Simulated Exam
A company owns land that is used as a softball diamond and recreational park for hosting employee picnics. Once a year the company also allows a non-profit organization to hold a softball game on these premises. During this year's softball game, the director of the non-profit was injured when a softball hit him in the head. He asked the company that owns the land to pay for his trip to the emergency room. The company's unendorsed Commercial General Liability policy Select one: A. Does not cover the director's injuries sustained because they happened during an athletic event. B. Does not cover the director's injuries sustained because of the volunteer exclusion. C. Pays up to the per occurrence liability limit for the director's injuries sustained. D. Pays for the director's injuries sustained up to the Coverage C limit.
A
Danforth Grocery Store specializes in fresh produce and is open 24 hours year-round. The store has contracts with suppliers to deliver produce and foods by 5:00 a.m. daily, so the parking area at the rear of the store is congested from 4:30 a.m. to 5:30 a.m. Customer traffic is heaviest from 7:00 a.m. to 9:00 a.m. and again from 3:00 p.m. to 6:00 p.m. The store has had six slip-and-fall claims from customers in the past year. Danforth Grocery Store is most exposed to which one of the following types of liability loss? Select one: A. Premises liability B. Completed operations liability C. Professional liability D. Automobile liability
A
Devon Distributing purchased smart watches for all their long haul drivers. The devices were monitored from the headquarters so the location of the driver was always known to Devon management. The watches could also send text messages and accept phone calls, so there was constant communication. This allowed Devon management to respond immediately in the event of an emergency or failure of a vehicle. This network is an example of: Select one: A. The Internet of Things. B. Social media. C. A big data network. D. Artificial intelligence.
A
Entities eligible for financial institution bonds are Select one: A. Not eligible for the ISO Commercial Crime Program. B. Excluded under the Commercial General Liability Crime Form. C. Insured by the Federal Deposit Insurance Corporation (FDIC). D. Required to carry the ISO Commercial Crime Form.
A
John's Hardware store is located along Main Street in a section dedicated to small businesses. One day a new employee was helping a customer fill their propane cylinder when an explosion occurred damaging a number of vehicles, injuring the customer and the new employee, and damaging the adjoining business. John's employee was found to be at fault for the explosion. Which one of the following would be covered under John's Coverage A of commercial general liability (CGL) policy? Select one: A. The injury to John's customer B. The burns suffered by John's new employee C. The slander suit falsely accusing the customer of manipulating the propane cylinder before John's employee attempted to fill it. D. The property damage to John's Hardware Store
A
Joshua owns a mid-sized contracting company and was considering a job on a multi-million dollar project. Due to the size of the project, Joshua had difficulty determining the maximum possible loss. Considering the size of the project, Joshua should do which one of the following? Select one: A. Purchase excess limits provided by an excess or umbrella liability policy. B. Implement a liability deductible. C. Consider separate premises and product liability policies. D. Pay for extensive loss control resources to avoid hazardous losses while on the job.
A
Sam is a risk manager and is reviewing his insurance program and coverage options with his insurance broker. Because of fluctuations in sales due to seasonal marketing promotions, the insurance broker recommends adding Inflation Guard optional coverage to Sam's Building and Personal Property Coverage Form (BPP). If Sam adds Inflation Guard as an optional coverage which one of the following is true? Select one: A. It automatically increases the limit of insurance by the percentage of annual increase shown in the declarations. B. It is automatically added whenever the Agreed Value optional coverage is added. C. It is available only on business personal property. D. It leaves policy limits unchanged while increasing the annual premium by the rate of inflation.
