AU 61 - 2020

Village Manor is a one-story 70-bed long-term care nursing and personal care facility, with a rehabilitation wing for ill and injured residents of all ages. The building is of fire-resistive construction, fully sprinklered, and meets all current code requirements. Many of its residents are on oxygen. Although Village Manor has a strict non-smoking policy, the staff has occasionally discovered both residents and visitors smoking. Village Manor permits visiting family members to join ambulatory residents for meals in its dining room, and it also offers full laundry service to its residents. A property underwriter is likely to find the greatest fire threat for Village Manor to be Select one: A. A kitchen fire. B. Oxygen tank combustion. C. Malfunctioning equipment. D. Careless smoking.

A. A kitchen fire.

When evaluating a manufacturing occupancy's fuel load, which can be substantial, an underwriter should consider several general categories of items, including the occupancy's inventory. Which one of the following statements is true regarding an underwriter's consideration of inventory as a potential fire hazard for a manufacturing occupancy? Select one: A. A metal fabricator working with magnesium and beryllium is subject to extreme fire and explosion hazards, and its stock inventory and finished product can be highly combustible. B. An underwriter can determine the hazard level of a finished product or commodity by the hazard level of its raw materials. C. Salvage is often a way to significantly minimize the loss value of damage to inventory caused by a fire. D. To minimize extensive damage to paper products, which often provide fuel for fire in addition to being highly susceptible to fire damage, a good sprinkler system is essential.

A. A metal fabricator working with magnesium and beryllium is subject to extreme fire and explosion hazards, and its stock inventory and finished product can be highly combustible.

An insurance policy's valuation method will determine the value of the insured's property in the event of a covered loss. Which one of the following valuation methods factors in depreciation when determining the value of insured property? A. Actual cash value (ACV) B. Functional valuation method C. Selling price valuation method D. Replacement cost

A. Actual cash value (ACV)

One measure of potential loss severity measures the exposure to a single loss and varies by cause of loss. Underwriters often use the expression "within four walls" to explain the concept of A. Amount subject. B. Normal loss expectancy. C. Policy amount. D. Probable maximum loss.

A. Amount subject.

Which one of the following hazards is perhaps the greatest single hazard in a metal-working occupancy? Select one: A. Careless handling of flammable liquids B. Static electricity and friction C. Spontaneous combustion D. Plumbing exposures producing potential water damage

A. Careless handling of flammable liquids

Of the elements commonly used by property underwriters when evaluating property submission, which one of the following is least likely to change? A. Construction B. Nature and quality of the occupancy C. External exposure D. Protection

A. Construction

Underwriter Joe Hess is evaluating a building for insurance coverage. This exposure is a four-story building of ordinary construction. The building is likely to present Joe with all of the following problems, EXCEPT: Select one: A. Difficulty in determining susceptibility to wind damage B. Valuation problems due to the age of the building C. Achieving proper amounts of insurance to value D. Deterioration

A. Difficulty in determining susceptibility to wind damage

A florist in a strip shopping center sustained significant damage from a fire caused by a neighboring pizza shop's deep fryer. The fire spread to the florist before the fire department could arrive. During the underwriting process for the florist's property insurance, this risk would most likely have been considered by the underwriter under which one of the following COPE elements? A. External exposure B. Construction C. Occupancy D. Protection

A. External exposure

Underwriters usually consider which one of the following perils to be the most significant cause of a property loss? A. Fire B. Windstorm C. Vandalism D. Lightning

A. Fire

Which one of the following statements is true regarding fire walls? A. Fire walls must not stop short of the ceiling or floor. B. A vertical extension of a fire wall that extends above a roofline is known as a "fender wall." C. In a masonry or frame building, a fire wall must not extend beyond the roof line. D. A wall must be at least three inches thick and constructed of fire resistive materials to be classified as a fire wall.

A. Fire walls must not stop short of the ceiling or floor.

All of the following are causes of loss to property, EXCEPT: A. Transit B. Earthquake C. Theft D. Windstorm

A. Transit

Fire-resistive construction is one of the six construction classifications. Which one of the following statements is true regarding fire resistive construction? Select one: A. Fire-resistive buildings must have structural components that either resist fire in excess of two hours, or are covered with a noncombustible material such as plaster or gypsum. B. Fire-resistive buildings can contain solid masonry structural components including reinforced concrete, but cannot contain joist systems or hollow masonry block. C. Fire-resistive construction is considered essentially fireproof, because its structural components and building materials can resist a fire's intense heat. D. Fire-resistive construction is the best from a fire underwriting perspective, but is often not the best with regard to preventing damage from other causes of loss.

A. Fire-resistive buildings must have structural components that either resist fire in excess of two hours, or are covered with a noncombustible material such as plaster or gypsum.

Which one the following statements regarding structural strength is true? A. Floors, beams, and joists spread interior load horizontally to vertical load-bearing components. B. Generally, in concrete construction, only walls made of pre-stressed and poured-in-place reinforced noncombustible materials are strong enough to support their load. C. Interior partition walls always bear the load, and columns are decorative rather than load bearing. D. The size and allocated costs of the building dictate the choice between walls and columns for interior load-bearing components.

A. Floors, beams, and joists spread interior load horizontally to vertical load-bearing components.

The term that refers to the expected maximum amount of combustible material in a given area of a building is A. Fuel load. B. Flash rate. C. Firestop. D. Flame spread.

A. Fuel load.

Key construction design characteristics of a building can affect its underwriting desirability. The building's height and shape, the number of fire divisions, and building openings influence the ease with which fire can be controlled and extinguished. Which one of the following is the most serious challenge firefighters face in fighting a fire in a 20-story high-rise building that has adequate risk control protection? Select one: A. Gaining access to the building to fight a fire from the inside B. Evacuating a restaurant on the top floor C. Finding a ladder that is tall enough to reach the upper stories D. Becoming disoriented because many floors may have a similar appearance

A. Gaining access to the building to fight a fire from the inside

Underwriters must know how a contraction of the economy can affect exposures for all of following reasons, EXCEPT: A. If sales decline while production temporarily continues, inventory will rapidly decline. B. If the collection of accounts receivables drops off, cash flow might diminish, creating pressure to contain expenses. C. Contraction of the economy has both physical and financial effects on property loss exposures. D. The probable frequency and severity of loss increases.

A. If sales decline while production temporarily continues, inventory will rapidly decline.

A building owner rents its property to an auto dealership. The property is damaged and temporarily unavailable for a period during which the dealership pays no rent. From the building owner's perspective, this is an example of: A. Lost income. B. A cause of loss. C. A period of restoration. D. An extra expense.

A. Lost income.

Which one of the following has the greatest effect on how different types of construction are classified? Select one: A. Materials used for load-bearing components B. Flame spread of contents C. Fuel load for combustible material D. Structures adjacent to the building

A. Materials used for load-bearing components

Underwriters use several measures to determine potential loss severity. One measure, amount subject, varies with the type of construction used in the building. In one class of construction, exterior walls, floor, and roof of a building are constructed and supported by metal, gypsum, and other material that will not catch fire. This type of construction is known as A. Noncombustible construction. B. Masonry noncombustible construction. C. Fire resistive construction. D. Frame construction

A. Noncombustible construction.

Building openings are a construction design characteristic that underwriters should consider. Openings that pierce fire walls or firestops increase fire loss potential, especially if they are unprotected. The most common cause of these types of unprotected openings is Select one: A. Oversight during building renovations. B. Inappropriate original construction. C. Vertical passageways such as elevators. D. Fire doors with fusible links that are propped open.

