Risk Management and Insurance

A bond that guarantees that the person responsible for the property of another will faithfully exercise his or her duties is called a A) fiduciary bond. B) performance bond. C) court bond. D) contract bond.

A

A provision included in a claims-made commercial general liability policy provides coverage for claims filed after the policy has expired. This provision is called a(n) A) extended reporting period provision. B) agreed amount endorsement. C) retroactive date provision. D) per-occurrence limit clause.

A

All of the following are considered to be instrumentalities of transportation and communication for purposes of inland marine insurance EXCEPT A) trains. B) tunnels. C) transmission lines. D) television towers.

A

All of the following statements about business income insurance are true EXCEPT A) Business income is defined as total sales that would have been made if the loss had not occurred. B) Payroll is considered a continuing normal operating expense. C) Business income insurance does not cover the physical damage caused by a peril which created the interruption in business. D) The business income coverage form can be purchased with a coinsurance requirement.

A

An employee of Nelson Manufacturing was injured by a defective machine Nelson purchased from Clark Corporation. The employee's tort action against Clark was successful. Clark, in turn, sued Nelson, alleging that Nelson failed to provide proper operating instructions to the employee. This claim (Clark vs. Nelson) is covered under Part Two of Nelson's worker compensation and employer liability policy. Such claims are called A) third-party over cases. B) absolute liability cases. C) joint-and-several liability cases. D) mass tort cases.

A

Appliance World sells small appliances. The store purchased an ISO crime coverage policy. Last night, someone used a crowbar to pry open a locked door, leaving marks of forced entry. The thief took a number of appliances. The crime that occurred in this case is called A) burglary. B) shoplifting. C) larceny. D) robbery.

A

David Florrell started a public accounting firm. David is concerned that accountants on his staff may give incorrect accounting advice, and the accounting firm may be sued. What type of liability insurance should David purchase to protect against such claims? A) errors and omissions insurance B) directors and officers liability insurance C) general liability insurance D) employers liability insurance

A

In addition to the named insured, all of the following are insureds under the Commercial General Liability Policy EXCEPT A) suppliers of products to the named insured's business. B) the insured's employees while acting within the scope of their employment. C) the manager of the insured's real estate. D) partners of the named insured.

A

In the ISO Commercial Crime Coverage form, theft is defined as the A) unlawful taking of property to the deprivation of the insured. B) unlawful taking of property from the care and custody of a person by someone who has caused or threatens to cause bodily harm or who has committed an unlawful act witnessed by that person. C) unlawful taking of money or securities through the alteration of a negotiable instrument. D) unlawful taking of property from inside the premises by someone who unlawfully enters or leaves the premises as evidenced by marks of forcible entry or exit.

A

Insurer A began to provide crime insurance coverage for JKL Company three months ago. Insurer B provided coverage up until the time Insurer A's coverage became effective. Forty-five days after the effective date of Insurer A's coverage, a loss was discovered that occurred while Insurer B was providing coverage. The loss would have been covered under Insurer A's policy had it been in effect the previous period. Which policy provision in the current Insurer A policy would make Insurer A responsible for this loss? A) loss sustained during prior insurance not issued by us B) termination as to any employee C) extended reporting period D) loss sustained form

A

Inter-Ocean Transfer owns 12 large cargo ships which transport goods. Inter-Ocean Transfer can obtain physical damage insurance on these vessels by purchasing A) hull insurance. B) cargo insurance. C) protection and indemnity insurance. D) freight insurance.

A

John Jones is risk manager of Alpha-2-Omega Company. John wants coverage for 'direct physical loss" ("open perils" coverage) under the business and personal property (BPP) coverage form. Which causes-of-loss form should he select? A) special form B) basic form C) standard form D) broad form

A

Metro City would like a pedestrian bridge constructed across Big Creek. The city will accept bids on the project until a specified date. Bidders must submit a bid bond that guarantees if the bid is accepted, the bidder will sign the construction contract and furnish a bond that guarantees the construction work will be completed according to contract specifications. This second bond the bidder must post is a A) performance bond. B) payment bond. C) maintenance bond. D) completion bond.