A
The Malvern Company is a small business insured under a businessowners policy (BOP) for both building and business personal property. Which one of the following would be covered under the definition of a building under The Malvern Company's BOP? Select one: A. Air conditioning equipment attached to the building B. Product manufactured by Malvern Company C. The land that the building sits on D. The fence that surrounds the building
A
Which one of the following is an example of intangible property exposed to theft resulting from a cyber attack? Select one: A. Trade secrets B. Computer software C. Computer hardware D. Money and securities
A
Which one of the following policies would respond to a furnace explosion? Select one: A. Commercial property policy B. Businessowners policy C. Equipment breakdown policy D. Office equipment and systems policy
A
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. All executive officers of an LLC B. Employees C. Spouses of the partners D. Legal representative of the insured
A
A carrier is prevented from delivering cargo aboard its ship due to an accident that occurred while at sea. One of the losses the carrier may face is loss of freight. Loss of freight refers to which one of the following? Select one: A. A penalty the carrier pays the shipper for nondelivery. B. The compensation the carrier receives for transporting cargo. C. The liability for loss or damage to the cargo entrusted to it. D. The cost of disposing of undeliverable goods.
B
A private company posted a video on the internet introducing a new product. The music used in the video was from a copyrighted song. When the company sought coverage under Part B of their Commercial General Liability (CGL) Coverage Form after a claim was filed against them for damages, coverage will most likely be excluded based on which one of the following exclusions? Select one: A. Insureds in media and Internet-type businesses exclusion B. Coverage for infringement of copyright, patent, trademarks, or trade secret are excluded unless it occurs in an advertisement exclusion C. Unauthorized use of another's name or product in a chat room exclusion D. Knowing violation of rights of another exclusion
B
An animal damaged the interior of an insured's automobile while it was parked with the windows down. Which one of the following types of physical damage coverage under the Business Auto Coverage Form (BACF) would cover this loss? Select one: A. Towing and labor B. Comprehensive C. Collision D. Specified perils
B
An intangible asset resulting from a collection of perceptions and opinions, past and present, about an organization that resides in the consciousness of its stakeholders is known as an organization's Select one: A. Intellectual property. B. Reputation. C. Code of ethics. D. Social responsibility.
B
Ava is Regional Manager for Goshen Mutual. She is looking over the past auto losses for Disposal Inc. She is tracking the experience of their drivers, the location of accidents, and the severity of the injury to their employees and the public. She is trying to determine the frequency and severity of the auto exposure for Disposal and to use the future models to suggest where Disposal allocates their loss prevention resources. Which one of the following forms of analysis is Ava using to help Disposal address their auto exposure? Select one: A. Data Mining B. Predictive Modeling C. Internet of Things D. Smart products
B
Ivan is a commercial insurance producer looking to expand his book of business. He is researching local businesses trying to determine which businesses might be eligible for the businessowners policy (BOP) and which would not be eligible. Which one of the following businesses would be ineligible for BOP coverage? Select one: A. Burt's Shoe Shop B. Jilian's Amusement Park C. Wanda's Homemade Donut Shop D. McMister Windows & Doors
B
Jones Retail has a Business Income (and Extra Expense) Coverage Form with a $100,000 limit and a 50 percent coinsurance clause. At the time of a $40,000 covered business income loss, Jones estimates its net income plus all operating expenses (minus certain deductible items) for the one-year policy period to be $400,000. How much will the insurer pay? Select one: A. $10,000 B. $20,000 C. $30,000 D. $40,000
B
Marlene is a producer for East Goshen Mutual. She recently met with the owners of Sugartown Farms to try and determine if they are eligible for the ISO businessowners policy (BOP). Which one of the following facts about Sugartown Farms would prevent it from being eligible for the BOP? Select one: A. Sugartown Farms has 3 rooms available as rental units on the property. B. Sugartown Farms has a restaurant with a bar for local patrons. C. Sugartown Farms is a three-story structure. D. Sugartown Farms has a total floor area of 4000 square feet.