A. Oversight during building renovations.

Janine is an underwriter with XYZ Insurance Company. She decided to inspect a building that is included in the application for coverage. Janine noticed that there was a vertical extension of the firewall through the roofline of an adjoining building. This construction feature, which helps to prevent the spread of fire from one division to another, is called a A. Parapet. B. Fire door. C. Flying buttress. D. Joist.

A. Parapet.

Noncombustible interior finishes that are relatively less combustible include all of the following, EXCEPT: Select one: A. Plastic wall coverings B. Wall board coverings C. Plaster D. Gypsum

A. Plastic wall coverings

A property underwriter's financial analysis should assess the current financial condition of a business. Which one of the following is a key element in an insured's ability to fund ongoing operations and finance potential loss? A. Positive and predictable cash flow B. Accounts receivable collections that are received over a long period of time C. The use of accounts receivable to secure debt D. The payment of debt in a timely manner

A. Positive and predictable cash flow

The institutional occupancies category includes all of the following occupancies, EXCEPT: Select one: A. Publishers B. Medical facilities C. Educational facilities D. Hospitals

A. Publishers

From the perspective of the insured, one of the benefits of obtaining a package policy is that package policies A. Reduce gaps and overlaps in coverage. B. Eliminate the need for coinsurance. C. Provide blanket coverage for all insured exposures. D. Cover all of the insured loss exposures under one policy.

A. Reduce gaps and overlaps in coverage.

Load-bearing components of a building prevent its collapse. Bill, a property underwriter, is reviewing an application for a convention center. The convention center is a fire-resistive structure with load-bearing exterior walls that enclose the building and support its weight and that of its contents. Bill is most likely to A. Request confirmation from the insured that the building contains columns to provide additional vertical support of its weight. B. Provide a quotation based on the application provided, because the building's load-bearing exterior walls are considered adequate for its support. C. Request confirmation from the insured that the building contains beams and joists to spread the building's weight horizontally. D. Request confirmation from the insured that the building's floors and walls are reinforced with structural steel to support its weight.

A. Request confirmation from the insured that the building contains columns to provide additional vertical support of its weight.

Robert, an underwriter, is reviewing a commercial property submission for a large real estate holding company. The company has a large portfolio of properties in areas prone to wind and flood damage, and Robert is concerned about the account's loss experience. Which one of the following sources will Robert most likely look to for this information? Select one: A. Risk control survey and report B. Insurance advisory organization C. Building codes D. Application

A. Risk control survey and report

An underwriter who is concerned about fire spreading due to the combustibility of interior finish materials, as well as the risk of toxic smoke, is most likely to find which one of the following design features favorable? Select one: A. Small, narrow windows spaced well apart B. Large windows that can be broken for ventilation by firefighters C. Heavy draperies of flame-retardant fabric and high quality wallpaper D. Solid mahogany furniture finished with varnish for durability

A. Small, narrow windows spaced well apart

The characteristics of interior finishes that are most relevant to fire problems include their ability to do all of the following, EXCEPT: A. Spontaneously ignite B. Contribute fuel to the fire C. Spread fire D. Emit smoke and noxious gases when burning

A. Spontaneously ignite

When evaluating a submission for a building more than 20 years old, some underwriters request a risk control inspection to verify the condition of the key elements of the building. Which one of the following is most likely what an underwriter wants to verify, even with an older building that has been adequately maintained? A. That the roof shingles and surfaces have been replaced within the last twenty to thirty years B. That the heating, cooling and electrical systems are not obsolete C. That there are no unprotected openings in vertical or horizontal firestops D. That the electrical wiring is is adequate for the occupancy

A. That the roof shingles and surfaces have been replaced within the last twenty to thirty years

All of the following are components of a property loss exposure, EXCEPT: A. The insurability of the property B. The causes of loss C. The financial consequences of a loss D. The type of property exposed to loss

A. The insurability of the property

Verifying the values of property exposed to a loss is an essential part of commercial property underwriting. For example, if the property values shown on a commercial property submission are higher than the property's actual value, then A. The insured will pay for unnecessary coverage. B. The insurer will not receive sufficient premium. C. The insurer will have to cancel the policy. D. The insured will have to retain most of its losses.

A. The insured will pay for unnecessary coverage.

An insured who owns a large business is comparing the different types of commercial insurance policies. The insured would likely choose a Commercial Package Policy because it will provide A. The option to add lines of insurance for all coverages that are needed. B. Automatic coverage for equipment breakdown at no additional premium. C. An option for all coverages in one policy at an economical premium. D. Coverage enhancements that are not included in standard forms.

A. The option to add lines of insurance for all coverages that are needed.

Large horizontal structures present a different type of problem than that present in a high-rise building. The solution to large horizontal area fire problems is A. The use of fire divisions. B. Vertical integrity. C. The use of flame retardant materials. D. Horizontal integrity.

A. The use of fire divisions.

Under NFPA Standard No. 251, Standard Methods of Tests of Fire Endurance of Building Construction and Materials, structural elements of a building are exposed to fire in a carefully controlled environment to evaluate and classify their fire-resistance capabilities. The fire resistance rating obtained from this testing is a measure of the A. Time that the materials tested can survive with their structural integrity intact. B. Time that the materials tested can survive a fire unscathed. C. Degree of damage in terms of deformation, flaking, cracking, and smoke generated. D. Degree of heat temperature that will cause the materials to combust.

A. Time that the materials tested can survive with their structural integrity intact.

Which one of the following is a reason that an insurance organization might develop their own, non-standard forms? A. To differentiate their product from those of their competitors. B. To provide coverage consistent with ISO forms. C. To write a type of coverage for which there are standard forms. D. To differentiate between mono-line and multi-line policies.

A. To differentiate their product from those of their competitors.

Which one of the following is true regarding underwriting indivisible combination policies? A. Underwriters have little flexibility regarding pricing and coverage. B. The underwriting process is longer because indivisible combination policies are more susceptible to adverse selection. C. Underwriters typically only issue indivisible combination policies to larger insureds. D. The underwriting is the same as if separate coverages were requested.

A. Underwriters have little flexibility regarding pricing and coverage.

Which one of the following is true about nonstandard combination policies? A. Underwriters have maximum flexibility to eliminate minimum coverages and price policies. B. Coverage is offered on an all-or-nothing basis for a single, indivisible premium. C. Nonstandard combination policies are typically written for small insureds that need package policies. D. Nonstandard combination policies use minimum coverage requirements to limit adverse selection.

A. Underwriters have maximum flexibility to eliminate minimum coverages and price policies.

Rosa is working with an architect to design a new building for her law firm. They initially discussed frame construction; however, Rosa learned from her insurance agent that frame construction is less desirable to property underwriters than joisted masonry. Therefore, Rosa has asked her architect how they might upgrade the construction to joisted masonry, without drastic changes to the plans or excessive expense. Which one of the following changes is the architect most likely to recommend to Rosa? A. Use concrete self-supporting exterior walls over the wood-framed structure. B. Fasten a steel or aluminum sheet metal covering to the wood-framed structure. C. Apply a brick or stone veneer, of at least two to six inches thick, to the external walls. D. Use composition boards in place of wood for the walls and floor.

A. Use concrete self-supporting exterior walls over the wood-framed structure.

Self-service operations such as laundries and gas stations represent a significant percentage of service industry occupancies. Although self-service equipment is designed for easy operation, an underwriter might find such a business unacceptable if a trained attendant is not on hand, due to the risk of Select one: A. Vandalism. B. Theft. C. Misuse of equipment. D. Defective equipment.

A. Vandalism.

Many institutional occupancies present unique occupancy hazards, as well as obstacles to fighting fires and controlling losses. Another prime underwriting concern is that older buildings are common among institutional occupancies. When analyzing the hazards associated with institutional occupancies, an underwriter should evaluate whether operations conform to the requirements established by the National Fire Protection Association's NFPA 51B with respect to Select one: A. Welding. B. Fuel load. C. Cooking facilities. D. Oxygen use.