A

Smith is Manager of ABC Department Store. Jones, ABC's Security Director, visited Smith to ask some questions. During questioning, Smith admitted that he stole $10,000 in merchandise. He was disciplined, but not fired. The loss was not reported to the insurer that wrote ABC's crime insurance. Six weeks later, Smith was observed on a surveillance camera stealing over $50,000 in jewelry from ABC. ABC immediately reported the loss to its crime insurer. Which ISO crime coverage condition may prevent ABC from collecting for this loss? A) termination as to any employee B) discovery form C) loss sustained form D) loss sustained under prior insurance

A

State X hired Build-Right Construction to build a bridge. State X required that construction be completed within 2 years after the contract was signed. Les Johnson is the president of Build- Right. State X required that Build-Right's promise to perform be guaranteed by a third party. Build-Right purchased a performance bond from Rock Solid Indemnity. The bond requires Rock Solid to be responsible if Build-Right does not have the project completed on time. In this scenario, which party is the obligee? A) State X B) Build-Right Construction C) Les Johnson D) Rock Solid Indemnity

A

The general liability policy covers bodily injury or property damage caused by "an accident, including continuous repeated exposure to substantially the same general harmful conditions." This cause is loss is called a(n) A) occurrence. B) accident. C) event. D) incident.

A

The phrase "general liability" is used to refer to the legal liability of a business arising from all of the following EXCEPT A) employees injured on the job. B) defective products. C) liability assumed by contract. D) completed operations.

A

The purpose of adding garage keepers legal liability coverage to the Garage Coverage Form is to A) eliminate the care, custody, and control exclusion under the policy. B) eliminate the contractual liability exclusion under the policy. C) add workers compensation coverage for persons working in the garage business. D) add comprehensive and collision coverage for vehicles held for sale.

A

There are a number of implied warranties in ocean marine insurance. One implied warranty is that the vessel is properly constructed and maintained, and that it properly equipped for the voyage to be undertaken. This implied warranty is the warranty of A) seaworthiness. B) barratry. C) no deviation from planned course. D) legal purpose.

A

Tracy is a trust officer at a bank. One of her responsibilities is to manage funds that have been set aside for the benefit of minor children. What type of bond guarantees that Tracy will faithfully execute her required duties in this capacity? A) fiduciary bond B) public official bond C) court bond D) performance bond

A

Which of the following forms is used to insure buildings that are under construction? A) builders risk coverage form B) floor plan coverage form C) new construction coverage form D) labor and materials coverage form

A

Which of the following is covered under the building and personal property coverage form? A) the insureds stock and inventory when located inside the insured building B) vehicles owned by the insured C) aircraft and watercraft owned by the insured D) a manufacturing building owned by a key customer or key supplier of the insured.

A

A cashier at Food World Supermarket accepted a phony $100 bill. Which ISO commercial crime coverage is designed to cover such a loss? A) Forgery or Alteration B) Money Orders and Counterfeit Paper Currency C) Inside the Premises—Theft of Money and Securities D) Inside the Premises—Robbery or Safe Burglary of Other Property

B

A customer was injured when a furnace exploded following its faulty installation by a heating and cooling business. For the heating and cooling business, this is an example of A) contingent liability. B) completed operations liability. C) products liability. D) contractual liability.

B

A firm wishing to insure a single shipment of merchandise sent by a common carrier would purchase a(n) A) annual transit policy. B) trip transit policy. C) bailee's liability policy. D) equipment floater.

B

ABC Company purchased an ISO Commercial General Liability Policy. The agent who sold ABC the coverage noted that the coverage trigger in this policy was different from the trigger in the previous policy. The new policy covers only those claims which are first reported during the policy period, provided the event occurred after a retroactive date. This type of policy is known as A) extended reporting coverage. B) claims-made coverage. C) accident only coverage. D) occurrence coverage.

