AIC 31 QUESTIONS WITH CORRECT
ANSWERS 2025
Which one of the following describes a windstorm under an insurance policy? - Correct
AnswersA wind of any velocity having sufficient force to cause damage
In a specified perils policy, a loss is covered only if - Correct AnswersThe cause of loss
is listed.
A mortgagee's rights under a property insurance policy can best be described as -
Correct AnswersIndependent of the named insured's rights and duties.
A specific exclusion common to most property policies is - Correct AnswersOrdinance
or law.
Paco Campos accidentally tosses a cigarette in a trash can in his old detached garage.
The garage catches on fire, but Paco, knowing his insurance policy will provide
coverage, waits until the garage is severely damaged before he begins to attempt to put
out the fire or call the fire department. This is an example of - Correct AnswersA morale
hazard.
Which one of the following statements is true regarding coinsurance? - Correct
AnswersThe adequacy of the amount of insurance purchased is measured against the
value of the property insured.
The earliest types of insurance coverage addressed only the building structures
exposure and the peril of - Correct AnswersFire.
When the insured has a specified-perils policy, the - Correct AnswersInsured is
obligated to determine which peril applies to the damage to his or her property.
Lisa is covered under a specified-perils policy. She has called her insurance producer to
report the theft of her wedding ring from her home. The burden of proof in this situation
is on - Correct AnswersLisa.
Which one of the following is true regarding "additional coverage" - Correct
AnswersSome additional coverages are created to reinstate coverage that has
otherwise been eliminated by exclusions.
Which one of the following is an important consideration in determining whether an
object is personal property or a fixture? - Correct AnswersThe owner's intent
Concurrent causation becomes an issue when - Correct AnswersOne of the perils is a
covered peril and the other is not.
,Concurrent causation is - Correct AnswersA single loss caused by two or more perils,
acting either simultaneously or in succession.
Henry's home was badly damaged from weight of ice and snow on the roof and eaves.
The property insurance coverage that would cover his loss is - Correct AnswersBroad-
form coverage.
Sharon and Robin joined in a business venture where they both share in business
profits and losses. Also involved in this venture is Larry, who has invested $50,000,
which is the extent of his liability in the business. Larry is a - Correct AnswersLimited
partner.
Freelance writer John owns a barn containing wheelbarrows, ladders, roofing shingles,
a lawn mower, clothes, some copyrights, two vehicles, and some miscellaneous
personal property. Which one of the following property items would be considered
John's real property? - Correct AnswersRoofing shingles
In determining coverage for a loss under a special-form policy, the adjuster must
determine - Correct AnswersWhether any exclusions apply.
Lifelong friends Sam and Peter combine their funds and purchase a summer home on a
lake. As co-owners, each of them has a 50 percent interest in the property. Sam and
Peter - Correct AnswersAre tenants in common.
Which one of the following forms added seven additional perils to the Basic Form
endorsement? - Correct AnswersThe Extended Coverage endorsement
Concurrent causation is defined as - Correct AnswersA single loss that was caused by
two or more perils, occurring simultaneously or in succession.
Collapse as an additional coverage under the HO-3 is an example of - Correct
AnswersA reinstatement of coverage previously excluded.
Which one of the following statements is true regarding the peril of collapse? - Correct
AnswersInsurers agree to pay for collapse of the insured building caused by perils listed
in the form.
Which one of the following statements is true regarding a specified-perils coverage
loss? - Correct AnswersAn adjuster must verify an identified peril caused the loss before
paying the loss.
The past month has caused many fire-related problems in Sarah's household. Which
one of the following incidents would be considered a hostile fire by Sarah's insurance
producer? - Correct AnswersSarah burned trash in her yard, and the fire spread and
burned down Sarah's garage.
, Alvin Ross has been informed by his insurance agent that his policy protects against
risk of direct physical loss to property. Over time, the walls began to crack and pipes
began to break causing extensive damage. Alvin was told that these problems are due
to faulty design. Which one of the following statements is true? - Correct AnswersAlvin's
insurer has the burden of proof, and if the insurer cannot prove that an exclusion applies
based on what caused the loss, then coverage would apply.