A. Welding.

Fire doors can protect building openings that can compromise the integrity of a fire division. They are classified by the National Fire Protection Association (NFPA) based on their ability to resist fire. To be most effective, a fire door in a fire wall must be capable of Select one: A. Withstanding the same fire as the wall itself. B. Opening automatically in the event of a fire, for easy exit by occupants to protect life safety. C. Being propped open so that firefighters have unrestricted access to all parts of the building. D. Withstanding fire for at least one hour.

A. Withstanding the same fire as the wall itself.

Mia is underwriting insurance for Weyville High School. The application shows that the high school facility is a two-story structure with a large cafeteria that uses electrical cooking appliances; a gymnasium; an auditorium for school plays, student assemblies and parent meetings; an art room; and fully equipped science laboratories. The school offers a number of extra-curricular activities and clubs, including art; the sports of basketball, football, lacrosse, baseball and soccer; drama and performing arts; photography; culinary arts; band and choir. Mia requests a risk control site visit in order to properly assess the account risk. Which one of the following areas of Weyville High School is Mia most likely to specifically remind her risk control representative to address? Select one: A. Electrical equipment and wiring B. Cafeteria C. Culinary arts and science rooms D. Auditorium

Auditorium

High-rise buildings present unique problems when their height restricts the capability of the local fire service to fight fires from outside. This is important to underwriters because delays to firefighters getting inside to attack a fire could increase property damage and pose a serious threat of bodily injury to firefighters and building occupants. According to the National Fire Protection Association (NFPA), any structure is considered a high-rise if it is taller than A. 50 feet. B. 75 feet. C. 100 feet. D. 150 feet.

B. 75 feet.

Jenna, an underwriter, has a number of submissions on her desk for review, all of which are for buildings that are more than 20 years old. Which one of the following accounts is Jenna most likely to find desirable with respect to its building age? A. A seven-story state-funded not-for-profit nursing home that was properly constructed of masonry noncombustible materials with a sloped shingled roof. Finances are often tight; however, it has maintained the building and has implemented upgrades to meet local code requirements. B. A 20-story suburban residential condominium building in a cold climate that was properly constructed of joisted masonry materials. The building has been properly maintained and meets local building codes. The building has a sloped shingled roof. C. A two-story office building that was originally two side-by-side residential houses that were combined to form a single building for the intended office occupancy. Renovations were completed, which included updating the heating, ventilation, plumbing, electrical and fire protection systems. D. A city hall building in a warm climate that was properly constructed of fire-resistive materials, and has been well-maintained. The building has a flat concrete roof. A subway line runs under the building. The building's heating, cooling, electrical and fire protection systems have been upgraded periodically to keep them up to code.

B. A 20-story suburban residential condominium building in a cold climate that was properly constructed of joisted masonry materials. The building has been properly maintained and meets local building codes. The building has a sloped shingled roof.

Which one of the following statements is true? Select one: A. Use of a structure will not materially affect aging relative to other buildings of similar construction. B. A frame structure will normally show its age faster than a joisted masonry structure. C. A fire resistive structure will normally show its age faster than a frame structure. D. A joisted masonry structure will normally show its age faster than a frame structure.

B. A frame structure will normally show its age faster than a joisted masonry structure.

Specific construction information is available from a number of sources, which enables underwriters to make informed decisions on commercial property accounts. From which one of the following sources will an underwriter most likely learn the construction type of the building for a mid-size commercial account? A. Building codes B. Application C. Insurance advisory organization D. Risk control survey and report

B. Application

Underwriters should consider the construction materials used in roofing. Roof coverings vary in the fire resistance they provide. Which one of the following roof coverings is an underwriter most likely to find on a residential building, and accept as adequate for the purpose of fire protection? Select one: A. Slate shingles B. Asphalt shingles C. Treated cedar shingles D. Wood shake shingles

B. Asphalt shingles

Insurers will sometimes write blanket insurance coverage to encourage insureds to purchase insurance to value. Which one of the following is one way in which blanket insurance helps avoid problems caused by underinsurance? A. Blanket insurance only provides full coverage for partial losses if the 100 percent coinsurance rate is met. B. Blanket insurance requires insureds to buy more insurance than would otherwise be required to avoid coinsurance penalties. C. Blanket insurance requires 100 percent coinsurance in order to provide coverage at multiple locations. D. Blanket insurance suspends the coinsurance penalty for all insureds.

B. Blanket insurance requires insureds to buy more insurance than would otherwise be required to avoid coinsurance penalties.

The combustibility of contents usually found in a particular occupancy can contribute significantly to the occupancy's overall fire hazard. A card and gift store is most likely to fall into which one of the following classifications according to ISO's Specific Commercial Property Evaluation Schedule? Select one: A. C-2, limited combustibility B. C-3, combustible C. C-4, free burning D. C-5, rapid burning

B. C-3, combustible

Commercial property insurance underwriters can rate an account a couple of different ways. A type of insurance rate that applies to all insureds in the same rating category is a A. Custom rate. B. Class rate. C. Schedule rate. D. Group rate

B. Class rate.

Manor Inn, a bed and breakfast that was built at the turn of the century, has a common area where its guests can relax and socialize, or curl up in front of a wood-burning stove with a book from its library. Coffee, tea, and cookies are laid out on a sideboard for the guests' refreshment. The building tends to be drafty, so the Inn uses portable heaters in its dining room to keep its guests comfortable. Several of the suites contain fireplaces. Which one of the following hazards groups best applies to the risks described? Select one: A. Typical hazards B. Common hazards C. Special hazards of the risk D. Special hazards of the class

B. Common hazards

When the economy stagnates, cash flow declines and expenses continue, which may cause the importance assigned to risk control to diminish and the insured to delay necessary maintenance or repairs. What physical hazards do property underwriters need to evaluate during a stagnate economy? A. Updating of safeguards on equipment to avoid injuries to workers B. Deferred maintenance C. Effects of increased dispersion of values D. Establishment of new risk management programs

B. Deferred maintenance

In addition to using standard forms developed by ISO or other advisory organizations, insurers may choose to develop their own nonstandard forms. Which one of the following is a main reason why insurers would use nonstandard forms? A. Incorporate provisions that are more favorable to insurers B. Differentiate their products C. Write insurance with higher coverage limits. D. Streamline the underwriting process

B. Differentiate their products

Sharon Petty has given her sister, Ellen, the right to use a property during Ellen's lifetime. Upon Ellen's death, this right terminates and cannot be passed to her estate. At Ellen's death, Sharon, if living, will retain outright ownership of the property. If Sharon dies before Ellen, the property will pass to Sharon's brother, Patrick. At Ellen's death, what type of interest does Sharon have in the property being used by Ellen? A. Life estate B. Fee simple C. Joint tenancy D. Remainder estate

B. Fee simple

The interior finishing materials of a building affect the building's combustibility and the underwriting desirability of an account. Once a finish is installed, a small fire can ignite the interior finish and quickly engulf the entire room, so that even a small fire may quickly generate and spread toxic gases throughout the building. This process is known as Select one: A. Toxic combustion. B. Flashover. C. Spontaneous ignition. D. Firespread.

