AINS 103 Exam
Cyber risk intellectual property loss exposures include
A. Property damage liability.
B. Loss to tangible property.
C. Personal and advertising injury liability.
D. Cyber extortion of trade secrets. - CORRECT ANSWER-D. Cyber extortion of trade
secrets.
Stanton Industries insures its building and business personal property under the
commercial property coverage part of a commercial package policy. Anthony is the new
risk manager for Stanton Industries. He wants to look at the policy to review the
property insured, the kinds and amounts of coverage provided, and any optional
coverages. Which one of the following component parts of the commercial property part
would provide Anthony with this information?
A. Causes of loss form
B. Commercial property declarations
C. Commercial property conditions
D. Coverage form - CORRECT ANSWER-B. Commercial property declarations
The 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.
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?
A. $273,500
B. $275,000
C. $308,500
D. $310,000 - CORRECT ANSWER-B. $275,000
= $310,000 - $1,500
= $308,500
*The loss exceeds the policy limit, so the insured will pay $275,000
**The deductible is subtracted from the loss, not the limit.
,Which one of the following perils would be covered under the commercial property
policy broad form but not covered under the basic form?
A. Damage due to vandalism
B. Damage due to vehicles
C. Damage due to weight of snow
D. Damage due to explosion. - CORRECT ANSWER-C. Damage due to weight of snow
The 3 extra perils covered under the Broad form include:
falling objects, weight of ice/snow, water damage
Hager Incorporated insures its building and business personal property under the
Building and Personal Property Coverage Form (BPP). The company suffered a fire
loss that destroyed a significant portion of the building and damaged the fence
surrounding the building. Assuming that the building is insured for at least 80 percent of
its value, coverage extensions under the BPP would provide coverage for which one of
the following?
A. The cost to remove pollutants from the neighboring creek
B. The cost to remove debris from the portion of the building that was destroyed
C. Increased cost of construction to comply with new ordinances or laws
D. Damage to the fence surrounding the building - CORRECT ANSWER-D. Damage to
the fence surrounding the building
- The fence surrounding the building would be considered outdoor property, and would
be covered under BPP coverage extensions which apply only if the building is insured
for at least 80 percent of its value.
- Debris removal and increased cost of construction are considered additional
coverages under the BPP.
- Coverage would not include removing pollutants from a neighboring creek.
Lucy's Bakery is insured under a commercial package policy with the Business Income
(and Extra Expense) Coverage Form. A fire loss caused significant damage to the
building. When Lucy learned that it would take 9 months to repair the building, she
decided to temporarily relocate to a nearby rental location. All of the following would be
considered covered extra expenses under the Business Income (and Extra Expense)
Coverage Form, EXCEPT:
A. The costs to move some of the ovens to the new location
B. The salary of the assistant baker and cake decorator
C. The rent for the new location
D. The cost to lease mixers and other machinery - CORRECT ANSWER-B. The salary
of the assistant baker and cake decorator.
Salaries are not an additional cost, as these are still expected to be paid as normal
,Dooley's Restaurant is insured under a commercial package policy (CPP) with the
Business Income (with Extra Expense) Coverage Form. The business suffered a
$400,000 loss of business income when it was forced to suspend operations after flood
waters damaged the basement and first floor of the restaurant. Which one of the
following is an acceptable reason for the CPP insurer to deny the business income
claim?
A. The policy's covered causes of loss did not include flood.
B. The business did not earn a profit in the prior 12-month period.
C. The business planned to resume operations within 120 days.
D. The building was damaged, but not completely destroyed. - CORRECT ANSWER-A.
The policy's covered causes of loss did not include flood.
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?
A. The increased cost of construction to meet new building codes or ordinances
B. The salary of key employees who will continue to work at a temporary location
C. The cost to remove damaged equipment and machinery
D. The increased cost of rent at a temporary location
E. Interest expense
F. Property taxes
G. Normal operating expenses - CORRECT ANSWER-D. The increased cost of rent at
a temporary location
All other options are continuing expenses
Sam's Hair Salon (SHS) is insured under a commercial package policy with the
Business Income (and Extra Expense) Coverage Form (BIC). The BIC has a $500,000
limit of insurance and a 70 percent coinsurance provision. A fire damaged SHS's
building and the business was forced to close down for 4 months while the damage
could be repaired. This resulted in a BIC loss of $250,000. The salon's net income plus
operating expenses that would have been incurred in the absence of the loss for 12
months beginning at the policy's inception was $700,000. Which one of the following
represents the coinsurance basis?
