AINS 23 questions with correct answers and practice

AINS 23 questions with correct answers and practice Business income losses can be Business income losses can be measured in terms of net income. Toy Company recently experienced $70,000 in expenses and $100,000 in revenue. What is Toy Company's net income? a. $30,000 b. $70,000 c. $100,000 d. $170,000 - ANSWERS a. $30,000 During a business interruption, some of the organization's expenses, called continuing expenses, will continue, and other expenses, called non-continuing expenses, will not continue. Which one of the following is an example of a continuing expense? a. Overtime wages to employees b. Cost to rent temporary office space c. Payroll of key employees d. Cost of overnight air shipment of needed repair parts - ANSWERS c. Payroll of key employees Which one of the following most fully describes what must occur in order for BI insurance to apply? a. An interruption of operations causes by property damage from a covered peril to property at locations or situations described in the policy resulting in a loss of business income and/or extra expense. b. An interruption of operations caused by property damage from a covered peril to property at locations or situations described in the policy. c. Property damage from a covered peril to property at locations or situations described in the policy resulting in a loss of business income and/or extra expense. d. An interruption of operations caused by property damage resulting in a loss of business income and/or extra expense. - ANSWERS a. An interruption of operations causes by property damage from a covered peril to property at locations or situations described in the policy resulting in a loss of business income and/or extra expense. Business income coverage is considered a time element coverage for which one of the following reasons? a. Loss frequency is dependent on the length of time needed to restore damaged property. b. The average duration of losses is only a few weeks. c. Loss severity is dependent on the length of time needed to restore damaged property. d. Maximum length of coverage only lasts for a specific amount of time. - ANSWERS c. Loss severity is dependent on the length of time needed to restore damaged property. BI insurance covers which one of the following types of losses that could result from a fire? a. The cost to replace destroyed inventory b. The cost of fighting the fire c. The extra expenses for renting a temporary office d. The cost of repairing a building - ANSWERS c. The extra expenses for renting a temporary office For BI coverage, the period of restoration is the period of time that begins 72 hours after the: a. Claims representative has completed a claim report. b. Extent of loss has been estimated by the insured. c. Claim for damage has been submitted to the insurer. d. Time the physical loss occurs. - ANSWERS d. Time the physical loss occurs. Which one of the following terms has a specific definition in the BI coverage form? a. Products b. Liability c. Operations d. Negligence - ANSWERS c. Operations In the ISO Business Income Coverage forms (BIC), which one of the following is defined as the slowdown or cessation of business activities or, in the case of rental value coverage, means that a part of the premises is rendered un-tenantable? a. Operations b. Period of restoration c. Premises d. Suspension - ANSWERS d. Suspension Which one of the following would be covered under the Extra Expense insuring agreement of the BI (and EE) Coverage Form? a. Interest expense b. Normal operating expenses c. Property taxes d. Costs to move to a temporary location - ANSWERS d. Costs to move to a temporary location In the BI coverage form, the period of restoration: a. Includes additional time to assess the effects of pollutants. b. Begins immediately after the physical loss occurs with no waiting period. c. Ends when the property is or should have been restored. d. Includes additional time to repair the building to comply with building code or law. - ANSWERS c. Ends when the property is or should have been restored. Which one of the following additional coverages would best cover the insured's loss of business income that results when fire damage to another building makes it unsafe for customers to enter the insured's premises and access is prohibited by civil authority? a. Expenses to reduce loss b. Extended business income c. Civil authority d. Alterations and new buildings - ANSWERS c. Civil authority The possibility of the insured incurring an uninsured EE loss other than the reduction in BI loss is greatly reduced by: a. The extended business income (EBI) additional coverage b. The business income (without extra expense) coverage form c. The expenses to reduce loss additional coverage d. The business income (and extra expense) coverage form - ANSWERS d. The business income (and extra expense) coverage form In which one of the following additional coverages in a BI coverage form are losses covered that continue after the period of restoration ends? a. Extended business income b. Alterations and new buildings c. Civil authority d. Expenses to reduce loss - ANSWERS a. Extended business income The Alterations and New Buildings additional coverage to the BIC Form provides coverage for loss of income resulting from a delay in starting operations, if the delay results from damage at the described premises by a covered cause of loss to which one of the following? a. New buildings under construction b. Computer operations c. Property at fairs or exhibitions d. Electronic data - ANSWERS a. New buildings under construction The coinsurance for BI coverage is: a. Gross income less continuing operating expenses b. Net income plus continuing operating expenses c. Gross income plus payroll and utilities d. Net income plus all operating expenses except certain deductible items - ANSWERS d. Net income plus all operating expenses except certain deductible items Which one of the following is the coinsurance basis under a BIC Form? a. The actual cash value of the building b. The replacement cost of the building c. The same as the property covered d. The projected net income and all operating expenses except for certain deductible items - ANSWERS d. The projected net income and all operating expenses except for certain deductible items Which one of the following coverages of the BIC Form is subject to its own limit of insurance? a. Extended business income