B. Flashover.

All of the following describe components of buildings that would be classified as fire resistive, EXCEPT: Select one: A. Horizontal and vertical load-bearing protected metal supports with a fire-resistance rating of at least two hours B. Floor and roof assemblies with a fire-resistance rating of not less than one hour C. Exterior walls or exterior structural components made of hollow masonry block at least 12 inches thick D. Exterior walls of solid masonry

B. Floor and roof assemblies with a fire-resistance rating of not less than one hour

Which one of the following is considered to be personal property as opposed to real property? A. Land B. Furniture C. A building's elevator D. A building's plumbing fixtures

B. Furniture

Wholesale clubs rely on high sales volume and low overhead to maintain their profit margins. Mitchell's, a membership wholesale club in the southeast, carries merchandise typical of stores across the United States, for both home and office. It offers membership both to individuals and businessowners. In addition to dry goods and furniture, Mitchell's maintains refrigerator and freezer cases for cold food; a butcher department; an onsite bakery; and an eatery for its customers that sells a limited selection of simple foods like pizza, cold and hot sandwiches, pretzels, and soft ice cream. A risk control representative who is assessing the property loss potential for Mitchell's is most likely to focus on its Select one: A. On-premises cooking and baking. B. High-rack storage. C. Machinery malfunction. D. Electrical systems and wiring.

B. High-rack storage.

According to the National Fire Protection Association (NFPA), cooking-related incidents are the leading cause of structure fires in stores or other mercantile occupancies. Which one of the following hazards causes nearly as much direct property damage as cooking equipment in mercantile occupancies? Select one: A. Combustion fires B. Incendiary fires C. Equipment malfunction fires D. Electrical wiring fires

B. Incendiary fires

Which one of the following broad categories of occupancy types is most likely to cause a property underwriter to question the possibility of adverse selection for a particular risk? Select one: A. Service industry occupancy B. Institutional occupancy C. Manufacturing occupancy D. Habitational commercial occupancy

B. Institutional occupancy

Masonry noncombustible construction is extremely popular because of its low initial cost, low maintenance, and ability to withstand not only the peril of fire, but also other causes of loss such as windstorm. A property underwriter's concerns about a masonry noncombustible building will most likely be related to A. The risk that the build-up of excessive heat from a severe fire could cause an explosion in the building. B. Its potential for collapse from the heat a fire generates. C. Its potential for severe damage from an earthquake. D. The risk that a fire would spread quickly from one floor to another within the interior of the building.

B. Its potential for collapse from the heat a fire generates.

Marilyn, an underwriter, is reviewing an application for commercial property insurance that states the building construction classification as masonry noncombustible. She finds that this classification is incorrect, however, because the application describes the building structure as having concrete exterior walls that are load-bearing and have a one-hour fire resistance rating, and wood floors and roof. Marilyn is most likely to consider which one of the following construction classifications as more appropriate for her underwriting purposes? Select one: A. Frame B. Joisted masonry C. Noncombustible D. Modified fire-resistive

B. Joisted masonry

Generally applied to fire losses, which one of the following loss severity measures is an estimate of the financial cost of the loss that would occur if all protection measures were to fail and no effective fire department response occurred. A. Amount subject B. Maximum foreseeable loss C. Policy amount D. Normal loss expectancy

B. Maximum foreseeable loss

Which one of the following statements is true regarding noncombustible construction? Select one: A. Noncombustible construction is a close equivalent to fire resistive construction. B. Noncombustible buildings are usually made of metal, but the metal is unprotected and therefore not fire resistive. C. Because load bearing components of a noncombustible structure will not burn, they will stand up to fire without significant damage. D. When exposed to the heat that a fire generates, metal columns, beams, and joists in noncombustible structures maintain tensile strength.

B. Noncombustible buildings are usually made of metal, but the metal is unprotected and therefore not fire resistive.

An underwriter's estimate of the largest loss that is likely to occur is called the A. Maximum possible loss. B. Probable maximum loss. C. Maximum foreseeable loss. D. Normal loss expectancy.

B. Probable maximum loss.

Fuel loads vary considerably among office occupancies. Which one of the following office occupancies will be the most desirable to a property underwriter with respect to its fuel load? Select one: A. A well-maintained 25-year-old law firm with its original solid mahogany furniture, but state-of-the-art computers and other office equipment B. An architectural firm with partitioned office space, that stores its blueprints both electronically and in a central storage room C. An accounting firm with a reception area and separate offices for its staff that contain steel desks and state-of-the-art technology to support its paperless initiative D. A modernized insurance company with an open-space floor design which keeps its paper records onsite as required to meet applicable regulations

C. An accounting firm with a reception area and separate offices for its staff that contain steel desks and state-of-the-art technology to support its paperless initiative

Marty's Crab Shack is an owner-operated small casual restaurant on the bay shore in Maryland that is best known for its seafood platters and sandwiches. Its deep-fried crab cakes are said to be the best in the area. The building was built in 1987 of frame construction. Marty, the Crab Shack's owner, lives in a second-story apartment above the restaurant. Business has been slow for the past couple of years due to a sluggish economy, but Marty is optimistic that recently completed extensive building and cosmetic renovations and increased advertising will strengthen sales. So far it seems to be working, as sales have been showing a steady improvement. Marty enforces strict housekeeping procedures to make sure that equipment is kept clean and trash is properly disposed. In particular, he requires that the hood and duct above the deep fryer be thoroughly cleaned by his employees each evening before closing to help prevent grease build-up, and he has a service contract in place for quarterly cleaning of the system by professionals. Malik, an underwriter, is evaluating Marty's Crab Shack for property insurance. Which one of the following is Malik most likely to find of concern with respect to this particular risk? Select one: A. Possibility of fire due to the age, type, and construction of the building, the risk for which could be increased by poor housekeeping and procedures. B. Risk of severe loss to Marty's Crab Shack's contents in the event of a fire. C. Possibility of incendiary fire due to moral hazards, because Marty's Crab Shack has struggled financially in the past, and is in a business where it is difficult to sustain profitability. D. Risk of fire from ignition sources related to cooking, since Marty's Crab Shack uses a deep fryer.

B. Risk of severe loss to Marty's Crab Shack's contents in the event of a fire.

The inspections and surveys condition clarifies that the insurer does not make A. Inspections of books and records. B. Safety inspections. C. Health inspections. D. Physical inspections.

B. Safety inspections.

An underwriter should be familiar with different types of occupancies and the risks they present to properly evaluate them for property insurance. In particular, underwriters should be familiar with the wide variety of occupancies in the largest and fastest growing segment of most Western economies, which is Select one: A. Institutional occupancies. B. Service industry occupancies. C. Mercantile occupancies. D. Manufacturing occupancies.

B. Service industry occupancies.

Insureds sometimes purchase package policies to meet their insurance needs. The underwriting approach can be affected by the type of package policies offered. Which one of the following types of package policies provides maximum flexibility for underwriters and does not affect underwriting considerations? A. Minimum requirement combination B. Simple combination C. Nonstandard combination D. Indivisible combination

B. Simple combination

When underwriting package policies, underwriters may need to make special considerations. Which one of the following best describes the main problem that arises when underwriting package policies? A. Package policies are typically more expensive and difficult to market to insureds. B. Some coverage parts of the package policy may contain unacceptable risks. C. Insureds with poor loss experience typically request package policies. D. Not enough insureds purchase package policies to generate reliable data on losses.

B. Some coverage parts of the package policy may contain unacceptable risks.

he structural materials of a building and the arrangement of those components determine a building's ability to withstand damage, including collapse. A property insurance application for an 8-story office building states that it has curtain walls. By this, the underwriter knows that the building's weight is Select one: A. Supported by load-bearing exterior walls. B. Supported by interior load-bearing partition walls. C. Supported by interior columns connected by non-load-bearing partition walls. D. Distributed between the interior and exterior walls to spread the load.

B. Supported by interior load-bearing partition walls.

Agreed Value optional coverage suspends the coinsurance condition if the insured carries the amount of insurance agreed to by the insurer and the insured. Because of this, underwriters should A. Place higher deductibles in the insured's policy. B. Take extra steps to verify the value of the property being insured. C. Encourage insured's to purchase blanket coverage along with the Agreed Value optional coverage. D. Raise rates charged to insureds that purchase Agreed Value optional coverage.