A. $350,000
B. $400,000
C. $500,000
D. $700,000 - CORRECT ANSWER-D. $700,000
Coinsurance basis = net income plus operating expenses that would have been
incurred in the absence of the loss for 12 months beginning at the policy's inception
, Joe's Cleaning Service is having a very good year, with close to a 30 percent increase
in sales. Joe is wondering if this growth will affect his general liability premium at the
end of the policy period. Which one of the following sections of the general liability
coverage form will provide this information?
A. Endorsements
B. Declarations Form
C. Extended Reporting Period
D. Limits of Insurance - CORRECT ANSWER-B. Declarations Form
The CGL declarations form will include rating and premium auditing information.
A customer filed a suit against Patsy's Market, claiming that she was injured when she
slipped and fell in the produce section. The customer claimed that she broke her elbow,
had to have surgery, and missed a week of work. The owner of Patsy's Market told its
commercial general liability (CGL) insurer that the produce area was always clean and
that the claim was suspicious. After reviewing the medical bills and video footage from
the market, the insurer concluded that Patsy's Market was probably liable for the
customer's injury. The CGL insurer will most likely attempt to do which one of the
following?
A. Refuse to defend Patsy's Market based on an exclusion
B. Deny the claim based on the owner's suspicion
C. Defend Patsy's Market in court
D. Negotiate an out of court settlement - CORRECT ANSWER-D. Negotiate an out of
court settlement
Which one of these offenses would not be considered a personal and advertising injury
under Coverage B of the Commercial General Liability Coverage Form?
A. Wrongful eviction from a dwelling or premises that a person occupies
B. Refusing to hire a qualified job applicant because of his ethnicity
C. Malicious prosecution
D. An organization's unauthorized use of another's advertising idea in an advertisement
- CORRECT ANSWER-B. Refusing to hire a qualified job applicant because of his
ethnicity
CGL Coverage B covers injury from:
false arrest
wrongful eviction
libel
slander
infringement upon another's copyright
Chuckie's chicken distributor researches the benefits of consuming chicken versus
consuming beef. In November 2011, Chuckie's publishes a brochure outlining the
Cyber risk intellectual property loss exposures include
A. Property damage liability.
B. Loss to tangible property.
C. Personal and advertising injury liability.
D. Cyber extortion of trade secrets. - CORRECT ANSWER-D. Cyber extortion of trade
secrets.
Stanton Industries insures its building and business personal property under the
commercial property coverage part of a commercial package policy. Anthony is the new
risk manager for Stanton Industries. He wants to look at the policy to review the
property insured, the kinds and amounts of coverage provided, and any optional
coverages. Which one of the following component parts of the commercial property part
would provide Anthony with this information?
A. Causes of loss form
B. Commercial property declarations
C. Commercial property conditions
D. Coverage form - CORRECT ANSWER-B. Commercial property declarations
The 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.
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?
A. $273,500
B. $275,000
C. $308,500
D. $310,000 - CORRECT ANSWER-B. $275,000
= $310,000 - $1,500
= $308,500
*The loss exceeds the policy limit, so the insured will pay $275,000
**The deductible is subtracted from the loss, not the limit.
,Which one of the following perils would be covered under the commercial property
policy broad form but not covered under the basic form?
A. Damage due to vandalism
B. Damage due to vehicles
C. Damage due to weight of snow
D. Damage due to explosion. - CORRECT ANSWER-C. Damage due to weight of snow
The 3 extra perils covered under the Broad form include:
falling objects, weight of ice/snow, water damage
Hager Incorporated insures its building and business personal property under the
Building and Personal Property Coverage Form (BPP). The company suffered a fire
loss that destroyed a significant portion of the building and damaged the fence
surrounding the building. Assuming that the building is insured for at least 80 percent of
its value, coverage extensions under the BPP would provide coverage for which one of
the following?
A. The cost to remove pollutants from the neighboring creek
B. The cost to remove debris from the portion of the building that was destroyed
C. Increased cost of construction to comply with new ordinances or laws
D. Damage to the fence surrounding the building - CORRECT ANSWER-D. Damage to
the fence surrounding the building
- The fence surrounding the building would be considered outdoor property, and would
be covered under BPP coverage extensions which apply only if the building is insured
for at least 80 percent of its value.
- Debris removal and increased cost of construction are considered additional
coverages under the BPP.