B

Al's Electric Service is an electric contracting company in Metro City. The owner of the company, Al Richards, posted a bond guaranteeing that all work performed by his company will comply with local building codes. This bond is an example of a A) fiduciary bond. B) license and permit bond. C) contract bond. D) judicial bond.

B

All of the following statements about a surety are true EXCEPT A) A surety theoretically expects no losses to occur. B) The principal is the party who agrees to answer for the debt, default, or obligation of another party. C) The surety has the legal right to recover a loss payment from the defaulting principal. D) There are three parties to a surety bond: the principal, the surety, and the obligee.

B

Executives of a Fortune 500 firm blocked an acquisition attempt by a larger company. When the stockholders learned they could have made large profits had the acquisition not been blocked, they filed a lawsuit against the executives of the firm. What type of liability insurance protects the executives of the organization against such suits? A) dram shop liability insurance B) directors and officers liability insurance C) employers liability insurance D) employment related practices liability insurance

B

In a surety arrangement, the party who benefits from the bond if the bonded party fails to perform is the A) principal. B) obligee. C) fidelity. D) surety.

B

In the ISO Commercial Crime Coverage form, robbery is defined as the A) unlawful taking of property to the deprivation of the insured. B) unlawful taking of property from the care and custody of a person by someone who has caused or threatens to cause bodily harm or who has committed an unlawful act witnessed by that person. C) unlawful taking of money or securities through the alteration of a negotiable instrument. D) unlawful taking of property from inside the premises by someone who unlawfully enters or leaves the premises as evidenced by marks of forcible entry or exit.

B

Jack, owner of Jack's Bar and Grill, was robbed while attempting to deposit receipts at his bank's night depository. Jack had purchased an ISO commercial crime coverage form. This loss would be covered under which insuring agreement? A) Inside the Premises—Theft of Money and Securities B) Outside the Premises C) Money Orders and Counterfeit Currency D) Inside the Premises—Robbery or Safe Burglary of Other Property

B

Liability arising out of work performed by independent contractors is referred to as A) contractual liability. B) contingent liability. C) care, custody, and control liability. D) customer's liability.

B

One commercial crime policy condition is "termination as to any employee." This condition terminates crime coverage A) on any employee once he or she is no longer employed by the company. B) on any employee once it is learned that he or she has committed a theft or dishonest act. C) on any employee who does not wish to be covered under the policy. D) on a selected category of employees (e.g. cashiers or clerical employees).

B

One general liability loss exposure develops as a result of a written or oral agreement to assume the legal liability of another party. A lease that specifies that the building owner is held harmless for liability arising out of use of the building is an example. This liability loss exposure is A) premises and operations liability. B) contractual liability. C) products and completed operations liability. D) contingent liability.

B

State X hired Build-Right Construction to build a bridge. State X required that construction be completed within 2 years after the contract was signed. Les Johnson is the president of Build- Right. State X required that Build-Right's promise to perform be guaranteed by a third party. Build-Right purchased a performance bond from Rock Solid Indemnity. The bond requires Rock Solid to be responsible if Build-Right does not have the project completed on time. In this scenario, which party is the principal? A) State X B) Build-Right Construction C) Les Johnson D) Rock Solid Indemnity

B

The employees of an industrial heating and cooling company spent four days installing a large gas furnace in a newly-constructed building. While testing the furnace one week later, an explosion occurred, damaging the building. Damage to the building was covered under the heating and cooling company's general liability insurance. When the heating and cooling company also sought reimbursement for the time its employees spent installing the furnace, the insurer denied coverage and noted a specific applicable exclusion. What exclusion denies coverage for such reimbursement? A) damage to the insured's product B) damage to the insured's work C) damage to impaired property D) damage to the insured's reputation.

B

Which of the following is covered under the liability coverage of a business owners policy? A) damage to the insured's property B) bodily injury liability C) automobile liability D) professional liability

B

Which of the following statements about ocean marine insurance is true? A) The coverage is narrow and excludes perils of the sea. B) Hull insurance includes collision liability covering the ship's owner if the ship collides with another ship. C) Protection and indemnity (P&I) insurance covers the shipper of goods for cargo losses. D) A particular average loss is a loss incurred only if a ship is totally lost or destroyed.

