceeds the applicable limit of insurance.

B. Insureds who have selected the replacement cost option may also elect to have the personal property of others valued at replacement cost.

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)? Select one: A. The amount of insurance is equal to 25 percent of the amount of insurance on the building or $50,000, whichever is less. B. 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. C. It includes coverage for the cost to demolish the undamaged portion of the structure and remove its debris. D. It does not apply if the replacement cost option has been selected.

B. 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.

Inland marine insurance is insurance that covers Select one: A. Businesses that own or operate watercraft, or import or export goods. B. Many different classes of property that typically involve an element of transportation on land. C. Companies that ship goods by commercial vessel on inland waterways. D. Miscellaneous lines such as burglary, glass, and steam boilers.

B. Many different classes of property that typically involve an element of transportation on land.

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? Select one: A. Unauthorized use of another's name or product B. Material published prior to the policy period C. Material published with knowledge of falsity D. Knowing violation of rights of another

B. Material published prior to the policy period

The coinsurance basis for business income coverage is Select one: A. Net income plus continuing operating expenses. B. Net income plus all operating expenses that would have been incurred in the absence of a loss. C. Gross income plus payroll and utilities. D. Gross income less continuing operating expenses.

B. Net income plus all operating expenses that would have been incurred in the absence of a loss.

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? Select one: A. No, because the coverage does not apply to accidents that occur away from the insured's premises and adjacent ways. B. No, because the medical expenses must be incurred and reported to the insurer within one year after the date of the accident. C. No, because the customer was obligated to tell Lucy that she would be filing a claim within five days of the accident. D. No, because there is no liability against the insured.

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

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? Select one: A. Premises and products liability B. Premises and operations liability C. Completed operations liability D. Incompleted operations liability

B. Premises and operations liability

XYZ contractor, covered under an unendorsed Commercial General Liability (CGL) Coverage Form, is installing kitchen cabinets in a customer's home. The contractor manufactured the cabinets. While the contractor is fastening a cabinet, it falls and injures the customer. Which one of the following best explains how coverage under the contractor's CGL Coverage Form applies in this case? Select one: A. Products and completed operations liability applies because the contractor was installing cabinets it manufactured. B. Premises and operations liability applies because the contractor was in the process of installing the cabinets. C. Products and completed operations liability applies because the contractor was completing the work. D. Premises and operations liability applies because the contractor was working at the customer's premises.

B. Premises and operations liability applies because the contractor was in the process of installing the cabinets.

Pedestrian Wilma was injured as a result of a contractor's negligence when the contractor failed to adequately warn the public of a hazard when paving a road. Any resulting liability claim by Wilma against the contractor would be considered to have arisen from the contractor's Select one: A. Products and completed operations liability exposure. B. Premises and operations liability exposure. C. Personal liability exposure. D. Absolute liability exposure.

B. Premises and operations liability exposure.

Joe Motors, which services automobiles, wants to maintain the goodwill of its customers. This is best accomplished by Select one: A. Purchasing garage liability insurance. B. Purchasing garagekeepers insurance. C. Lowering the physical damage deductible under its business auto insurance. D. Raising liability limits under its business auto insurance.

B. Purchasing garagekeepers insurance.

Which one of these offenses would not be considered a personal and advertising injury under Coverage B of the Commercial General Liability Coverage Form? Select one: A. An organization's unauthorized use of another's advertising idea in an advertisement B. Refusing to hire a qualified job applicant because of his ethnicity C. Wrongful eviction from a dwelling or premises that a person occupies D. Malicious prosecution

B. Refusing to hire a qualified job applicant because of his ethnicity

Leslie suffered a severe burn to her hand when her microwave oven manufactured by LH Appliances caught fire. The fire also caused damage to her kitchen cabinets. Two years later, Leslie decided to file a suit against the manufacturer when she learned that microwaves manufactured by LH Appliances had been found responsible for several other fires. LH Appliances was insured by an occurrence version of the commercial general liability (CGL) coverage form with no deductible or endorsements. Which one of the following correctly describes how LH Appliances' CGL will apply to the claim? Select one: A. The CGL will defend the insured, but only cover the claim for the property damages to the cabinets if found liable. B. The CGL will defend the insured, and pay both for both the bodily injury and damages to the cabinets if found liable. C. The CGL will not cover the claim because it was filed two years after the event that caused the damages. D. The CGL will defend the insured, but only pay for Leslie's medical expenses if found liable.

