AINS 23 PT 3
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. Propose a premium reduction at renewal time. B. Add a special endorsement to the policy. C. Increase the physical damage deductible. D. Propose a premium increase at renewal time.
A
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. A big data network. C. Artificial intelligence. D. Social media.
A
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
The insurance agent advised the owners of Perfect Dry Cleaning that bailees' customers polices cover Select one: A. Both legal liability exposure and goodwill exposure. B. Goodwill exposure but not legal liability exposure. C. Legal liability exposure but not goodwill exposure. D. Neither legal liability exposure nor goodwill exposure.
A
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 often purchase excess or liability insurance coverage because their primary insurers are unwilling to provide adequate limits within the primary insurance layer. B. 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. C. 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. 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.
A
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 policy's covered causes of loss did not include flood. C. The business did not earn a profit in the prior 12-month period. D. The business planned to resume operations within 120 days.
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. Neither policy provides coverage for any of the losses. B. Each loss would be covered under the commercial property policy only. C. Each loss would be covered under both the commercial property policy and the equipment breakdown policy. D. Each loss would be covered under the equipment breakdown policy only.
B
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
Which one of the following statements is correct with respect to the Building and Personal Property Coverage Form (BPP) deductible? Select one: A. 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. C. Under the ISO Commercial Lines Manual rules, the standard deductible must be at least $2,500. D. 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.
B
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 disgruntled tenant who started a fire in the building would be an insured under Business Liability Coverage of Wilson LLC's BOP. B. 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. C. 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. D. 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.
B
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
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 not be paid under Coverage C because Joan was at fault. 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 be paid under Coverage C on a no-fault basis.
C
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. What property is covered and property that is not covered B. An insuring agreement C. A range of covered peril D. Definitions and provisions
C
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
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. Increase subrogation amounts D. Detect fraudulent claims
D
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 water damage caused by the firefighters B. The part of the building that was added 5 years ago C. The part of the building that was struck by the lightning D. The cost of upgrades due to local ordinances
D
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 of an independent service station that is test driving a covered auto after a tune up C. An employee driving his or her personally owned car on an errand for Morlyn D. An employee driving a vehicle leased by Morlyn for business purposes
D
The coinsurance basis for business income coverage is Select one: A. Net income plus continuing operating expenses. B. Gross income plus payroll and utilities. C. Gross income less continuing operating expenses. D. Net income plus all operating expenses that would have been incurred in the absence of a loss.
D
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 suspension of operations must be greater than 60 days. B. The suspension of operations must be less than a year. C. The insured must continue operations at a new location. D. The loss or damage must be caused by a covered cause of loss.
D
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. Premises and operations liability. B. Property liability. C. Operations liability. D. Professional liability.
A
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. Trip transit policy B. Parcel post policy C. Annual transit policy D. Open cargo policy
A
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
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. Payroll of key employees C. Debt repayments D. Insurance premiums
A
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. Compliance with legal requirements and compliance with regulatory requirements D. The embracing of risk and a spirit of cooperation
A
Which one of the following types of contractors are usually ineligible for coverage under a businessowners policy (BOP)? Select one: A. General contractors B. Painting contractors C. Plumbers D. Carpenters
A
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
Employers liability insurance covers an employer against which one of the following? Select one: A. Liability for damages arising out of its employment practices B. Its liability for an employee's occupational injury or disease that is not covered by a workers compensation statute C. Liability for damage to employees' property caused by its negligence D. Liability for suits alleging negligence on the part of its employees
B
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
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 comply with laws and regulations B. A duty to pay covered pollution cost C. A duty to renew the policy D. A duty to insure all vehicles owned by the named insured
B
In which one of the following ways does process mining differs from other data analysis techniques used by insurers? Select one: A. It looks only at improving the customer experience. B. It looks at the entire process rather than one specific area. C. It is used primarily to detect fraud. D. It relies on social media to do its analysis.
B
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
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
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. Written material that was known to be false C. Breach of an implied warranty D. Willful violation of a penal statute
B
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. Products. D. Professional.
B
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
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. Defend the insured against any suit seeking such damages. C. Provide coverage for liability assumed under contract. D. Pay for medical expenses such as ambulance, hospital and professional nursing care.
B
By automatically including basic coverages for all insureds, the businessowners policy (BOP) helps the insurer Select one: A. Collect additional premium. B. Cover complex loss exposures. C. Reduce adverse selection. D. Eliminate the underwriting process.
C
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 car dealership that also does repairs C. A heating and air-conditioning contractor D. A trucking company that transports produce
C
Umbrella liability insurance Select one: A. Limits may not exceed the limits provided by other liability insurance coverages. 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. Is an all-risk coverage for property damage.
C
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. Theft of clothing items in their store. B. Lightning damage to the computer system used for internet sales. C. Loss or damage caused by computer viruses. D. Fire damage to clothing items currently listed for sale online.
C
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. Partners C. Stockholders D. Spouses of the partners
C
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 personal property. B. Damage to tangible property. C. Errors and omissions liability. D. Damage to intangible property.
D
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 is located in an office building. B. It has seating for 15 people. C. It does some cooking on premises. D. It sells beer and wine.
D
Joe Motors, which services automobiles, wants to maintain the goodwill of its customers. This is best accomplished by Select one: A. Raising liability limits under its business auto insurance. B. Purchasing garage liability insurance. C. Lowering the physical damage deductible under its business auto insurance. D. Purchasing garagekeepers insurance.
D
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. Injuries to MMC's full-time ship captains are likely to be covered under state workers compensation laws. B. Temporary employees are considered employees of MMC rather than employees of the firm supplying them to MMC. C. The independent contractors are automatically employees under common law. D. Many states workers compensation statutes exclude casual labor (temporary employees).
D
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. Actual Cash Value option B. Inflation Guard option C. Replacement Cost option D. Agreed Value option
D
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. Fidelity bond B. Commercial General Liability Crime Form C. Standard Form number 381 D. Financial institution bond
D
Which one of the following is the first step in the enterprise risk management (ERM) process? Select one: A. Analyze risks B. Identify risks C. Monitor and assure D. Scan the environment
D
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. Property taxes D. Costs to move to a temporary location
D
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. Insurers are seeking assistance from reinsurers. B. Underwriters are spending less time cultivating relationships and trust with insureds. C. Underwriters are spending more time collecting and evaluating data. D. More insurers are turning to automated systems.
D
