AINS 103 Questions with CORRECT Answers
Question:
For most businesses, which peril poses the greatest risk of a large or total property loss?
Answer:
For most businesses, fire poses the greatest risk of a large or total property loss.
Question:
Extra expenses are expenses, in addition to ordinary expenses, that an organization
incurs to mitigate the effects of a business interruption. Which one of the following is an
example of an extra expense?
Answer:
Cost to rent temporary office space.
Question:
An electrical contractor was hired to install a new 100-amp fuse box in the Smith's
home. During installation, the contractor inadvertently left a small screwdriver in a duct
space behind the panel. Three weeks later, the screwdriver caused an electrical short
which led to a fire. Which one of the following loss exposures best categorizes the
electrical contractor's legal liability exposure for the fire damages?
Answer:
Completed operations liability.
Question:
Upon entering a restaurant, a customer grasped a handrail that broke off, causing the
customer to fall and break his wrist. This is an example of which one of the following
types of commercial general liability loss?
Answer:
Premises and operations liability.
Question:
Inland marine insurance is insurance that covers:
Answer:
Many different classes of property that typically involve an element of transportation on
land.
,Question:
Workers compensation benefits include which one of the following?
Answer:
Rehabilitation benefits.
Question:
Bio-Pharma was a highly-regarded pharmaceutical company. That changed last year
when it was revealed that Bio-Pharma researchers had fabricated test results of the
company's new hypertension drug, and a company official bribed a key regulator to get
the drug approved. These revelations led to a sharp decline in sales of all of
Bio-Pharma's drugs, a sharp decline in net income, and a decline in BioPharma's stock
price. This scenario clearly indicates the value of a corporation's...?
Answer:
Reputation.
Question:
When a clothing manufacturer decides to expand the sale of its clothing line by offering
internet purchases, it creates new exposures not otherwise covered, or not fully
covered, by a traditional policy. These include:
Answer:
Loss or damage caused by computer viruses.
Question:
Sally is a commercial property claims adjuster. When she is first assigned a claim, she
reviews the commercial property part of the policy to make sure that the property that
suffered the loss matches the description of the property insured. She also reviews the
kinds and amount of coverage provided. Which one of the following components of the
commercial property part will provide Sally with this information?
Answer:
The commercial property declarations page contains information such as a description
of the property insured, the kinds and amounts of coverage provided, and any optional
coverages, among other information.
, Question:
Billy owns a baseball souvenir store in Cooperstown, NY. He insured his store under a
Building and Personal Property Coverage Form (BPP) with a $275,000 limit and a $1,500
deductible. A large fire in the store caused significant damage amounting to $310,000 in
covered damages. How much would Billy's insurer pay under his BPP? - $275,000.
$310,000
Answer:
$1,500 = $308,500, which exceeds the BPP limit. The insurer will pay $275,000. The
deductible is subtracted from the loss, not the limit.
Question:
Which one of the following is one of the covered causes of loss in the commercial
property policy Causes of Loss-Basic form?
Answer:
Explosion is a covered cause of loss under the basic form. All the others are additional
causes of loss covered by the broad form (and they are also covered under the special
form).
Question:
Which one of the following is correct with respect to the Increased Cost of Construction
additional coverage of the Building and Personal Property Coverage Form (BPP)?
Answer:
It provides a small amount of insurance to cover the increased cost to comply with
ordinances or laws regulating the repair, rebuilding, or replacement of covered
buildings.
Question:
Which one of the following would be considered an extra expense under the Business
Income (and Extra Expense) Coverage Form of the commercial package policy?
Answer:
The increased cost of rent at a temporary location.
Question:
For most businesses, which peril poses the greatest risk of a large or total property loss?
Answer:
For most businesses, fire poses the greatest risk of a large or total property loss.
Question:
Extra expenses are expenses, in addition to ordinary expenses, that an organization
incurs to mitigate the effects of a business interruption. Which one of the following is an
example of an extra expense?
Answer:
Cost to rent temporary office space.
Question:
An electrical contractor was hired to install a new 100-amp fuse box in the Smith's
home. During installation, the contractor inadvertently left a small screwdriver in a duct
space behind the panel. Three weeks later, the screwdriver caused an electrical short
which led to a fire. Which one of the following loss exposures best categorizes the
electrical contractor's legal liability exposure for the fire damages?
Answer:
Completed operations liability.
Question:
Upon entering a restaurant, a customer grasped a handrail that broke off, causing the
customer to fall and break his wrist. This is an example of which one of the following
types of commercial general liability loss?
Answer:
Premises and operations liability.
Question:
Inland marine insurance is insurance that covers:
Answer:
Many different classes of property that typically involve an element of transportation on
land.
,Question:
Workers compensation benefits include which one of the following?
Answer:
Rehabilitation benefits.
Question:
Bio-Pharma was a highly-regarded pharmaceutical company. That changed last year
when it was revealed that Bio-Pharma researchers had fabricated test results of the
company's new hypertension drug, and a company official bribed a key regulator to get
the drug approved. These revelations led to a sharp decline in sales of all of
Bio-Pharma's drugs, a sharp decline in net income, and a decline in BioPharma's stock
price. This scenario clearly indicates the value of a corporation's...?
Answer:
Reputation.
Question:
When a clothing manufacturer decides to expand the sale of its clothing line by offering
internet purchases, it creates new exposures not otherwise covered, or not fully
covered, by a traditional policy. These include:
Answer:
Loss or damage caused by computer viruses.
Question:
Sally is a commercial property claims adjuster. When she is first assigned a claim, she
reviews the commercial property part of the policy to make sure that the property that
suffered the loss matches the description of the property insured. She also reviews the
kinds and amount of coverage provided. Which one of the following components of the
commercial property part will provide Sally with this information?
Answer:
The commercial property declarations page contains information such as a description
of the property insured, the kinds and amounts of coverage provided, and any optional
coverages, among other information.
, Question:
Billy owns a baseball souvenir store in Cooperstown, NY. He insured his store under a
Building and Personal Property Coverage Form (BPP) with a $275,000 limit and a $1,500
deductible. A large fire in the store caused significant damage amounting to $310,000 in
covered damages. How much would Billy's insurer pay under his BPP? - $275,000.
$310,000
Answer:
$1,500 = $308,500, which exceeds the BPP limit. The insurer will pay $275,000. The
deductible is subtracted from the loss, not the limit.
Question:
Which one of the following is one of the covered causes of loss in the commercial
property policy Causes of Loss-Basic form?
Answer:
Explosion is a covered cause of loss under the basic form. All the others are additional
causes of loss covered by the broad form (and they are also covered under the special
form).
Question:
Which one of the following is correct with respect to the Increased Cost of Construction
additional coverage of the Building and Personal Property Coverage Form (BPP)?
Answer:
It provides a small amount of insurance to cover the increased cost to comply with
ordinances or laws regulating the repair, rebuilding, or replacement of covered
buildings.
Question:
Which one of the following would be considered an extra expense under the Business
Income (and Extra Expense) Coverage Form of the commercial package policy?
Answer:
The increased cost of rent at a temporary location.