B
Once a risk manager has started the risk management process and has completed a scan of the environment, which one of the following is the next step in the enterprise risk management (ERM) process? Select one: A. Scan the environment B. Identify risks C. Analyze risks D. Monitor and assure
B
Sandy owns a small retail store. Sandy's store is covered under a businessowners policy (BOP) with a $500,000 limit of insurance for its business personal property and a $1,000 deductible. Sandy did not purchase any optional coverages. A fire broke out in a neighboring store, and spread to Sandy's store. Sandy claimed the following damages: Description Amount Cash in a money drawer $5,000 Damage to the building $50,000 Damage to a computer and printer in the office area $15,000 Damage to a personalized sign attached to the building $1,000 How much will the BOP insurer pay for this loss? Select one: A. $50,000 B. $65,000 C. $66,500 D. $71,500
B
The Paoli Power Shop has its building and business personal property insured under a businessowners policy (BOP). Torrential rainstorms caused a nearby river to overflow its banks and flood the area. The flood caused significant water damage to both the building and personal property. Which one of the following would be true under the BOP? Select one: A. Upgrades following the flood would be covered B. The water damage would not be covered C. Property would be covered but personal property would not D. The BOP policy would cover all losses from the flood
B
The Property Custody Company (PCC) stores customer property for a fee. PCC is insured under a bailees' customers policy. One day, due to the negligence of an unrelated party and not due to any negligence of PCC, property owned by one of PCC's customers is destroyed while in PCC's custody. Which one of the following describes how PCC's insurer will handle the claim for the damage to PCC's customer's property under PCC's bailees' customers policy? Select one: A. It will pay the claim because PCC is legally liable for damage to customers' property whatever the cause. B. It will pay the claim because PCC's policy covers damage to customers' goods in its possession regardless of negligence. C. It will deny the claim because PCC was not negligent. D. It will deny the claim because damage to the property of PCC's customers is not covered.
B
The insured is a sole proprietor who owns a business auto insured by a Business Auto Coverage Form with a personal injury protection (PIP) endorsement. While driving the car, she was in an accident in which the following losses were incurred: $2,000 housekeeper for one month $3,000 physical therapy and rehabilitation $4,000 damage to the covered auto $10,000 hospital bills $20,000 pain and suffering to the other driver Assuming adequate limits and that no other insurance policies apply, how much can she recover pursuant to the PIP endorsement? Select one: A. $10,000 B. $15,000 C. $19,000 D. $39,000
B
There can be adverse financial consequences following the loss of or damage to property including a reduction in property value. Which one of the following statements is correct with respect to a reduction in value? Select one: A. If a computer is lost or stolen, its decline in value is measured as its replacement cost minus its salvage value. B. A rare glass statute that is repaired after being damaged is likely to have declined in value. C. For insurance purposes, the dollar amount of a reduction in value is the same regardless of the valuation measure used. D. When property is lost or destroyed, the limit of insurance is deemed to be the amount of the reduction in value.
B
Which one of the following causes of loss is covered by the commercial property policy Causes of Loss—Broad Form but not the Basic Form? Select one: A. Windstorm or hail B. Falling objects C. Lightning D. Aircraft or vehicles
B
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 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. B. 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. C. When a new store opens down the street, the insured submits a false story to the newspaper stating that the store increases its prices before putting items on sale. The insured is sued for the false statements. D. An insured is sued for damaging a competitor's software and causing the competitor to lose business. The competitor submits a claim for his loss of business.