- Coverage would not include removing pollutants from a neighboring creek.
Lucy's Bakery is insured under a commercial package policy with the Business Income
(and Extra Expense) Coverage Form. A fire loss caused significant damage to the
building. When Lucy learned that it would take 9 months to repair the building, she
decided to temporarily relocate to a nearby rental location. All of the following would be
considered covered extra expenses under the Business Income (and Extra Expense)
Coverage Form, EXCEPT:
A. The costs to move some of the ovens to the new location
B. The salary of the assistant baker and cake decorator
C. The rent for the new location
D. The cost to lease mixers and other machinery - CORRECT ANSWER-B. The salary
of the assistant baker and cake decorator.
Salaries are not an additional cost, as these are still expected to be paid as normal
,Dooley's Restaurant is insured under a commercial package policy (CPP) with the
Business Income (with Extra Expense) Coverage Form. The business suffered a
$400,000 loss of business income when it was forced to suspend operations after flood
waters damaged the basement and first floor of the restaurant. Which one of the
following is an acceptable reason for the CPP insurer to deny the business income
claim?
A. The policy's covered causes of loss did not include flood.
B. The business did not earn a profit in the prior 12-month period.
C. The business planned to resume operations within 120 days.
D. The building was damaged, but not completely destroyed. - CORRECT ANSWER-A.
The policy's covered causes of loss did not include flood.
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?
A. The increased cost of construction to meet new building codes or ordinances
B. The salary of key employees who will continue to work at a temporary location
C. The cost to remove damaged equipment and machinery
D. The increased cost of rent at a temporary location
E. Interest expense
F. Property taxes
G. Normal operating expenses - CORRECT ANSWER-D. The increased cost of rent at
a temporary location
All other options are continuing expenses
Sam's Hair Salon (SHS) is insured under a commercial package policy with the
Business Income (and Extra Expense) Coverage Form (BIC). The BIC has a $500,000
limit of insurance and a 70 percent coinsurance provision. A fire damaged SHS's
building and the business was forced to close down for 4 months while the damage
could be repaired. This resulted in a BIC loss of $250,000. The salon's net income plus
operating expenses that would have been incurred in the absence of the loss for 12
months beginning at the policy's inception was $700,000. Which one of the following
represents the coinsurance basis?
A. $350,000
B. $400,000
C. $500,000
D. $700,000 - CORRECT ANSWER-D. $700,000
Coinsurance basis = net income plus operating expenses that would have been
incurred in the absence of the loss for 12 months beginning at the policy's inception
, Joe's Cleaning Service is having a very good year, with close to a 30 percent increase
in sales. Joe is wondering if this growth will affect his general liability premium at the
end of the policy period. Which one of the following sections of the general liability
coverage form will provide this information?
A. Endorsements
B. Declarations Form
C. Extended Reporting Period
D. Limits of Insurance - CORRECT ANSWER-B. Declarations Form
The CGL declarations form will include rating and premium auditing information.
A customer filed a suit against Patsy's Market, claiming that she was injured when she
slipped and fell in the produce section. The customer claimed that she broke her elbow,
had to have surgery, and missed a week of work. The owner of Patsy's Market told its
commercial general liability (CGL) insurer that the produce area was always clean and
that the claim was suspicious. After reviewing the medical bills and video footage from
the market, the insurer concluded that Patsy's Market was probably liable for the
customer's injury. The CGL insurer will most likely attempt to do which one of the
following?
A. Refuse to defend Patsy's Market based on an exclusion
B. Deny the claim based on the owner's suspicion
C. Defend Patsy's Market in court
D. Negotiate an out of court settlement - CORRECT ANSWER-D. Negotiate an out of
court settlement
Which one of these offenses would not be considered a personal and advertising injury
under Coverage B of the Commercial General Liability Coverage Form?
A. Wrongful eviction from a dwelling or premises that a person occupies
B. Refusing to hire a qualified job applicant because of his ethnicity
C. Malicious prosecution
D. An organization's unauthorized use of another's advertising idea in an advertisement
- CORRECT ANSWER-B. Refusing to hire a qualified job applicant because of his
ethnicity
CGL Coverage B covers injury from:
false arrest
wrongful eviction
libel
slander
infringement upon another's copyright
Chuckie's chicken distributor researches the benefits of consuming chicken versus
consuming beef. In November 2011, Chuckie's publishes a brochure outlining the