Lila Jones has a $250,000 home mortgage which includes $200,000 for her loan
balance and $50,000 equity in her home. How much insurance is Lila entitled to
purchase on her home? - Correct Answers$250,000, because that is Lila's total
insurable interest in her home
Which one of the following describes the mortgage clause? - Correct AnswersThe
mortgagee is notified of cancellation or non-renewal at least 10 days before cancellation
or non-renewal takes effect.
Which one of the following statements is true about the mortgage clause? - Correct
AnswersThe mortgagee can collect even if the insured intentionally burned down the
house assuming other policy conditions are met.
Which one of the following exclusions is common to property policies? - Correct
AnswersGovernmental action
Some additional coverages such as debris removal - Correct AnswersIncrease the
available limit.
Mark's six-year-old lawn mower was destroyed in a fire. It will cost him $7,000 to
purchase a new mower of the same brand and model. The lawn mower's depreciation is
$3,000. Mark has a $1,000 deductible on his homeowners insurance policy. The actual
cash value of Mark's lawn mower, not considering the deductible, is - Correct
AnswersCorrect. The $7,000 replacement cost minus the $3,000 depreciation results in
a $4,000 actual cash value.
Deductibles - Correct AnswersEliminates the insurer's obligation for small losses below
the deductible amount.
An insurer is most likely to elect to replace lost or damaged property through a
replacement service company - Correct AnswersWhen the markup on an item is
especially high.
Freddy has an HO3 policy with a $100 deductible and a special limit of liability for cash
in the amount of $300. A burglary takes place at Freddy's home and the following
property is stolen: A $1,000 computer, a $100 DVD player, a $400 gun and $500 in
cash, amounting to a total loss of $2,000. Assuming these are covered items, Freddy
will recover how much from the insurer? - Correct AnswersThe $100 deductible is not
ANSWERS 2025
Which one of the following describes a windstorm under an insurance policy? - Correct
AnswersA wind of any velocity having sufficient force to cause damage
In a specified perils policy, a loss is covered only if - Correct AnswersThe cause of loss
is listed.
A mortgagee's rights under a property insurance policy can best be described as -
Correct AnswersIndependent of the named insured's rights and duties.
A specific exclusion common to most property policies is - Correct AnswersOrdinance
or law.
Paco Campos accidentally tosses a cigarette in a trash can in his old detached garage.
The garage catches on fire, but Paco, knowing his insurance policy will provide
coverage, waits until the garage is severely damaged before he begins to attempt to put
out the fire or call the fire department. This is an example of - Correct AnswersA morale
hazard.
Which one of the following statements is true regarding coinsurance? - Correct
AnswersThe adequacy of the amount of insurance purchased is measured against the
value of the property insured.
The earliest types of insurance coverage addressed only the building structures
exposure and the peril of - Correct AnswersFire.
When the insured has a specified-perils policy, the - Correct AnswersInsured is
obligated to determine which peril applies to the damage to his or her property.
Lisa is covered under a specified-perils policy. She has called her insurance producer to
report the theft of her wedding ring from her home. The burden of proof in this situation
is on - Correct AnswersLisa.
Which one of the following is true regarding "additional coverage" - Correct
AnswersSome additional coverages are created to reinstate coverage that has
otherwise been eliminated by exclusions.
Which one of the following is an important consideration in determining whether an
object is personal property or a fixture? - Correct AnswersThe owner's intent
Concurrent causation becomes an issue when - Correct AnswersOne of the perils is a
covered peril and the other is not.
,Concurrent causation is - Correct AnswersA single loss caused by two or more perils,
acting either simultaneously or in succession.
Henry's home was badly damaged from weight of ice and snow on the roof and eaves.
The property insurance coverage that would cover his loss is - Correct AnswersBroad-
form coverage.