B

Which of the following statements about the ISO business owners policy is true? A) The current form is written on a named-perils basis, but an "open-perils" (all risks) endorsement is available. B) It provides business income and extra expense coverage as an additional coverage. C) The policy covers business personal property but does not cover buildings. D) The policy is designed to meet the special needs of large businesses.

B

Which of the following statements describes a Difference in Conditions (DIC) Policy? A) It is a type of commercial umbrella liability policy. B) It is an all-risk policy that covers perils not insured by basic property insurance contracts. C) It is designed to cover indirect losses for which the insured has direct damage coverage. D) It is used to settle disputes when an insured has more than one insurance policy with differing policy provisions.

B

Which of the following statements is true concerning the ISO employment-related practices liability form? A) Coverage is provided without a co-payment provision. B) Legal defense costs are included as part of the policy limit. C) Wrongful termination is excluded from coverage. D) Liability to employees is excluded from coverage.

B

Which of the following types of forms is used to insure fluctuations in business personal property, such as inventory and finished goods? A) accounts receivable coverage form B) a value reporting form C) difference in conditions insurance D) business income insurance

B

A burglar took some blank checks during a break-in at XYZ Company. He was careful to make sure that the theft would be difficult to discover. Three months later, he wrote himself a check for $20,000 and signed the company treasurer's name on the check. After the check was cashed, the loss was discovered. Which commercial crime coverage form would cover this loss? A) Inside the Premises—Theft of Money and Securities B) Money Orders or Counterfeit Currency C) Forgery or Alteration D) Outside the Premises

C

A-1 Electrical Service is an electrical contractor that employs 14 electricians. A-1 faces many loss exposures. One general liability exposure arises out of faulty work that A-1 electricians may perform for customers at their homes or businesses. This liability exposure is known as A) premises and operations liability. B) products liability. C) completed operations liability. D) contingent liability.

C

All of the following are ISO commercial crime coverage exclusions EXCEPT A) dishonest acts committed by a named insured or partner of the named insured. B) indirect loss resulting from covered losses. C) theft committed by an employee of the named insured. D) losses from unauthorized trading in stocks and bonds.

C

All of the following statements about aviation insurance are true EXCEPT A) Physical damage coverage can be written on an "all-risks" basis. B) Liability coverage also applies to bodily injury arising out of the premises where the aircraft is stored. C) Liability coverage applies to liability arising out of a workers compensation law. D) Aviation insurance is a highly-specialized market with relatively few insurers.

C

All of the following statements about inland marine forms are true EXCEPT A) A mail coverage form covers securities in transit by first-class mail, registered or certified mail, or express mail. B) A commercial articles coverage form is used to insure photographic equipment and musical instruments. C) A jewelers block coverage form is used by individuals to insure jewelry limited in coverage by the homeowners form. D) The signs coverage form covers neon, mechanical, and electrical signs.

C

All of the following statements about liability coverage under the business owners policy are true EXCEPT A) Liability arising out of personal injury is covered as part of the insuring agreement. B) Medical payments coverage is provided. C) Employees acting within the scope of their employment are excluded from coverage. D) Coverage is included for the legal costs of defending the insured.

C

Bishop Appliance Store is covered by a commercial crime insurance policy. The policy provides coverage for "Employee Theft" on a blanket basis. When the store owner arrived to open the store for business one morning, he discovered that many small electrical appliances were missing. A surveillance tape showed a company employee had disabled the burglar alarm before leaving work, and had returned to the store later and had taken the appliances. Which of the following statements regarding this loss is true? A) There is no coverage under "Employee Theft" as the loss was property, not money. B) There is no coverage as the employee was not specifically named in the policy. C) There is coverage because "Employee Theft" includes coverage for property. D) There is no coverage as it requires that the employee be caught while committing the theft.