B
Charlene's Clothing is a retail store selling expensive women's clothing. It is insured under an unendorsed Commercial General Liability (CGL) Coverage Form. One day an employee suspects that a customer is about to shoplift an expensive handbag, so she grabs the customer and detains her until the police arrive. The customer files a suit against Charlene's for humiliation and minor bruising. This is an example of which one of the following CGL loss exposures? Select one: A. Premises and operations B. Medical payments C. Personal and advertising injury D. Products and completed operations
C
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 of overnight air shipment of needed repair parts B. Overtime wages to employees C. Insurance premiums D. Cost to rent temporary office space
C
In order for an insurer to be obligated to pay damages under a businessowners policy (BOP) for a liability claim three conditions must be met. All of the following are conditions for a liability claim under the BOP, EXCEPT: Select one: A. The policy must apply to the occurrence B. The insured must be legally obligated to pay the claim C. The insured must have known about the incident before the policy went into effect D. The damages must result from bodily injury or property damage or personal and advertising injury
C
Lawn Chemical Company applies fertilizer and weed killer to lawns and shrubs. Which one of the following is a liability loss exposure to which Lawn Chemical Company likely has a significant exposure? Select one: A. Vicarious liability B. Premises liability C. Completed operations liability D. Professional liability
C
Smith Stores had net income of $5,000 per month in the 12 months before a covered business income loss. The store is unable to reopen for three months. During that time, continuing expenses totaled $6,000. What is the amount of Smith Stores' business income loss? Select one: A. $6,000 B. $15,000 C. $21,000 D. $66,000
C
Sugartown Industries insures its building and personal property under the commercial property coverage part of a commercial package policy (CPP). Following a lightning storm, a portion of the building was damaged from a small fire. The operations 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 operations manager with information on the covered perils? Select one: A. Building and personal property coverage form B. Commercial property declarations C. Causes of loss form D. Commercial property conditions
C
The Jackson Motor Company (JMC) is a commercial trucking company that provides shipment services for a number of manufacturers throughout the US. It has a good safety record, but believes that it needs insurance to protect it from its possible legal liability for damage to the cargo of its customers during shipment by its vehicles. Which one of the following inland marine insurance policies is most appropriate for JMC? Select one: A. Annual transit policy B. Contractor's equipment floater C. Motor truck cargo liability policy D. Trip transit policy
C
The Random Bookstore (Random) is covered by an unendorsed Commercial General Liability (CGL) Coverage Form. A customer in the store tripped over her untied shoelace and fell, breaking her right arm. Which one of the following is a reason Random's insurer might refuse to pay any damages under Random's CGL policy? Select one: A. The definition of bodily injury in the CGL policy does not include this type of injury. B. Premises-type claims are excluded by Random's basic CGL policy. C. The insured must be legally obligated before the insurer has the duty of paying. D. This is not an occurrence as defined by Random's CGL policy.
C
The claims manager for Providence Mall knows the longer liability claims are open, the higher the demand and claim cost. The manager wants to use data analytics to predict the final settlement amount of bodily injury claims that are open over two years. The manager would also like to examine how much the amount varies based on the different areas in the mall and which stores have claims from injury occurring within the store. Which one of the following methods would help predict the cost of the claims with those attributes? Select one: A. Data mining B. Process mining C. Cluster analysis D. Fraud analysis
C
To what extent are extra expenses covered under the ISO Business Income Coverage (without Extra Expense) Coverage Form? Select one: A. To the full extent of the expenses incurred by the insured B. On an actual cash value basis C. Only to the extent that they actually reduce the business income loss D. On a replacement cost basis as long as the coinsurance requirement is met
C
Under the Commercial General Liability (CGL) Coverage Form, medical payments coverage applies to which one of the following situations? Select one: A. Frank was injured working as a security guard in a security booth located on the premises of the named insured. B. Kevin fractured his elbow while playing in a volleyball contest against another local company. C. Sara is a volunteer helping the named insured clean up their grounds. D. Tamara is hired by the named insured to do work for a tenant of the insured.
C
Which one of the following best describes an advantage to insurers of nonfiled classes compared with filed classes of inland marine insurance? Select one: A. Nonfiled classes are characterized by a relatively large number of potential insureds. B. Nonfiled classes are the same in all states. C. Nonfiled classes allow for the customization of policy provisions and rates for a small number of individual insureds. D. Nonfiled classes are characterized by relatively homogeneous loss exposures.
