AU 61 Questions with CORRECT Answers
Question:
Commercial package policy (CPP)
Answer:
Policy that covers two or more lines of business by combining ISO's commercial lines
coverage parts.
Question:
Businessowners policy (BOP)
Answer:
A package policy that combines most of the property and liability coverages needed by
small and medium-size businesses.
Question:
Output policy
Answer:
A policy that combines, in one form and associated endorsements, all or most of the
commercial property coverages that the insured organization needs, and uses a flexible
rating plan.
Question:
Predictive modeling
Answer:
A process in which historical data based on behaviors and events is blended with
multiple variables and used to construct models of anticipated future outcomes.
Question:
Insurable interest
Answer:
An interest in the subject of an insurance policy that is not unduly remote and that
would cause the interested party to suffer financial loss if an insured event occurred.
,Question:
Factual expectancy
Answer:
A situation in which a party experiences an economic advantage if an insured event
does not occur or, conversely, economic harm if the event does occur.
Question:
Fee simple estate
Answer:
A full ownership interest in property with the unconditional right to dispose of it.
Question:
Joint tenancy
Answer:
A concurrently owned and undivided interest in an estate that transfers to a surviving
joint tenant upon the death of the other.
Question:
Life tenant (life estate)
Answer:
A person entitled to exclusive possession of real property and to all income the land
produces for the duration of that person's or someone else's life; terminates on the
death of the life tenant and does not pass to his or her estate.
Question:
Remainder estate
Answer:
The right granted an individual (a remainderman) to hold an estate following the death
of the life tenant.
Question:
Remainderman
Answer:
The individual who acquires an estate following the death of a life tenant and who
acquires a fee simple estate in the property.
,Question:
Replacement cost
Answer:
The cost to repair or replace property using new materials of like kind and quality with
no deduction for depreciation.
Question:
Actual cash value (ACV)
Answer:
Cost to replace property with new property of like kind and quality less depreciation.
Question:
Functional valuation method
Answer:
A valuation method in which the insurer is required to pay no more than the cost to
repair or replace the damaged or destroyed property with property that is its functional
equivalent.
Question:
Insurance to value
Answer:
Insurance written for an amount approximating the full value of the asset(s) insured.
Question:
Coinsurance condition
Answer:
A condition that requires the insured to carry insurance equal to at least a specified
percentage of the actual cash value (ACV) of the property insured.
Question:
Insurance-to-value provision
Answer:
A provision in property insurance policies that encourages insureds to purchase an
amount of insurance that is equal to, or close to, the value of the covered property.
, Question:
Agreed Value optional coverage
Answer:
Optional coverage that suspends the Coinsurance condition if the insured carries the
amount of insurance agreed to by the insurer and insured.
Question:
Blanket insurance
Answer:
Insurance that covers either of the following with one limit of insurance: (1) one type of
property in one or more separately rated buildings or (2) two or more types of property
in one or more separately rated buildings.
Question:
Blanket limit
Answer:
The maximum dollar amount the insurer will pay for two or more items or classes of
property at one or more locations.
Question:
Inflation Guard optional coverage
Answer:
Coverage for the effects of inflation that automatically increases the limit of insurance
by the percentage of annual increase shown in the declarations.
Question:
Market value
Answer:
The price at which a particular piece of property could be sold on the open market by an
unrelated buyer and seller.
Question:
Fire-resistive construction
Answer:
A class of construction that has exterior walls, floors, and roofs of masonry or other
fire-resistive material with a fire-resistance rating of at least two hours.
Question:
Commercial package policy (CPP)
Answer:
Policy that covers two or more lines of business by combining ISO's commercial lines
coverage parts.
Question:
Businessowners policy (BOP)
Answer:
A package policy that combines most of the property and liability coverages needed by
small and medium-size businesses.
Question:
Output policy
Answer:
A policy that combines, in one form and associated endorsements, all or most of the
commercial property coverages that the insured organization needs, and uses a flexible
rating plan.
Question:
Predictive modeling
Answer:
A process in which historical data based on behaviors and events is blended with
multiple variables and used to construct models of anticipated future outcomes.
Question:
Insurable interest
Answer:
An interest in the subject of an insurance policy that is not unduly remote and that
would cause the interested party to suffer financial loss if an insured event occurred.
,Question:
Factual expectancy
Answer:
A situation in which a party experiences an economic advantage if an insured event
does not occur or, conversely, economic harm if the event does occur.
Question:
Fee simple estate
Answer:
A full ownership interest in property with the unconditional right to dispose of it.
Question:
Joint tenancy
Answer:
A concurrently owned and undivided interest in an estate that transfers to a surviving
joint tenant upon the death of the other.
Question:
Life tenant (life estate)
Answer:
A person entitled to exclusive possession of real property and to all income the land
produces for the duration of that person's or someone else's life; terminates on the
death of the life tenant and does not pass to his or her estate.
Question:
Remainder estate
Answer:
The right granted an individual (a remainderman) to hold an estate following the death
of the life tenant.
Question:
Remainderman
Answer:
The individual who acquires an estate following the death of a life tenant and who
acquires a fee simple estate in the property.
,Question:
Replacement cost
Answer:
The cost to repair or replace property using new materials of like kind and quality with
no deduction for depreciation.
Question:
Actual cash value (ACV)
Answer:
Cost to replace property with new property of like kind and quality less depreciation.
Question:
Functional valuation method
Answer:
A valuation method in which the insurer is required to pay no more than the cost to
repair or replace the damaged or destroyed property with property that is its functional
equivalent.
Question:
Insurance to value
Answer:
Insurance written for an amount approximating the full value of the asset(s) insured.
Question:
Coinsurance condition
Answer:
A condition that requires the insured to carry insurance equal to at least a specified
percentage of the actual cash value (ACV) of the property insured.
Question:
Insurance-to-value provision
Answer:
A provision in property insurance policies that encourages insureds to purchase an
amount of insurance that is equal to, or close to, the value of the covered property.
, Question:
Agreed Value optional coverage
Answer:
Optional coverage that suspends the Coinsurance condition if the insured carries the
amount of insurance agreed to by the insurer and insured.
Question:
Blanket insurance
Answer:
Insurance that covers either of the following with one limit of insurance: (1) one type of
property in one or more separately rated buildings or (2) two or more types of property
in one or more separately rated buildings.
Question:
Blanket limit
Answer:
The maximum dollar amount the insurer will pay for two or more items or classes of
property at one or more locations.
Question:
Inflation Guard optional coverage
Answer:
Coverage for the effects of inflation that automatically increases the limit of insurance
by the percentage of annual increase shown in the declarations.
Question:
Market value
Answer:
The price at which a particular piece of property could be sold on the open market by an
unrelated buyer and seller.
Question:
Fire-resistive construction
Answer:
A class of construction that has exterior walls, floors, and roofs of masonry or other
fire-resistive material with a fire-resistance rating of at least two hours.
