AINS 103: Exam Questions With Correct
Solutions
While performing duties for the business, all of the following would be an insured under
Business Liability Coverage of a partnership's businessowners policy (BOP), EXCEPT:
CORRECT ANSWERS All executive officers of an LLC.
Which one of the following would be covered under the Extra Expense insuring
agreement of the Business Income (and Extra Expense) Coverage Form? CORRECT
ANSWERS Costs to move office equipment to a substitute location.
An intangible asset resulting from a collection of perceptions and opinions, past and
present, about an organization that resides in the consciousness of its stakeholders is
known as an organization's: CORRECT ANSWERS Reputation.
Ivan is a commercial insurance producer looking to expand his book of business. He is
researching local businesses trying to determine which businesses might be eligible for
the businessowners policy (BOP) and which would not be eligible. Which one of the
following businesses would be ineligible for BOP coverage? CORRECT ANSWERS
Amusement parks are generally not eligible for BOP coverage. Retail stores, small
restaurants with limited cooking, and trade contractors are generally eligible for BOP
coverage.
Marlene is a producer for East Goshen Mutual. She recently met with the owners of
Sugartown Farms to try and determine if they are eligible for the ISO businessowners
policy (BOP). Which one of the following facts about Sugartown Farms would prevent it
from being eligible for the BOP? CORRECT ANSWERS Sugartown Farms has a
restaurant with a bar for local patrons.
Sugartown Industries insures its building and personal property under the commercial
property coverage part of a commercial package policy (CPP). Following a lightning
storm, a portion of the building was damaged from a small fire. The operations manager
pulled out the CPP to make sure that the building was covered for this type of loss.
Which one of the following components of the commercial property coverage part would
provide the operations manager with information on the covered perils? CORRECT
ANSWERS The causes of loss form. The three types of cause of loss forms - Basic,
Broad, and Special - allow the insured to select, or the underwriter to offer, a range of
covered perils.
Under the Commercial General Liability (CGL) Coverage Form, medical payments
coverage applies to which one of the following situations? CORRECT ANSWERS Sara
is a volunteer helping the named insured clean up their grounds.
, Which one of the following causes of loss is covered by the commercial property policy
Causes of Loss—Broad Form but not the Basic Form? CORRECT ANSWERS Falling
objects.
The Property Custody Company (PCC) stores customer property for a fee. PCC is
insured under a bailees' customers policy. One day, due to the negligence of an
unrelated party and not due to any negligence of PCC, property owned by one of PCC's
customers is destroyed while in PCC's custody. Which one of the following describes
how PCC's insurer will handle the claim for the damage to PCC's customer's property
under PCC's bailees' customers policy? CORRECT ANSWERS It will pay the claim
because PCC's policy covers damage to customers' goods in its possession regardless
of negligence.
A private company posted a video on the internet introducing a new product. The music
used in the video was from a copyrighted song. When the company sought coverage
under Part B of their Commercial General Liability (CGL) Coverage Form after a claim
was filed against them for damages, coverage will most likely be excluded based on
which one of the following exclusions? CORRECT ANSWERS Coverage for
infringement of copyright, patent, trademarks, or trade secret are excluded unless it
occurs in an advertisement exclusion.
Devon Distributing purchased smart watches for all their long haul drivers. The devices
were monitored from the headquarters so the location of the driver was always known to
Devon management. The watches could also send text messages and accept phone
calls, so there was constant communication. This allowed Devon management to
respond immediately in the event of an emergency or failure of a vehicle. This network
is an example of: CORRECT ANSWERS The Internet of Things.
Business income insurance covers which one of the following types of losses that could
result from a fire? CORRECT ANSWERS The extra expenses for renting a temporary
office.
Smith Stores had net income of $5,000 per month in the 12 months before a covered
business income loss. The store is unable to reopen for three months. During that time,
continuing expenses totaled $6,000. What is the amount of Smith Stores' business
income loss? CORRECT ANSWERS $21,000. The business was interrupted for three
months, for a business income loss of $15,000, plus continuing expenses of $6,000,
equals $21,000.
The Paoli Power Shop has its building and business personal property insured under a
businessowners policy (BOP). Torrential rainstorms caused a nearby river to overflow
its banks and flood the area. The flood caused significant water damage to both the
building and personal property. Which one of the following would be true under the
BOP? CORRECT ANSWERS The water damage would not be covered.
Like all policies, the BOP property policy specifies causes of loss that limit or exclude
coverage to include flooding.