C

Frank's property insurance requires periodic reporting of inventory values. Frank believes he can save money by under-reporting the inventory. Last period, Frank reported $200,000 when the value was really $400,000. Shortly after filing the report, when the value was $500,000, the inventory was destroyed. How much will Frank's insurer pay, assuming no deductible? A) nothing, as underreporting voids coverage B) $200,000 C) $250,000 D) $400,000

C

Graham is a cashier at a convenience store. A customer pulled a gun on him, and said that he would shoot Graham unless he gave him all the money in the cash register. This crime, which is covered under the ISO commercial crime coverage form, is called A) extortion. B) murder. C) robbery. D) burglary.

C

HRC Company purchased an unendorsed ISO Commercial General Liability (CGL) policy. Which of the following claims would be covered under the CGL? A) workers compensation liability B) liability arising from intentional acts C) personal and advertising injury liability D) professional liability

C

Holiday DeCor Company is insured by a commercial general liability policy (CGL). Holiday DeCor rented a storage facility for one month to store some excess inventory. While visiting the storage facility, a Holiday DeCor employee discarded a cigarette. The resulting fire severely damaged the storage facility. Which statement is true regarding coverage of this damage under the CGL? A) There is no coverage as the damage occurred at a rented premises. B) There is no coverage because property damage liability is excluded. C) The damage is covered under the fire legal liability coverage. D) There is no coverage because an employee of Holiday DeCor caused the loss.

C

In the context of a surety agreement, the party who agrees to answer for the debt, default, or obligation of another party is called the A) principal. B) obligee. C) surety. D) fidelity.

C

In the optional replacement cost coverage provision is not selected, how are losses settled under the building and personal property (BPP) coverage form? A) market value B) original purchase price C) actual cash value D) book value

C

One inland marine coverage form is the accounts receivable coverage form. In which of the following cases would the purchaser of this form (the insured) be indemnified through the coverage? A) if the insured cannot pay amounts owed because the purchaser has become insolvent B) if the insured cannot pay amounts owed because the purchaser has suffered an insured physical damage loss C) if the insured cannot collect accounts receivable because of the destruction of records D) if the insured cannot collect accounts receivable because the purchaser extended credit to poor credit risks

C

One of the additional coverages under the building and personal property coverage form is "increased cost of construction." The coverage is payable if A) a skilled artisan is needed to duplicate the construction of the damaged property. B) a labor strike or materials shortage increases construction costs. C) an ordinance or building code increases the cost of construction. D) the materials necessary to rebuild the damaged structure are more expensive than ordinary building materials.

C

One type of commercial property insurance excludes perils which are covered by the basic coverages. Some businesses buy this coverage to fill coverage gaps, including flood and earthquake, and to cover property in other countries. This type of insurance is called A) protection and indemnity insurance. B) building and personal property coverage form. C) difference in conditions insurance. D) builders risk coverage form.

C

Renee is risk manager of XYZ Company. She purchased a Commercial Package Policy for her company and added one of the optional coverages. This option suspends the coinsurance clause and substitutes a new agreement covering any loss in the same proportion that the limit of insurance purchased bears to a value specified in the declarations. This provision is known as A) waiver of inventory coverage. B) inflation guard coverage. C) agreed value coverage. D) replacement cost coverage.

C

Ted Thomas is risk manager of XYZ Company. He is concerned his company might be sued by current or former employees alleging wrongful termination, failure to promote, racial or gender discrimination, or sexual harassment. What type of liability insurance can Ted purchase to cover these types of claims? A) workers compensation insurance B) employer liability insurance C) employment-related practices liability insurance D) directors and officers liability insurance

C

The building and personal property coverage form provides several optional coverages. Under one optional coverage, no deduction is taken for depreciation when settling a covered loss. This optional coverage is called A) extra expense. B) agreed value. C) replacement cost. D) inflation guard.

C

The business income and extra expense coverage form covers loss of business income and continuing normal operating expenses. How is business income (revenue) defined? A) total sales B) total sales less cost of goods sold C) pre-tax net profit D) after-tax net income

C

What is the effect of the optional agreed value provision in the building and personal property coverage form? A) It provides replacement cost coverage. B) It increases insured values along with inflation. C) It suspends the coinsurance clause. D) It reduces the deductible to $50.