B. The CGL will defend the insured, and pay both for both the bodily injury and damages to the cabinets if found liable.

Which one of the following statements best describes the Causes of Loss—Special Form? Select one: A. The placement of the "burden of proof" rests with the insured as opposed to the insurer. B. The Special Form provides coverage for direct physical losses other than those that are specifically excluded. C. The Special Form is designed to cover any loss that would not be covered by the Basic and Broad Forms. D. The Special Form contains exclusions that are covered in the Basic and Broad Forms for certain hard to insure perils.

B. The Special Form provides coverage for direct physical losses other than those that are specifically excluded.

As part of its assessment of its cyber risk, an organization should consider whether there are any intangible property exposures. Which one of the following would best be classified as an intangible property loss? Select one: A. Two disgruntled employees use the computer system to transfer office funds into their own personal bank accounts. B. The computer system is hacked and data including credit card numbers are stolen. C. Thieves break into the main office and steal several desktop computers. D. There is a fire in the storage area which destroys the backup copy of the office computer system.

B. The computer system is hacked and data including credit card numbers are stolen.

Renata owns a valuable antique sculpture by a famous artist. One day she accidentally dropped the sculpture and a piece of it broke off. Renata took the sculpture to an art restorer, who reattached the broken piece and repaired the surface. From a distance, the statue looks the same as it did before Renata dropped it, but a close inspection reveals the repair. Which one of the following best describes the financial consequences of the accident? Select one: A. There are no financial consequences because the piece looks the same as it did before the accident. B. The financial consequences include the cost of the repair and the reduction in value resulting from the repaired damage. C. Renata has incurred a total loss because original artwork is impossible to replace. D. The only financial consequence of the accident is the money Renata paid the art restorer for the repair.

B. The financial consequences include the cost of the repair and the reduction in value resulting from the repaired damage.

Which one of the following statements is correct with respect to the Building and Personal Property Coverage Form (BPP) deductible? Select one: A. Under the ISO Commercial Lines Manual rules, the standard deductible must be at least $2,500. B. The insurer is not obligated to pay anything to the insured unless the loss exceeds the deductible. C. If the Coinsurance condition or the Agreed Value optional coverage applies, the amount of the loss is first reduced by the deductible before applying any penalty imposed by those provisions. D. If an occurrence involves a loss that affects more than one category of covered property and a separate limit of insurance applies to each category, losses to all categories are totaled and the deductible applied to that total amount.

B. The insurer is not obligated to pay anything to the insured unless the loss exceeds the deductible.

Lucy's Bakery is insured under a commercial package policy with the Business Income (and Extra Expense) Coverage Form. A fire loss caused significant damage to the building. When Lucy learned that it would take 9 months to repair the building, she decided to temporarily relocate to a nearby rental location. All of the following would be considered covered extra expenses under the Business Income (and Extra Expense) Coverage Form, EXCEPT: Select one: A. The cost to lease mixers and other machinery B. The salary of the assistant baker and cake decorator C. The costs to move some of the ovens to the new location D. The rent for the new location

B. The salary of the assistant baker and cake decorator

To be covered under a workers compensation statute, an injury or disease (in most states) must meet which one of the following requirements? Select one: A. Result from the employer's negligence B. Occur away from the regular work premises C. Arise out of employees' job-related injuries and diseases D. Result in total disability

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

A family recently purchased a new home constructed by a residential home builder. Two months after taking possession, several of the family members were injured when the roof suddenly collapsed. The family sued the construction company and was awarded monetary damages for their injuries. This is an example of which one of the following types of commercial liability loss exposure for the construction company? Select one: A. Products liability B. Premises and operations liability C. Completed operations liability D. Employers liability

C. 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? Select one: A. Normal operating expenses B. Interest Expense C. Costs to move to a temporary location D. Property taxes

C. Costs to move to a temporary location

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? Select one: A. Coverages B. Conditions C. Declarations D. Definitions

C. Declarations

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? Select one: A. Walsh Builders was not at fault for the accident. B. The injury was more serious than a minor injury. C. He is entitled to workers compensation benefits. D. The injury did not occur on the premises of Walsh Builders.

C. He is entitled to workers compensation benefits.

An individual owns a web-based business. All sales records and contact data are maintained on the same network server as the website. Someone hacks into the server and deletes all of the saved data. Which one of the following types of loss is this? Select one: A. Tangible property B. Personal injury C. Intangible property D. Contingent business income

C. Intangible property

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? Select one: A. Loss of use B. Tangible property C. Intangible property D. Loss of business income

C. Intangible property

Which one of the following statements about Inflation Guard optional coverage of the Building and Personal Property Coverage Form (BPP) is true? Select one: A. It is available only on business personal property. B. It is automatically added whenever the Agreed Value optional coverage is added. C. It is automatically increases the limit of insurance by the percentage of annual increase shown in the declarations. D. It leaves policy limits unchanged while increasing the annual premium by the rate of inflation.