B. Take extra steps to verify the value of the property being insured.

Contraction of the economy has physical effects on property loss exposures. When inventory ceases to sell, what physical effects develop? A. The total value at risk becomes further diversified. B. The accumulation of inventory alters the storage configuration of finished goods or merchandise. C. The total value at risk decreases. D. The probable frequency and severity of loss decrease.

B. The accumulation of inventory alters the storage configuration of finished goods or merchandise.

In inspecting a restaurant, field underwriter Susan Warren noted that the storage area was packed with paper products and cleaning supplies. The entire area was extremely dirty and there was apparent grease accumulation on the cooking surfaces and on the hoods above the grills and the deep fryers. Soiled laundry had been thrown into a cardboard box near a large oven. Of the hazards noted by Susan in the restaurant, which one provides the most common source of fuel for restaurant fires in general? Select one: A. The storage area B. The grease C. The debris D. The soiled laundry

B. The grease

Verifying the values of property exposed to a loss is an essential part of commercial property underwriting. For example, if the property values shown on a commercial property submission are lower than the property's actual value, then A. The insured can benefit from not protecting the property from loss. B. The insurer will not receive sufficient premium. C. The insured will pay for unnecessary coverage. D. The insured will have to retain a majority of its losses.

B. The insurer will not receive sufficient premium.

In the context of property loss exposures, flood is considered to be all of the following, EXCEPT: A. A means by which property is damaged or destroyed B. A cause of loss C. An adverse financial consequence D. A peril

C. An adverse financial consequence

Personal property values are easier to determine than real property values. However, when the values of personal property are difficult to resolve, which one of the following is almost always required? A. A comparison to similar insureds B. An inspection by the insurer C. An outside appraisal D. A report from the insured

C. An outside appraisal

Juan, a risk control representative, is conducting an assessment of the headquarters office of Westin Waste, a multi-county refuse collection and disposal company. Westin's offices house several hundred employees on seven floors. The building was built ten years ago. There is a lobby and cafeteria for its employees on the first floor, a small coffee room next to the restrooms on each floor, and a dining room on the seventh floor with a small refrigerator and coffee service for the convenience of its executives. Westin maintains a large network server in a separate room on the first floor, as well as a storage room for janitorial and other supplies. Westin provides desktop computers and steel desks for each of its office employees. Most of the floors of the building are partitioned into cubicles. The floors are tiled, and each wall is mostly windows, with vinyl blinds. To which one of the following hazards is Juan likely to pay particular attention while conducting his assessment, with respect to potential fire loss? Select one: A. The storage for office and janitorial supplies B. The office's eating facilities for its staff and management C. The office's interior finish and furnishings D. The office's heating, electrical, plumbing, and computer systems

B. The office's eating facilities for its staff and management

A property location's probable maximum loss (PML) is A. The amount of insurance carried on the location. B. The underwriter's estimate of the largest loss likely to occur. C. The loss expected under normal operating conditions with all fire protection services working. D. Calculated excluding the effects of building features that impede the vertical spread of fire.

B. The underwriter's estimate of the largest loss likely to occur.

Which one of the following best describes a curtain wall? A. They are generally load bearing exterior walls. B. They are generally non-load bearing exterior walls. C. They are generally non-load bearing interior fabric partitions. D. They are generally load bearing interior walls.

B. They are generally non-load bearing exterior walls.

ABC, Inc. has property insurance on its factory with a limit of $180,000. ABC suffers a loss for $100,000 and at the time of the loss, the factory has an actual cash value (ACV) of $250,000. Assuming an 80% coinsurance penalty and a $1,000 deductible, which one of the following represents the amount ABC's insurer will pay? A. $71,000 B. $72,000 C. $89,000 D. $99,000

C. $89,000 First calculate the 80% coinsurance (0.8 * 250,000) = 200,000. Since the limit was less than that, then take $180,000 limit / $200,000 required = 0.9. Multiply 0.9 by $100,000 loss and then subtract the $1,000 deductible. (0.9*100,000) - 1,000 = $89,000

A tool that underwriters can use to evaluate the effectiveness of building codes in general, and how vigorously they were enforced in a particular community, is Select one: A. An International Building Code Grading Schedule B. A Building Code Enforcement Verification Report C. A Building Code Effectiveness Grading Schedule D. An International Building Code Effectiveness Report

C. A Building Code Effectiveness Grading Schedule

The most common roof covering is A. Fiberglass sheets or shingles. B. Tin sheets. C. Asphalt shingles. D. Tile.

C. Asphalt shingles.

For most habitational occupancies, which one of the following is the leading cause of fires? Select one: A. Fireplace sparks or inadequate shielding B. Intentionally set fires C. Cooking equipment D. Chimney fires due to lack of maintenance and cleaning

C. Cooking equipment

Penn Woods Plaza, a strip shopping center in Pennsylvania, is classified as mill construction. Its tenants include an accounting office, a Chinese restaurant, a pizza parlor, a nail salon, and a dry cleaner. From a fire underwriting perspective, a property underwriter is most likely to find this risk Select one: A. Undesirable, because of the tenant occupancies that are considered high risk for fire that could easily spread to neighboring tenants. B. Undesirable, because the building would be prone to collapse in the event of a severe fire. C. Desirable, because the structure would probably survive a severe fire. D. Desirable, because the floors and joists would resist fire for at least two hours.

C. Desirable, because the structure would probably survive a severe fire.

Fire doors are usually rated according to their Select one: A. Construction materials. B. Mechanisms and speed. C. Fire-resistive hourly rating. D. Size and density.

C. Fire-resistive hourly rating.

In manufacturing occupancies, a heat treatment process is a combination of heating and cooling operations applied to a metal or alloy in the solid state to obtain desired conditions or properties. Which one of the following represents a significant ignition source associated with heat treatment processes? Select one: A. Steam pressure vessels B. Electric motors C. Furnaces D. Friction

C. Furnaces

It is important for an underwriter to understand how the materials of a building are rated for their fire resistance and flame spread ability. Flame spread refers to how readily flames spread A. Across the building's exterior materials, such as from exterior walls to the building's roof. B. Vertically through a building's materials, from one floor to the one above or below. C. Horizontally across the surfaces of a building's materials, such as from one room to another. D. From the building's interior to its exterior elements, putting neighboring structures at risk.

C. Horizontally across the surfaces of a building's materials, such as from one room to another.

When considering a risk, the underwriter must consider the perils to which the building is exposed. All of these statements regarding specific perils are true, EXCEPT: A. Most policies that cover broad named perils or risks of direct loss provide protection against collapse. B. Water markings from floods or leaks can be vital signs of potential loss causes. C. If roofing shingles are not replaced on a 10 to 15 year cycle, losses can be expected from hail or wind. D. Modern technology has increased the use of noncombustible material.

C. If roofing shingles are not replaced on a 10 to 15 year cycle, losses can be expected from hail or wind.

Which one of the following types of package policies limits the insured's coverage selection but provides underwriters with little flexibility regarding alternative coverages and prices? A. Nonstandard combination B. Standard combination C. Indivisible combination D. Minimum requirement combination

C. Indivisible combination

Sharon Petty has given her sister, Ellen, the right to use a property during Ellen's lifetime. Upon Ellen's death, this right terminates and cannot be passed to her estate. At Ellen's death, Sharon, if living, will retain outright ownership of the property. If Sharon dies before Ellen, the property will pass to Sharon's brother, Patrick. In this situation, Ellen is a A. Fee simple owner. B. Joint tenant. C. Life tenant. D. Remainderman.