C

Which of the following exposures is covered under a Commercial General Liability Policy with no endorsements? A) liability arising out of seepage of pollutants B) employment-related practices liability C) personal injury liability D) aircraft liability

C

Which of the following losses is generally covered under a commercial umbrella policy? A) liability arising out of workers compensation laws B) liability arising out of pollution C) liability arising out of use of a business auto D) the cost of recalling defective products

C

Which of the following statements about the business income coverage form is true? A) Business income is defined as gross earnings before taxes. B) Payroll is excluded unless it is specifically added. C) The form covers loss of business income and extra expenses incurred during restoration. D) The form can be used by a manufacturing operation only.

C

Which of the following statements about various types of surety bonds is true? A) A judicial bond guarantees that a public official will faithfully perform his or her duties for the protection of the public. B) A payment bond guarantees that the bonded person will appear in court. C) A license and permit bond guarantees that the bonded party will comply with all the laws and regulations governing his or her activities. D) A bid bond guarantees that the principal will complete a construction project on time.

C

All of the following are coverage options under the physical damage coverage in the Business Auto Coverage Form EXCEPT A) comprehensive coverage. B) specified causes-of-loss coverage. C) collision coverage. D) property damage liability coverage.

D

All of the following are extensions of coverage under the building and personal property coverage form EXCEPT A) newly acquired or constructed property. B) valuable papers and records. C) personal property temporarily off the premises. D) currency and securities.

D

All of the following statements about the business owners policy are true EXCEPT A) Coverage for business personal property includes coverage for leased personal property which the named insured has a contractual responsibility to insure. B) The amount of insurance on the buildings increases by a stated percentage each year. C) Additional coverages include pollutant cleanup and removal. D) The policy must be written with a deductible of at least $2,000 for property losses.

D

Bay Gallery owns a building a Wharf Street. Bay Gallery purchased a Commercial General Liability Policy with no endorsements. All of the following claims would be covered under the policy EXCEPT A) An artist sued the gallery for slander after an employee of the gallery said the artist's work looks like it was painted by an intoxicated monkey. B) A customer is injured when a painting falls from the wall and strikes the customer. C) A customer is injured after falling on a slippery floor at the gallery. D) An employee of the gallery accidentally started a fire that caused extensive damage to the building.

D

Bernice is an underwriter. She is reviewing a commercial crime coverage application. The coverage will be written using the discovery form. Bernice is concerned that a large undiscovered loss may exist prior to the policy's inception date. Which provision should Bernice add to the policy to protect the insurer against liability for such previous losses? A) extended reporting endorsement B) loss sustained during prior insurance provision C) waiver of inventory provision D) retroactive date endorsement

D

In the ISO Commercial Crime Coverage form, safe burglary is defined as the A) unlawful taking of property to the deprivation of the insured. B) unlawful taking of property from the care and custody of a person by someone who has caused or threatens to cause bodily harm or who has committed an unlawful act witnessed by that person. C) unlawful taking of money or securities through the alteration of a negotiable instrument. D) unlawful taking of property from within a locked safe or vault by someone who enters the safe or vault as evidenced by marks of forcible entry upon the exterior.

D

In the context of a surety agreement, the party who agrees to perform certain acts or fulfill certain obligations is called the A) fidelity. B) obligee. C) surety. D) principal.

D

Jennifer was just asked to serve on the Board of an insurance company. Jennifer is concerned that if the company is mismanaged, the policyowners, stockholders, and employees might sue the management team. What type of liability insurance will protect Jennifer from such claims if she accepts a position on the insurance company's Board? A) commercial general liability insurance B) employment-related practices liability insurance C) workers compensation and employer liability insurance D) directors and officers liability insurance

D

Medical malpractice insurance written on a claims-made basis can leave a surgeon vulnerable to malpractice claims if the surgeon retires, changes insurers, or drops coverage. A provision can be added to the claims-made form that protects the surgeon for future claims arising from incidents that occurred while the claims-made policy was in force. This provision is called a(n) A) cut-through endorsement. B) drop-down endorsement. C) agreed amount endorsement. D) extended reporting period endorsement.