Solutions
While performing duties for the business, all of the following would be an insured under
Business Liability Coverage of a partnership's businessowners policy (BOP), EXCEPT:
CORRECT ANSWERS All executive officers of an LLC.
Which one of the following would be covered under the Extra Expense insuring
agreement of the Business Income (and Extra Expense) Coverage Form? CORRECT
ANSWERS Costs to move office equipment to a substitute location.
An intangible asset resulting from a collection of perceptions and opinions, past and
present, about an organization that resides in the consciousness of its stakeholders is
known as an organization's: CORRECT ANSWERS Reputation.
Ivan is a commercial insurance producer looking to expand his book of business. He is
researching local businesses trying to determine which businesses might be eligible for
the businessowners policy (BOP) and which would not be eligible. Which one of the
following businesses would be ineligible for BOP coverage? CORRECT ANSWERS
Amusement parks are generally not eligible for BOP coverage. Retail stores, small
restaurants with limited cooking, and trade contractors are generally eligible for BOP
coverage.
Marlene is a producer for East Goshen Mutual. She recently met with the owners of
Sugartown Farms to try and determine if they are eligible for the ISO businessowners
policy (BOP). Which one of the following facts about Sugartown Farms would prevent it
from being eligible for the BOP? CORRECT ANSWERS Sugartown Farms has a
restaurant with a bar for local patrons.
Sugartown Industries insures its building and personal property under the commercial
property coverage part of a commercial package policy (CPP). Following a lightning
storm, a portion of the building was damaged from a small fire. The operations manager
pulled out the CPP to make sure that the building was covered for this type of loss.
Which one of the following components of the commercial property coverage part would
provide the operations manager with information on the covered perils? CORRECT
ANSWERS The causes of loss form. The three types of cause of loss forms - Basic,
Broad, and Special - allow the insured to select, or the underwriter to offer, a range of
covered perils.
Under the Commercial General Liability (CGL) Coverage Form, medical payments
coverage applies to which one of the following situations? CORRECT ANSWERS Sara
is a volunteer helping the named insured clean up their grounds.
, Which one of the following causes of loss is covered by the commercial property policy
Causes of Loss—Broad Form but not the Basic Form? CORRECT ANSWERS Falling
objects.
The Property Custody Company (PCC) stores customer property for a fee. PCC is
insured under a bailees' customers policy. One day, due to the negligence of an
unrelated party and not due to any negligence of PCC, property owned by one of PCC's
customers is destroyed while in PCC's custody. Which one of the following describes
how PCC's insurer will handle the claim for the damage to PCC's customer's property
under PCC's bailees' customers policy? CORRECT ANSWERS It will pay the claim
because PCC's policy covers damage to customers' goods in its possession regardless
of negligence.
A private company posted a video on the internet introducing a new product. The music
used in the video was from a copyrighted song. When the company sought coverage
under Part B of their Commercial General Liability (CGL) Coverage Form after a claim
was filed against them for damages, coverage will most likely be excluded based on
which one of the following exclusions? CORRECT ANSWERS Coverage for
infringement of copyright, patent, trademarks, or trade secret are excluded unless it
occurs in an advertisement exclusion.
Devon Distributing purchased smart watches for all their long haul drivers. The devices
were monitored from the headquarters so the location of the driver was always known to
Devon management. The watches could also send text messages and accept phone
calls, so there was constant communication. This allowed Devon management to
respond immediately in the event of an emergency or failure of a vehicle. This network
is an example of: CORRECT ANSWERS The Internet of Things.
Business income insurance covers which one of the following types of losses that could
result from a fire? CORRECT ANSWERS The extra expenses for renting a temporary
office.
Smith Stores had net income of $5,000 per month in the 12 months before a covered
business income loss. The store is unable to reopen for three months. During that time,
continuing expenses totaled $6,000. What is the amount of Smith Stores' business
income loss? CORRECT ANSWERS $21,000. The business was interrupted for three
months, for a business income loss of $15,000, plus continuing expenses of $6,000,
equals $21,000.
The Paoli Power Shop has its building and business personal property insured under a
businessowners policy (BOP). Torrential rainstorms caused a nearby river to overflow
its banks and flood the area. The flood caused significant water damage to both the
building and personal property. Which one of the following would be true under the
BOP? CORRECT ANSWERS The water damage would not be covered.
Like all policies, the BOP property policy specifies causes of loss that limit or exclude
coverage to include flooding.