C. Life tenant.

In mercantile occupancies, the combustibility of the contents varies, depending primarily on the Select one: A. Fire protection systems. B. Construction of the building. C. Merchandise being sold. D. Solvents used.

C. Merchandise being sold.

Trainee underwriter Sue is touring various sites to learn more about building construction. The site she is currently visiting is a building with wood columns that are 10 inches thick. The wood beams and ties are very deep and wide. Sue notes that the floors in the building are four inch thick tongue and groove planks. As viewed from the outside of the building, the roof deck is constructed of a very sturdy and heavy timber. Sue should classify this building as being which one of the following construction types? A. Mixed construction B. Ordinary construction C. Mill construction D. Frame construction

C. Mill construction

Underwriters must sometimes underwrite package policies for applicants that have differing loss exposure levels by line of business. Which one of the following can be used to ensure that enough premiums are paid to cover the higher hazard risks? A. Class rates for high hazard risks B. High deductible for high hazard risks C. Minimum premium levels for low hazard risks D. Indivisible premium for all risks

C. Minimum premium levels for low hazard risks

Underwriters use several measures to determine potential severity of loss. One measure is the loss expected to occur under usual operating conditions with all fire protection services operational. This measure is called A. Maximum foreseeable loss. B. Maximum possible loss. C. Normal loss expectancy. D. Probable maximum loss.

C. Normal loss expectancy.

Physical hazards associated with structures can be most thoroughly analyzed if they are divided into groups. Each of the following is an example of these hazard groups, EXCEPT: Select one: A. Common hazards B. Special hazards of the class C. Occupational hazards D. Special hazards of the risk

C. Occupational hazards

The risk manager of a midsize manufacturing company would like several coverage enhancements and a seamless approach to insurance for their Building and Business Personal Property, Inland Marine and Crime insurance. What type of policy format would best suit the risk manager's needs? A. Commercial Package policy B. Businessowners policy C. Output policy D. Broker policy

C. Output policy

Building codes can provide an underwriter with information regarding the construction of buildings erected under the provisions of those codes. Well-designed and properly enforced building codes can reduce insured losses. A local ordinance that establishes criteria that a building's structural components must meet is a A. Prescriptive code. B. Community code. C. Performance code. D. Municipal code.

C. Performance code.

Arthur requested a risk control survey to support his underwriting of a college dormitory. Upon review of the survey report, he discovered that a number of problems had been found, evidencing shoddy workmanship. The building had exposed electrical wiring, stair landings constructed of particle board, and an inoperable sprinkler system. The concrete block walls were penetrated by cables, without application of firestopping material to restore the fire-resistance rating of the walls. Arthur declined to quote the account, due to the building contractor's failure to comply with which one of the following? Select one: A. Community codes B. Prescriptive codes C. Performance codes D. International Building Codes

C. Performance codes

Property insurance policies usually cover some property that is not contained within the building. For this reason, most property policies use which one of the following terms? A. Floating property B. Real property C. Personal property D. Contents

C. Personal property

To refer to items such as furniture and stock, most property insurance policies use the term A. Floating property. B. Real property. C. Personal property. D. Contents.

C. Personal property.

In considering a worst case scenario for a chemical lab exposure, property underwriter Thad assumes that the automatic fire sprinklers will not be maintained and fully functional to actuate when a fire occurs and that firefighters will not respond to the alarm in a timely manner. While this seems unlikely, Thad wants to make sure all facts of the loss exposure have been considered. To determine the potential loss severity for the chemical lab Thad is using the measure of A. Amount subject. B. Normal loss expectancy. C. Probable maximum loss. D. Policy amount.

C. Probable maximum loss.

With package policies, underwriters often incorporate risk control services into the underwriting process. Which one of the following is true regarding risk control services and package policies? A. The more coverages included in the package policy, the less risk control services are needed. B. Risk control services always lower the insured's expected loss levels. C. Reducing losses from one source may increase the possibility of loss from another. D. Underwriters typically have less time to perform risk control services with package policies.

C. Reducing losses from one source may increase the possibility of loss from another.

Policy provisions usually specify a valuation method which states how the insurer will determine the value of the insured's property in the event of a covered loss. Which one of the following types of valuation methods reimburses the insured fully for any losses sustained and eliminates uncertainty in loss adjustments? A. Selling price valuation method B. Actual cash value (ACV) C. Replacement cost D. Functional valuation method

C. Replacement cost

The fire department connection that allows the fire department access to dry standpipes that supply water to hose stations and sprinkler systems is known as the Select one: A. Essential connection. B. Standby connection. C. Siamese connection. D. Twin connection.

C. Siamese connection.

A building's occupancy can affect an account's loss frequency and severity and is therefore a significant component of underwriting for commercial property insurance. Underwriters have traditionally grouped occupancy types into how many broad categories? Select one: A. Two B. Four C. Six D. Eight

C. Six

Denver Dental School was awarded a Leadership in Energy and Environmental Design (LEED®) certification following its recent building renovations to achieve energy reduction, lighting and water efficiency, and use of environmentally preferable materials and green housekeeping programs. Ciara is underwriting this five-story building of highly fire-resistive construction, and asks her risk control engineer to conduct a site inspection. She specifically asks the engineer to investigate the insulation type added during the renovation, and to make sure it was properly installed. If Ciara is most concerned about toxic fumes harming the school's occupants in the event of a serious fire, which one of the following types of insulation will she least prefer that the engineer find? Select one: A. Rigid foamboard with fire-resistive barrier B. Fiberglass C. Sprayed-on cellular plastic foam D. Fiberboard

C. Sprayed-on cellular plastic foam

Fuel load is usually expressed as weight of combustible material per A. Square inch. B. Exposure unit. C. Square foot. D. Building.

C. Square foot.

Underwriting Laboratories, Inc. (UL) conducts tests to classify structural materials according to their fire-resistance capabilities. The materials are assigned a rating expressed in terms of hours. These ratings are used to evaluate the A. Expected degree of damage to the materials. B. Flashpoint of the materials. C. Structural integrity of the materials. D. Expected duration of a fire involving the materials.

C. Structural integrity of the materials.

Which one of the following types of property ownership is available only to a husband and wife? A. Fee simple estate B. Joint tenancy C. Tenancy by the entirety D. Remainder estate

C. Tenancy by the entirety

Which one of the following statements is true regarding measures of potential loss severity for property loss exposures? A. The amount of insurance carried on a property location is the most useful figure for determining potential loss severity. B. The amount subject to a single loss at a location is consistent for all causes of loss to which the location is exposed. C. The amount subject for a location, as estimated by any two underwriters with a common employer, should be consistent. D. The amount subject should be determined separately for each policy an insurer writes within a single fire division.

C. The amount subject for a location, as estimated by any two underwriters with a common employer, should be consistent.

The construction classification of a building is a key factor in underwriting and pricing property insurance. Which one of the following best explains why the construction classification is important to a property underwriter? Select one: A. From a building's construction classification, the underwriter is able to determine approximately how long it will take to rebuild in the event of a total loss. B. The construction of a building indicates to the property underwriter whether the building contains a hazardous occupancy. C. The construction of a building has a direct bearing on the extent of damage a fire can cause, and on its ability to protect its contents. D. From a building's construction classification, the underwriter is able to determine whether the structure contains highly valued building materials.

C. The construction of a building has a direct bearing on the extent of damage a fire can cause, and on its ability to protect its contents.

Underwriters should examine the financial condition of potential insureds because A. If an insured is not able to produce a profit, then it will not be able to afford the insurance premium. B. If an insured does not have strong, consistent cash flow, then the insured will most likely face an underwriting loss. C. The financial state of a company is also a tangible measure of management competence and resources available for effective risk control. D. Analyzing an insured's financial condition gives the underwriter a more thorough understanding of the insured's loss history.