D

National Bank believed it had been properly authorized to transfer $250,000 to the off-shore account of one of its corporate customers. The authorization was fraudulent, however, and the transferred funds were stolen. Under which commercial crime coverage insuring agreement would such a loss be covered? A) Money Orders and Counterfeit Currency B) Forgery or Alteration C) Outside the Premises D) Funds Transfer Fraud

D

One physical damage coverage alternative under the Business Auto Policy provides coverage for losses caused by certain named perils, such as fire, lightning, or explosion; theft; windstorm, hail or earthquake; flood; vandalism or mischief; or the sinking, burning, collision or derailment of any conveyance transporting the covered auto. This physical damage coverage alternative is A) collision coverage. B) garage coverage. C) comprehensive coverage. D) specified causes-of-loss coverage.

D

Rick is risk manager of Herald News, a daily newspaper in a competitive market. Rick wants to make sure that if Herald's printing facility is damaged or destroyed, the paper will continue to be published. What type of insurance can Rick purchase to cover the added cost of continuing to print the paper after a physical damage loss has occurred? A) contingent business income coverage B) product liability insurance C) business income from dependent properties coverage D) extra expense coverage

D

Some directors and officers (D&O) liability policies include an insuring agreement that covers the legal liability of a corporation arising out of the acts of directors and officers. This coverage for the organization is called A) blanket coverage. B) corporate reimbursement coverage. C) personal liability of directors and officers coverage. D) entity coverage.

D

State X hired Build-Right Construction to build a bridge. State X required that construction be completed within 2 years after the contract was signed. Les Johnson is the president of Build- Right. State X required that Build-Right's promise to perform be guaranteed by a third party. Build-Right purchased a performance bond from Rock Solid Indemnity. The bond requires Rock Solid to be responsible if Build-Right does not have the project completed on time. In this scenario, which party is the surety? A) State X B) Build-Right Construction C) Les Johnson D) Rock Solid Indemnity

D

Tom opened a store in a mall. His store is located between a theater and a department store. Tom counts on the theater and department store to generate walk-in business at his store. While his store has been successful, Tom knows that if either or both of the other businesses closed, his store would suffer an economic loss. What type of dependent property situation is illustrated in this scenario? A) contributing location B) recipient location C) manufacturing location D) leader location

D

Which ocean marine coverage provides comprehensive liability insurance for property damage caused by the ship to piers and docks, damage to the ship's cargo, and injury to the passengers or crew? A) collision liability clause B) hull insurance C) freight insurance D) protection and indemnity insurance

D

Which of the following perils is not included in the causes-of-loss basic form of the ISO commercial package policy? A) fire B) lightning C) explosion D) flood

D

Which of the following statements about physicians, surgeons, and dentists liability insurance is true? A) Liability coverage is restricted to accidental acts. B) The policy eliminates the need for medical practitioners to purchase general liability insurance. C) The insurer must obtain the consent of medical practitioners before the insurer can settle claims. D) The policy covers the physician for the negligent acts of an employee.

D

Which of the following statements about the commercial crime insurance policy is true? A) Loss from the unauthorized disclosure of confidential information is covered. B) Theft committed by the named insured or his/her partners is covered. C) Inventory shortages are only covered if proof of loss depends on an inventory computation or on a profit and loss computation. D) Indirect losses, such as loss of profits after a business is closed because of a burglary, are excluded.

D

XYZ Insurance Company markets a wide range of coverages. One type of coverage provides monetary compensation if a bonded party fails to perform certain acts. This coverage is called A) property insurance. B) liability insurance. C) a fidelity bond. D) a surety bond.

D

XYZ, Inc. would suffer serious financial consequences if either of its two major customers were shut down and could not purchase XYZ products. Which of the following types of consequential loss protection would provide protection against this exposure? A) leasehold interest B) extra expense C) marine insurance D) business income from dependent properties

D