AU 61 Questions with CORRECT Answers
Question:
Emily is a risk analyst at EFG Company. She is presenting a cost benefit analysis with
her supervisor to senior management on ways to improve their risk control program in
the employer's warehouses. Her supervisor asked her to compile some improvements
and the reasons they will help all employees at EFG and also help management reach
their business goals. All of the following could be potential program improvements for
considering committing resources to improving risk control in the warehouses, EXCEPT:
Answer:
Bring in an outside team to consider increasing the size of the warehouses for more
storage.
Question:
Which one of the following statements is true for underwriters when considering the risk
of wildfires?
Answer:
Extensive wildfires may result in government-mandated evacuations of entire
communities, resulting in tremendous business interruption losses.
Question:
Hilltop Health Club (HHC) is a fitness center that is open from 6:00 AM to 10:00 PM
seven days a week. The facility offers a full range of exercise equipment, an outdoor
obstacle course, training classes, and locker rooms with showers. HHC also has a small
snack bar with a grill offering breakfast and lunch daily. Which one of the following
would be considered a special hazard of the risk for HHC?
Answer:
The snack bar with the grill.
Question:
Which one of the items below would be included in the probable maximum loss (PML)
calculation following a business interruption loss but are not included in the worksheet
calculating the coinsurance basis?
Answer:
Extra Expenses.
, Question:
Emilia works for Malvern Insurance Underwriters. She is reviewing the period of
restoration under the business income policy following a fire loss that closed an
account's headquarters due to smoke and partially collapsed the employee parking
garage. Operations were affected due to their inability to coordinate with their suppliers
for deliveries and use their headquarters. The fire occurred on March 1st and they were
able to resume normal operations on April 25th of the same year. Unfortunately, a
server malfunctioned due to corrupted software a consultant had loaded before the fire
and caused the website to remain down until May 2nd. Which one of the following
periods would represent the correct period of restoration?
Answer:
March 4th to April 25th. The period of restoration begins 72 hours after the physical loss
occurs and ends when the property is (or should have been) restored to use with
reasonable speed.
Question:
A large fire at Paoli Computers destroyed their facility. The underwriter on the account
contacted the agent and they agreed that Paoli had the proper amount of business
income insurance to handle the loss. Paoli was in a yearly lease with the property owner
and had 25 employees who worked in the destroyed building. They had a fleet of
vehicles to deliver products and service accounts that they were unable to use. Which
one of the following expenses would be expected to remain relatively stable despite the
loss?
Answer:
Income Taxes.
Question:
Anthony is reviewing a property insurance application for Rizzo Bakery. Rizzo Bakery is
a manufacturer of artisan breads that are sold at food markets. When evaluating the
fuel load for this type of manufacturing operation, which one of the following would be a
major concern for Anthony?
Answer:
Combustible dust.
Question:
Emily is a risk analyst at EFG Company. She is presenting a cost benefit analysis with
her supervisor to senior management on ways to improve their risk control program in
the employer's warehouses. Her supervisor asked her to compile some improvements
and the reasons they will help all employees at EFG and also help management reach
their business goals. All of the following could be potential program improvements for
considering committing resources to improving risk control in the warehouses, EXCEPT:
Answer:
Bring in an outside team to consider increasing the size of the warehouses for more
storage.
Question:
Which one of the following statements is true for underwriters when considering the risk
of wildfires?
Answer:
Extensive wildfires may result in government-mandated evacuations of entire
communities, resulting in tremendous business interruption losses.
Question:
Hilltop Health Club (HHC) is a fitness center that is open from 6:00 AM to 10:00 PM
seven days a week. The facility offers a full range of exercise equipment, an outdoor
obstacle course, training classes, and locker rooms with showers. HHC also has a small
snack bar with a grill offering breakfast and lunch daily. Which one of the following
would be considered a special hazard of the risk for HHC?
Answer:
The snack bar with the grill.
Question:
Which one of the items below would be included in the probable maximum loss (PML)
calculation following a business interruption loss but are not included in the worksheet
calculating the coinsurance basis?
Answer:
Extra Expenses.
, Question:
Emilia works for Malvern Insurance Underwriters. She is reviewing the period of
restoration under the business income policy following a fire loss that closed an
account's headquarters due to smoke and partially collapsed the employee parking
garage. Operations were affected due to their inability to coordinate with their suppliers
for deliveries and use their headquarters. The fire occurred on March 1st and they were
able to resume normal operations on April 25th of the same year. Unfortunately, a
server malfunctioned due to corrupted software a consultant had loaded before the fire
and caused the website to remain down until May 2nd. Which one of the following
periods would represent the correct period of restoration?
Answer:
March 4th to April 25th. The period of restoration begins 72 hours after the physical loss
occurs and ends when the property is (or should have been) restored to use with
reasonable speed.
Question:
A large fire at Paoli Computers destroyed their facility. The underwriter on the account
contacted the agent and they agreed that Paoli had the proper amount of business
income insurance to handle the loss. Paoli was in a yearly lease with the property owner
and had 25 employees who worked in the destroyed building. They had a fleet of
vehicles to deliver products and service accounts that they were unable to use. Which
one of the following expenses would be expected to remain relatively stable despite the
loss?
Answer:
Income Taxes.
Question:
Anthony is reviewing a property insurance application for Rizzo Bakery. Rizzo Bakery is
a manufacturer of artisan breads that are sold at food markets. When evaluating the
fuel load for this type of manufacturing operation, which one of the following would be a
major concern for Anthony?
Answer:
Combustible dust.