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

The typical workers compensation statute provides payment for which one of the following? Select one: A. Medical bills sustained while an employee commutes to work on public transit B. Injuries to customers on the insured premises C. Medical bills for an injury sustained by an employee while working D. Any property damage that accompanies a bodily injury

C. Medical bills for an injury sustained by an employee while working

Which one of the following statements is true regarding Coverage C—Medical Payments of the Commercial General Liability policy? Select one: A. Medical payments coverage provides high limits of insurance for bodily injury losses. B. Medical payments coverage is liability insurance because it pays only if the insured is legally liable. C. Medical payments coverage is a means of making prompt settlements. D. Medical payments coverage applies to bodily injury to any insured.

C. Medical payments coverage is a means of making prompt settlements.

Fancy Dress Shop is a small specialty clothing boutique for women. Liability claims against Fancy Dress Shop would most likely arise from its Select one: A. Products and completed operations exposure. B. Advertising exposure. C. Premises and operations exposure. D. Workers compensation exposure.

C. Premises and operations exposure.

Sarah was looking for new furniture for her home and visited a local woodworker's studio. While she was admiring a bookcase, it accidentally fell over and injured her leg. From the commercial liability standpoint of the woodworker, this is an example of Select one: A. Products liability. B. Completed operations liability. C. Premises and operations liability. D. Employers liability.

C. Premises and operations liability.

Meat Products Company (MPC) runs packing plants in three Midwest states. The company was in the news recently because of its labor practices. The Department of Labor (DOL) investigated complaints from five female employees that MPC discriminated against them. The DOL found the claim was true. The Immigration and Naturalization Service (INS) found that the company employed illegal immigrants and paid them less than the minimum wage. When this news became public, MPC's reputation was severely harmed. This scenario illustrates which source of reputation risk? Select one: A. Corporate governance and leadership B. Corporate social responsibility C. Regulatory and legal compliance D. Communication and crisis management

C. Regulatory and legal compliance

Workers compensation benefits include which one of the following? Select one: A. Death benefits of 100 percent of wage loss B. Pain and suffering benefits C. Rehabilitation benefits D. Property damage benefits

C. Rehabilitation benefits

The two categories of property that are exposed to loss from cyber risk are Select one: A. Insured and uninsured. B. Covered and not covered. C. Tangible and intangible. D. Real and personal.

C. Tangible and intangible.

Which one of the following best describes real property? Select one: A. Property being shipped to or from others. B. Business personal property that includes furniture, machinery and equipment, and stock/inventory. C. Tangible property that includes land, structures permanently attached to the land, and whatever is growing on the land. D. Vehicles, merchandise, furniture, tools, and similar items.

C. Tangible property that includes land, structures permanently attached to the land, and whatever is growing on the land.

Sue is injured at work, and her job responsibilities are reduced for 30 days, after which time she is fully recovered. Sue has which one of the following types of workers compensation disabilities? Select one: A. Temporary total disability B. Permanent partial disability C. Temporary partial disability D. Permanent total disability

C. Temporary partial disability

Joan was using a screwdriver to open a can of paint, when the tip of the screwdriver broke off and hit her above the eye. She rushed to the eye doctor because her eye hurt and kept watering. After a thorough exam, the eye doctor sent her home with some eye drops and a bill for $450. Joan paid the bill and immediately filed a claim against Blue Tools (the screwdriver manufacturer) under Coverage C—Medical Payments of its CGL policy. Which one of the following statements is correct regarding this claim? Select one: A. The claim would be paid under Coverage C on a no-fault basis. B. The claim would not be paid under Coverage C because the injury occurred away from the insured's premises. C. The claim would not be paid under Coverage C because it falls under the products-completed operations hazard. D. The claim would not be paid under Coverage C because Joan was at fault.