C. The financial state of a company is also a tangible measure of management competence and resources available for effective risk control.

Which one of the following statements is true regarding an underwriter's assessment of occupancy as a property risk characteristic? A. The occupancy for which a building was designed is typically not important, as long as the current occupancy is considered to be low risk. B. Occupancy means the duration of time that the insured has occupied its current building, which is important for an underwriter to consider with respect to claims frequency. C. The operations and processes conducted within a building introduce hazards that influence loss frequency and severity. D. An occupancy that is open to the public, and generates a high volume of foot traffic, is considered to be more hazardous than a woodworking shop without public access.

C. The operations and processes conducted within a building introduce hazards that influence loss frequency and severity.

Underwriters can use a valuation guidebook or computer software supplied by an appraisal company to make their own property value estimates. Which one of the following is true regarding the valuation guidebooks or computer software? A. They are not used as often as appraisals and other valuation methods. B. They cannot be used to determine the value of machinery. C. They can also be used for valuing building contents or equipment. D. They rely on past insurance premiums as the primary valuation factor.

C. They can also be used for valuing building contents or equipment.

Commercial property underwriters should be aware that self-service laundries, which could operate on a 24-hour basis, are especially susceptible to which one of the following perils? Select one: A. Fire B. Theft C. Vandalism D. Smoke damage

C. Vandalism

Which one of the following ways can an underwriter determine if a company's management is actively supporting a property risk management program? A. Provide the insured with a self-inspection form to complete B. Review a copy of the written property risk management program C. Interview the first-line supervisors to determine if they understand the property risk management program D. A risk control survey that discloses the condition and housekeeping of a premise

D. A risk control survey that discloses the condition and housekeeping of a premise

From a fire underwriting perspective, fire-resistive is the best construction type. However, property underwriters also consider other perils that may be prevalent in a given region. In an area prone to the earthquake hazard, which one of the following is an underwriter most likely to find more desirable than a fire-resistive building? Select one: A. A large joisted masonry structure B. A large noncombustible structure C. A small masonry noncombustible structure D. A small frame structure

D. A small frame structure

Valley Paints, a commercial painting contractor, maintains a dual purpose building. One side of the building houses its office and customer samples and meeting area. The other side, separated by a steel door, houses an on-site inventory of standard paints, solvents, sprayers, ladders, and other supplies. Under which one of the following ISO occupancy rating system factors is Valley Paints most likely to be charged a premium surcharge by its property insurer? Select one: A. Combustibility of contents B. Susceptibility of contents C. Basic occupancy charge D. Additional occupancy hazards

D. Additional occupancy hazards

Heating systems should be properly installed and maintained, as they represent a common ignition source for habitational occupancies. Also, air conditioning ducts that run throughout a building can quickly spread smoke and fire. Automatic dampers installed in a habitational occupancy can help provide fire protection with respect to Select one: A. Hot-air duct systems. B. Hot-water pipes. C. Gas space heaters. D. Air conditioning systems.

D. Air conditioning systems.

All of the following are financial consequences of property loss exposures, EXCEPT: A. Extra expenses B. Lost income C. Property value reduction D. Causes of loss

D. Causes of loss

In addition to coverage parts, a commercial package policy includes which one of the following forms? A. Common Exclusions form B. General Conditions form C. General Forms List D. Common Policy Conditions form

D. Common Policy Conditions form

Martin is underwriting a commercial restaurant building that is located a block from the beach in New Jersey, in an area known for high wind gusts. There are other buildings immediately adjacent on either side of the restaurant. Martin is evaluating the roof's construction materials with respect to their effectiveness both as a weather seal for the building, and as a fire protective barrier. Which one of the following roofing materials is he likely to find most desirable? A. Asphalt shingles B. Treated cedar shingles C. Tile D. Concrete

D. Concrete

Of the four interdependent elements that commercial property underwriters analyze when evaluating submissions for property insurance, which one of the following stands out as a key factor in underwriting property insurance? A. Protection B. Occupancy C. External exposure D. Construction

D. Construction

When working with a valuation guidebook or computer software, underwriters use several factors to determine a property's value. Which one of the following is a factor evaluated by underwriters to determine property value? A. Number of emergency exits B. Past insurance premiums C. Building occupants D. Construction materials used

D. Construction materials used

As they relate to occupancies, commercial fire rating systems, such as the method used by ISO, indicate the Select one: A. Burn rates of the construction materials used in the occupancy. B. Premium to be charged based on the age, size, and use of the occupancy. C. Effectiveness of the occupancy's fire protection systems. D. Degree of hazard that an occupancy presents in a particular classification.

D. Degree of hazard that an occupancy presents in a particular classification.

Lily is concerned about a fire in the manufacturing facility spreading to the neighboring offices. Which one of the following construction design features will Lily most likely want to determine is present for adequate fire protection and life safety? Select one: A. Fire door between the two facilities, rated by the National Fire Protection Association (NFPA) to withstand fire for at least one hour B. Roof vents in the manufacturing facility, through which hot smoke and gases can be vented to aid in fire suppression C. Fire-resistive fender wall of at least 18 inches between the two facilities D. Fire wall of masonry material at least eight inches thick between the two facilities

D. Fire wall of masonry material at least eight inches thick between the two facilities

A wedding photographer uses his camera equipment at several dozen different locations each year. In insurance terminology, the camera equipment is considered to be A. Contents. B. Property in transit. C. Property in the possession of others. D. Floating property.

D. Floating property.

The expected maximum amount of combustible material in a given area of a building, including both structural elements and contents, is known as the buildings A. Fire resistance rating. B. Fire endurance classification. C. Flame spread capacity. D. Fuel load measurement.

D. Fuel load measurement.

A person who does not own a property but has a right to use the property during his or her lifetime A. Can pass this interest to heirs if premature death occurs. B. Is referred to as a remainderman. C. Cannot sell the right to use the property to another person. D. Has an insurable interest in the property.

D. Has an insurable interest in the property.

Heather, an underwriter, is reviewing a property insurance submission for a commercial building with an effective date that is only two weeks away. She needs additional information to what is provided on the application in order to be comfortable quoting the account, and to determine the proper premium for the account. Which one of the following sources is Heather most likely to use to obtain additional risk exposure information? Select one: A. ISO Rating Survey Detail Report B. Sprinklered Property Report C. Risk control survey and report D. ISO Building Underwriting Report

D. ISO Building Underwriting Report

Flame spread classifications provide references that building planners can use for different A. Construction types. B. Building designs. C. Fire barriers. D. Interior finishes.

D. Interior finishes.

For which one of the following reasons should an underwriter consider the attitude of a prospective commercial property insured's management toward risk control? A. It may be used to determine whether the client has misrepresented any material fact on the insurance application. B. It helps the underwriter determine potential losses and is useful in estimating the premium base rate. C. It assists the underwriter in determining the client's ability to pay the insurance premium. D. It helps the underwriter assess the quality of the account.

D. It helps the underwriter assess the quality of the account.

Which one of the following is one reason why a businessowners policy appeals to many small and midsize businesses? A. It is tailored to fit the coverage needs of unique and complicated businesses. B. It often provides property coverage enhancements not available in CPP's. C. It offers monoline coverage. D. It is an economical alternative to regular commercial package policies.

D. It is an economical alternative to regular commercial package policies.

Buildings of ordinary construction are usually found in major metropolitan areas in the northern states of the United States. Of the six construction classifications, ordinary construction refers to Select one: A. Frame. B. Fire-resistive. C. Noncombustible. D. Joisted masonry.