Sharon and Robin joined in a business venture where they both share in business
profits and losses. Also involved in this venture is Larry, who has invested $50,000,
which is the extent of his liability in the business. Larry is a - Correct AnswersLimited
partner.
Freelance writer John owns a barn containing wheelbarrows, ladders, roofing shingles,
a lawn mower, clothes, some copyrights, two vehicles, and some miscellaneous
personal property. Which one of the following property items would be considered
John's real property? - Correct AnswersRoofing shingles
In determining coverage for a loss under a special-form policy, the adjuster must
determine - Correct AnswersWhether any exclusions apply.
Lifelong friends Sam and Peter combine their funds and purchase a summer home on a
lake. As co-owners, each of them has a 50 percent interest in the property. Sam and
Peter - Correct AnswersAre tenants in common.
Which one of the following forms added seven additional perils to the Basic Form
endorsement? - Correct AnswersThe Extended Coverage endorsement
Concurrent causation is defined as - Correct AnswersA single loss that was caused by
two or more perils, occurring simultaneously or in succession.
Collapse as an additional coverage under the HO-3 is an example of - Correct
AnswersA reinstatement of coverage previously excluded.
Which one of the following statements is true regarding the peril of collapse? - Correct
AnswersInsurers agree to pay for collapse of the insured building caused by perils listed
in the form.
Which one of the following statements is true regarding a specified-perils coverage
loss? - Correct AnswersAn adjuster must verify an identified peril caused the loss before
paying the loss.
The past month has caused many fire-related problems in Sarah's household. Which
one of the following incidents would be considered a hostile fire by Sarah's insurance
producer? - Correct AnswersSarah burned trash in her yard, and the fire spread and
burned down Sarah's garage.
, Alvin Ross has been informed by his insurance agent that his policy protects against
risk of direct physical loss to property. Over time, the walls began to crack and pipes
began to break causing extensive damage. Alvin was told that these problems are due
to faulty design. Which one of the following statements is true? - Correct AnswersAlvin's
insurer has the burden of proof, and if the insurer cannot prove that an exclusion applies
based on what caused the loss, then coverage would apply.
Lila Jones has a $250,000 home mortgage which includes $200,000 for her loan
balance and $50,000 equity in her home. How much insurance is Lila entitled to
purchase on her home? - Correct Answers$250,000, because that is Lila's total
insurable interest in her home
Which one of the following describes the mortgage clause? - Correct AnswersThe
mortgagee is notified of cancellation or non-renewal at least 10 days before cancellation
or non-renewal takes effect.
Which one of the following statements is true about the mortgage clause? - Correct
AnswersThe mortgagee can collect even if the insured intentionally burned down the
house assuming other policy conditions are met.
Which one of the following exclusions is common to property policies? - Correct
AnswersGovernmental action
Some additional coverages such as debris removal - Correct AnswersIncrease the
available limit.
Mark's six-year-old lawn mower was destroyed in a fire. It will cost him $7,000 to
purchase a new mower of the same brand and model. The lawn mower's depreciation is
$3,000. Mark has a $1,000 deductible on his homeowners insurance policy. The actual
cash value of Mark's lawn mower, not considering the deductible, is - Correct
AnswersCorrect. The $7,000 replacement cost minus the $3,000 depreciation results in
a $4,000 actual cash value.
Deductibles - Correct AnswersEliminates the insurer's obligation for small losses below
the deductible amount.
An insurer is most likely to elect to replace lost or damaged property through a
replacement service company - Correct AnswersWhen the markup on an item is
especially high.
Freddy has an HO3 policy with a $100 deductible and a special limit of liability for cash
in the amount of $300. A burglary takes place at Freddy's home and the following
property is stolen: A $1,000 computer, a $100 DVD player, a $400 gun and $500 in
cash, amounting to a total loss of $2,000. Assuming these are covered items, Freddy
will recover how much from the insurer? - Correct AnswersThe $100 deductible is not