C. The claim would not be paid under Coverage C because it falls under the products-completed operations hazard.

Cameron has a Commercial Package Policy (CPP) that has a Building and Personal Property Coverage Form (BPP) with a Causes of Loss - Broad Form covering his building with a $750,000 limit. A tropical storm struck Cameron's building and the strong winds tore most of the shingles from the building's roof and shattered multiple windows with flying debris. The total amount of damages was $20,000 for the windows and $20,000 for the shingles. Ignoring any deductibles that may apply, how much will Cameron's insurer pay for damage to his windows and shingles? Select one: A. The damage is not covered B. $20,000 C. $39,000 D. $40,000

D. $40,000

Sam's Hair Salon (SHS) is insured under a commercial package policy with the Business Income (and Extra Expense) Coverage Form (BIC). The BIC has a $500,000 limit of insurance and a 70 percent coinsurance provision. A fire damaged SHS's building and the business was forced to close down for 4 months while the damage could be repaired. This resulted in a BIC loss of $250,000. The salon's net income plus operating expenses that would have been incurred in the absence of the loss was $700,000. Which one of the following represents the coinsurance basis? Select one: A. $350,000 B. $400,000 C. $500,000 D. $700,000

D. $700,000

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 Select one: A. Specific basis. B. Net basis. C. Fixed basis. D. Blanket basis.

D. Blanket basis.

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? Select one: A. Commercial property declarations B. Building and personal property coverage form C. Commercial property conditions D. Causes of loss form

D. Causes of loss form

A contractor is hired to install a new concrete sidewalk in front of a store. Several weeks after the sidewalk was installed, the concrete buckles and a passerby trips and falls on the buckled sidewalk. The passerby sues the contractor to recover medical expenses incurred due to the fall. This commercial liability loss is categorized as Select one: A. Products liability. B. Environmental liability. C. Professional liability. D. Completed operations liability.

D. Completed operations liability.

Internet blogger Tom operates a public interest group on the Internet. In posting his opinions, Tom falsely accused the governor of his state of criminal behavior. Tom's Commercial General Liability (CGL) Coverage Form will most likely exclude coverage for any resulting damage based on which one of the following exclusions? Select one: A. Insureds in media and Internet-type businesses exclusion B. Unauthorized use of another's name or product exclusion C. Knowing violation of rights of another exclusion D. Electronic chatrooms or discussion boards exclusion

D. Electronic chatrooms or discussion boards exclusion

For most businesses, which one of the following is the peril that poses the greatest risk of a large or total property loss? Select one: A. Flood B. Windstorm C. Earthquake D. Fire

D. Fire

Gilbert Industries insures its building and personal property under the Building and Personal Property Coverage Form (BPP). A large section on the building was destroyed by fire after the building was struck by lightning. Because the building was over 25 years-old, there had been a number of building code changes since it was constructed. In order for Gilbert Industries to comply with these new codes, the cost of rebuilding would increase. Which one of the following additional coverages under the BPP would provide coverage for these costs? Select one: A. Newly acquired or constructed property coverage B. Replacement cost coverage C. Inflation guard coverage D. Increased cost of construction coverage

D. Increased cost of construction coverage

Which one of the following supply chain exposures can a business mitigate by carefully wording contracts and diversifying suppliers? Select one: A. Strikes or other employment issues B. Changes in demand C. Production bottlenecks D. Loss of supply due to external events

D. Loss of supply due to external events

Joe signs a contract with Home Builders to install the electrical wiring for a new home. He uses his own tools and follows the specifications in the contract. Joe is burned while installing the wiring. Does Home Builders' workers compensation policy cover Joe's injury? Select one: A. Yes, because the injury arose out of and in the course of employment B. No, because Joe probably contributed to the injury C. Yes, because Home Builders must provide no-fault protection for employees D. No, because Joe is not an employee of Home Builders

D. No, because Joe is not an employee of Home Builders

The liability loss exposure that exists when an organization is legally responsible for bodily injury or property damage caused by an accident that occurs on an organization's owned, leased, or rented property is Select one: A. Professional liability. B. Property liability. C. Operations liability. D. Premises and operations liability.

D. Premises and operations liability.

Liability for completed operations is so similar to which one of the following types of liability exposures that the two are often treated as components of one loss exposure? Select one: A. Premises liability B. Professional liability C. Operations liability D. Products liability

D. Products liability

In property insurance, the term "property in transit" refers to which one of the following? Select one: A. Owned property while located anywhere other than the insured location B. Property while being moved from one building to another at the insured location only C. Mobile equipment while moving under its own power from one work location to another D. Property while being transported by trucks, cars, buses, trains, airplanes, and ships

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

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 Select one: A. Patents. B. Intellectual property. C. Internal security. D. Reputation.

D. Reputation.

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? Select one: A. The increased cost of construction to meet new building codes or ordinances B. The salary of key employees who will continue to work at a temporary location C. The cost to remove damaged equipment and machinery D. The increased cost of rent at a temporary location

D. 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? Select one: A. The building was damaged, but not completely destroyed. B. The business planned to resume operations within 120 days. C. The business did not earn a profit in the prior 12-month period. D. The policy's covered causes of loss did not include flood.

D. The policy's covered causes of loss did not include flood.