D. Joisted masonry.

Physical hazards increase the probable frequency or severity of a loss. Which one of the following descriptions demonstrates special hazards of the class? Select one: A. Handling and disposal of waste at a restaurant B. Alterations and cleaning offered by retail clothing store C. Plumbing system at a resort hotel with an indoor water park D. Maintenance garage at a school bus depot

D. Maintenance garage at a school bus depot

Insureds sometimes purchase package policies to meet their insurance needs. The underwriting approach can be affected by the type of package policies offered. Which one of the following types of package policies is used to reduce adverse selection and often results in a premium discount for the insured? A. Simple combination B. Indivisible combination C. Nonstandard combination D. Minimum combination requirement

D. Minimum combination requirement

An insured requiring specialty commercial property coverage, such as flood insurance, will most likely purchase which one of the following types of policies? A. Package policy B. Output policy C. Businessowners policy D. Monoline policy

D. Monoline policy

Underwriter Joe, in measuring a shoe store's potential loss severity calculated what the expected loss would be under routine and anticipated operating conditions. Joe examined the fire divisions, construction and hazards and his calculations also assumed that all fire protection services were working. Joe was using which one of the following measures to determine the potential loss severity for the shoe store exposure? A. Policy amount B. Probable maximum loss C. Amount subject D. Normal loss expectancy

D. Normal loss expectancy

The age of a building is a key factor affecting the underwriting desirability of an account for commercial property insurance. Which one of the following is true regarding the age of a building from an underwriting perspective? Select one: A. An older building typically poses no higher risk of loss than a newer one, if it was correctly built at the time it was constructed, and has been properly maintained and upgraded to meet local building code requirements since that time. B. Complying with current building codes is a way to reduce the repair or replacement costs of a building after a loss. C. Unlike wooden surfaces that need protection against the effects of weather, buildings with concrete or brick surfaces can be expected to retain the strength and integrity of their structural supports over several decades. D. Older buildings are more vulnerable to damage than newer buildings when faced with causes of loss such as windstorm and hail.

D. Older buildings are more vulnerable to damage than newer buildings when faced with causes of loss such as windstorm and hail.

Office occupancies have many special hazards of the class or special hazards of the risk to which an underwriter should pay attention. Which one of the following is a special hazard of high-rise office occupancies that an underwriter should carefully consider? Select one: A. Eating facilities B. Stored chemicals C. Computer systems D. Other occupancies

D. Other occupancies

Why might an insured elect to purchase an output policy instead of a commercial package policy (CPP)? A. Output policies provide only essential coverages at a cheaper price than a CPP. B. Output policies are composed of different policy provisions than a CPP. C. Output policies contain coverage tailored to smaller businesses. D. Output policies often provide coverage enhancements not contained in the standard CPP.

D. Output policies often provide coverage enhancements not contained in the standard CPP.

Pointe Woods is a two-year-old eight-story apartment building in Vermont. It is a fully sprinklered, modified fire-resistive building with electric forced-air heat. Which one of the following plumbing risks is most likely to be a concern to Pointe Woods' property insurance underwriter? Select one: A. Piping rupture due to freezing B. Piping breakage due to building subsidence C. Wind damage to walls containing piping D. Overflow of water from sinks, toilets, and bathtubs

D. Overflow of water from sinks, toilets, and bathtubs

A multiline insurance policy is also known as a: A. Broker form. B. Standard policy. C. Manuscript form. D. Package policy.

D. Package policy.

All of the following are underwriting considerations regarding older buildings, EXCEPT: Select one: A. A different building code in force at the time of construction B. Possible deterioration of heating and electrical systems C. Possible changes in occupancy relative to the use originally intended for the building D. Plumbing systems using plastic pipes and fittings

D. Plumbing systems using plastic pipes and fittings

An important consideration in evaluating property loss exposures is their potential severity. Underwriters use several measures to determine the potential severity of a loss and each measure is the sum of separate values for every type of coverage the policy provides. Which one of the following measures of potential loss severity is the easiest to calculate and is the only measure of potential severity on which underwriters tend to agree? A. Amount subject B. Probable maximum loss C. Maximum foreseeable loss D. Policy amount

D. Policy amount

Following a serious fire that started in the underground parking garage of a commercial building and quickly consumed the first floor of the building, it was discovered that the building contractor had improperly installed a 3-inch-thick firestop on a wire-mesh screen located below the ceiling in the parking garage. This allowed the fire to quickly spread to the occupied floor above. Which one of the following did the contractor most likely violate? Select one: A. Community codes B. International Building Codes C. Performance codes D. Prescriptive codes

D. Prescriptive codes

In insurance terminology, property being shipped by aircraft is considered to be A. Contents. B. Floating property. C. Property in the possession of others. D. Property in transit.

D. Property in transit.

All of the following statements are true regarding aging property risks, EXCEPT: Select one: A. Water markings from floods or leaks can be vital signs of potential loss causes. B. Heating, cooling, and electrical systems may be obsolete. C. Structures deteriorate from normal wear and tear. D. Roof shingles should be replaced on a 10 to 15 year cycle, or losses can be expected from hail or wind.

D. Roof shingles should be replaced on a 10 to 15 year cycle, or losses can be expected from hail or wind.

In inspecting a restaurant, field underwriter Susan Warren noted that the storage area was packed with paper products and cleaning supplies. The entire area was extremely dirty and there was apparent grease accumulation on the cooking surfaces and on the hoods above the grills and the deep fryers. Soiled laundry had been thrown into a cardboard box near a large oven. Of the following items noticed by Susan, which one presents the most serious exposure? Select one: A. The grill B. The paper products C. The dirty surfaces D. The deep fryer

D. The deep fryer

Which one of the following statements regarding package policy underwriting is true? A. Adverse selection is increased by requiring certain minimum coverages when using a package policy. B. Nonstandard combination policies are manuscript contracts written according to the policyholders' rather than the underwriters' specifications. C. All of the policyholder's exposures can be covered by a single policy. D. The disadvantage of package underwriting is that underwriters cannot be selective in the coverage offered to the applicant.

D. The disadvantage of package underwriting is that underwriters cannot be selective in the coverage offered to the applicant.

Radcliffe Real Estate Group has purchased an old warehouse building and is converting it to office space for medical and dental tenants. The building was correctly built 40 years ago according to building code requirements at that time, and has been properly maintained and periodically upgraded since it was built. The electrical system was built for purposes of providing lighting to the building. Which one of the following concerns is an underwriter most likely to have about this building? Select one: A. The building might lack protective features and systems generally considered essential today. B. Complying with current building codes might increase the cost of renovations, and/or the cost of making repairs after a loss. C. Conversion and remodeling might have created concealed spaces in which fire could burn undetected and spread rapidly. D. The wiring may not be adequate to power the new tenants' equipment without causing a fire from excess heat.

D. The wiring may not be adequate to power the new tenants' equipment without causing a fire from excess heat.

Which one of the following statements is true regarding manuscript forms of insurance policies? A. They tend to have more endorsements attached to them than standard forms. B. The wording is often poor and unacceptable to insurers. C. They are structured for smaller accounts. D. They usually offer more favorable terms for insureds than standard forms.

D. They usually offer more favorable terms for insureds than standard forms.

Aside from determining the value of a building, there are other underwriting considerations related to verifying commercial property values. Which one of the following statements regarding verifying property values is true? A. Premium audits can serve as a substitute for other property value verification tools. B. Insurers will only value property on either an actual cash value or agreed value basis. C. Personal property values are typically more difficult to determine than real property values. D. Underground foundations and plumbing must be given special consideration when determining property values.

D. Underground foundations and plumbing must be given special consideration when determining property values.

Which one of the following is most likely to be considered real property as opposed to personal property? A. Property in transit B. Furniture C. Floating property D. Wall-to-wall carpeting

D. Wall-to-wall carpeting