C
Which one of the following exposures would be best suited for businessowners policy (BOP)? Select one: A. An insured is concerned about professional liability claims due to their engineers completing blueprints to clients for building permits. B. An insured's workers compensation losses have been on the rise for the last three years and a policy is needed to increase loss prevention awareness. C. An insured is considering upgrades to the furniture in the lobby of his business and making computers with wi-fi available to customers while they wait. D. The insured has an auto dealership and is considering adding a car wash to improve goodwill in the area.
C
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. Continuing property taxes for corporate headquarters B. Normal operating expenses C. Costs to move office equipment to a substitute location D. Expense to repair the damaged property
C
Alice has the use of a company car insured with a Business Auto Coverage Form with one endorsement for uninsured motorists (UM) coverage. Alice was in an accident while driving the car and sustained the following losses: $ 200 - housekeeper for one day $ 300 - physical therapy and rehabilitation $ 400 - lost wages $1,000 - hospital bills $2,000 - doctor's bill The other driver was at fault but had no insurance. Assuming that no other insurance applies, how much can Alice collect under her employer's UM coverage? Select one: A. $1,000 B. $1,700 C. $1,900 D. $3,900
D
An injured customer sued the ABC General Store for damages resulting from bodily injury sustained when the customer slipped and fell while shopping in the hardware section. The customer suffered a knee and elbow injury. ABC General is insured under a businessowners policy (BOP) with a $500,000 liability and medical expense limit of insurance. The insurer defended ABC General against the suit, but the court awarded the customer $285,000 for his injury and prejudgment interest of $15,000. 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. $320,000
D
Business income insurance covers which one of the following types of losses that could result from a fire? Select one: A. The cost to replace destroyed inventory B. The cost of fighting the fire C. The cost of repairing a building D. The extra expenses for renting a temporary office
D
Considering the claims process, which one of the following data analysis methods begins with data analysis of claims activity logs to identify steps taken for claims and the timing of them? Select one: A. Regression analysis B. Data mining C. Cluster analysis D. Process mining
D
Grace is injured at work, and her job responsibilities are reduced for 30 days, after which time she is permanently restricted by her doctor from lifting greater than 25 pounds. This will eliminate one of her job duties which is reassigned to another employee. Grace has which one of the following types of workers compensation disabilities? Select one: A. Temporary total disability B. Permanent total disability C. Temporary partial disability D. Permanent partial disability
D
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. Vandalism B. Lawful prosecution C. Breach of contract D. Wrongful eviction
D
Owen is a producer tasked with helping XYZ Products identify their supply chain risk. Owen suggested XYZ create a flowchart detailing the movement of their products. The purpose of creating a flowchart to identify supply chain risk would be which one of the following? Select one: A. Flowcharts help locate the lowest price for products. B. Flowcharts will set the strategic objective for a company. C. Flowcharts are most important for addressing shortcomings in an insured's internal environment. D. Looking at the process visually can help the client develop appropriate risk management techniques, such as finding an alternative supplier.
D
The Workers Compensation and Employers Liability Insurance Policy provides that the insured is responsible to reimburse the insurer in which one of the following situations? Select one: A. Any benefits paid by the insurer even though the insured has failed to comply with policy conditions. B. Benefits paid to employees with pre-existing injuries. C. A liability suit was filed against the insured for occupational injuries to employees. D. Penalties levied under a workers compensation law against the insured for noncompliance with health and safety laws and regulations.
D
With advancements in technology, underwriting data is becoming increasingly abundant and more reliable. Which one of the following is an example of how technological advancements are changing underwriting? Select one: A. ABC Underwriters are spending less time cultivating relationships and trust with insureds. B. Liam works for ABC Underwriters and scheduled a meeting with a reinsurer to discuss additional limits for his accounts. C. Bethany works for ABC Underwriters and dedicates more time each day to collecting and evaluating her underwriting applications. D. Olivia has been asked to spend the next week analyzing unique risks presented by specialized accounts.
D
