AU 61 - 2024/2025 EXAM STUDY TEST
GUIDE QUESTIONS AND ANSWERS
A building owner rents its property to an auto dealership. The property is damaged and
temporarily unavailable for a period during which the dealership pays no rent. From the building
owner's perspective, this is an example of:
A. Lost income.
B. A cause of loss.
C. A period of restoration.
D. An extra expense. - ANS A. Lost income.
All of the following are financial consequences of property loss exposures, EXCEPT:
A. Extra expenses
B. Lost income
C. Property value reduction
D. Causes of loss - ANS D. Causes of loss
Property insurance policies usually cover some property that is not contained within the building.
For this reason, most property policies use which one of the following terms?
A. Floating property
B. Real property
C. Personal property
D. Contents - ANS C. Personal property
Which one of the following is most likely to be considered real property as opposed to personal
property?
A. Property in transit
B. Furniture
C. Floating property
D. Wall-to-wall carpeting - ANS D. Wall-to-wall carpeting
To refer to items such as furniture and stock, most property insurance policies use the term
A. Floating property.
B. Real property.
C. Personal property.
D. Contents. - ANS C. Personal property.
Which one of the following is considered to be personal property as opposed to real property?
,A. Land
B. Furniture
C. A building's elevator
D. A building's plumbing fixtures - ANS B. Furniture
In insurance terminology, property being shipped by aircraft is considered to be
A. Contents.
B. Floating property.
C. Property in the possession of others.
D. Property in transit. - ANS D. Property in transit.
All of the following are components of a property loss exposure, EXCEPT:
A. The insurability of the property
B. The causes of loss
C. The financial consequences of a loss
D. The type of property exposed to loss - ANS A. The insurability of the property
A wedding photographer uses his camera equipment at several dozen different locations each
year. In insurance terminology, the camera equipment is considered to be
A. Contents.
B. Property in transit.
C. Property in the possession of others.
D. Floating property. - ANS D. Floating property.
In the context of property loss exposures, flood is considered to be all of the following, EXCEPT:
A. A means by which property is damaged or destroyed
B. A cause of loss
C. An adverse financial consequence
D. A peril - ANS C. An adverse financial consequence
All of the following are causes of loss to property, EXCEPT:
A. Transit
B. Earthquake
C. Theft
D. Windstorm - ANS A. Transit
The risk manager of a midsize manufacturing company would like several coverage
enhancements and a seamless approach to insurance for their Building and Business Personal
,Property, Inland Marine and Crime insurance. What type of policy format would best suit the risk
manager's needs?
A. Commercial Package policy
B. Businessowners policy
C. Output policy
D. Broker policy - ANS C. Output policy
In addition to coverage parts, a commercial package policy includes which one of the following
forms?
A. Common Exclusions form
B. General Conditions form
C. General Forms List
D. Common Policy Conditions form - ANS D. Common Policy Conditions form
An insured requiring specialty commercial property coverage, such as flood insurance, will most
likely purchase which one of the following types of policies?
A. Package policy
B. Output policy
C. Businessowners policy
D. Monoline policy - ANS D. Monoline policy
The inspections and surveys condition clarifies that the insurer does not make
A. Inspections of books and records.
B. Safety inspections.
C. Health inspections.
D. Physical inspections. - ANS B. Safety inspections.
A multiline insurance policy is also known as a:
A. Broker form.
B. Standard policy.
C. Manuscript form.
D. Package policy. - ANS D. Package policy.
Why might an insured elect to purchase an output policy instead of a commercial package
policy (CPP)?
A. Output policies provide only essential coverages at a cheaper price than a CPP.
B. Output policies are composed of different policy provisions than a CPP.
C. Output policies contain coverage tailored to smaller businesses.
, D. Output policies often provide coverage enhancements not contained in the standard CPP. -
ANS D. Output policies often provide coverage enhancements not contained in the standard
CPP.
An insured who owns a large business is comparing the different types of commercial insurance
policies. The insured would likely choose a Commercial Package Policy because it will provide
A. The option to add lines of insurance for all coverages that are needed.
B. Automatic coverage for equipment breakdown at no additional premium.
C. An option for all coverages in one policy at an economical premium.
D. Coverage enhancements that are not included in standard forms. - ANS A. The option to
add lines of insurance for all coverages that are needed.
Which one of the following statements is true regarding manuscript forms of insurance policies?
A. They tend to have more endorsements attached to them than standard forms.
B. The wording is often poor and unacceptable to insurers.
C. They are structured for smaller accounts.
D. They usually offer more favorable terms for insureds than standard forms. - ANS D. They
usually offer more favorable terms for insureds than standard forms.
Which one of the following is a reason that an insurance organization might develop their own,
non-standard forms?
A. To differentiate their product from those of their competitors.
B. To provide coverage consistent with ISO forms.
C. To write a type of coverage for which there are standard forms.
D. To differentiate between mono-line and multi-line policies. - ANS A. To differentiate their
product from those of their competitors.
In addition to using standard forms developed by ISO or other advisory organizations, insurers
may choose to develop their own nonstandard forms. Which one of the following is a main
reason why insurers would use nonstandard forms?
A. Incorporate provisions that are more favorable to insurers
B. Differentiate their products
C. Write insurance with higher coverage limits.
D. Streamline the underwriting process - ANS B. Differentiate their products
Which one of the following is true regarding underwriting indivisible combination policies?
A. Underwriters have little flexibility regarding pricing and coverage.
B. The underwriting process is longer because indivisible combination policies are more
susceptible to adverse selection.
GUIDE QUESTIONS AND ANSWERS
A building owner rents its property to an auto dealership. The property is damaged and
temporarily unavailable for a period during which the dealership pays no rent. From the building
owner's perspective, this is an example of:
A. Lost income.
B. A cause of loss.
C. A period of restoration.
D. An extra expense. - ANS A. Lost income.
All of the following are financial consequences of property loss exposures, EXCEPT:
A. Extra expenses
B. Lost income
C. Property value reduction
D. Causes of loss - ANS D. Causes of loss
Property insurance policies usually cover some property that is not contained within the building.
For this reason, most property policies use which one of the following terms?
A. Floating property
B. Real property
C. Personal property
D. Contents - ANS C. Personal property
Which one of the following is most likely to be considered real property as opposed to personal
property?
A. Property in transit
B. Furniture
C. Floating property
D. Wall-to-wall carpeting - ANS D. Wall-to-wall carpeting
To refer to items such as furniture and stock, most property insurance policies use the term
A. Floating property.
B. Real property.
C. Personal property.
D. Contents. - ANS C. Personal property.
Which one of the following is considered to be personal property as opposed to real property?
,A. Land
B. Furniture
C. A building's elevator
D. A building's plumbing fixtures - ANS B. Furniture
In insurance terminology, property being shipped by aircraft is considered to be
A. Contents.
B. Floating property.
C. Property in the possession of others.
D. Property in transit. - ANS D. Property in transit.
All of the following are components of a property loss exposure, EXCEPT:
A. The insurability of the property
B. The causes of loss
C. The financial consequences of a loss
D. The type of property exposed to loss - ANS A. The insurability of the property
A wedding photographer uses his camera equipment at several dozen different locations each
year. In insurance terminology, the camera equipment is considered to be
A. Contents.
B. Property in transit.
C. Property in the possession of others.
D. Floating property. - ANS D. Floating property.
In the context of property loss exposures, flood is considered to be all of the following, EXCEPT:
A. A means by which property is damaged or destroyed
B. A cause of loss
C. An adverse financial consequence
D. A peril - ANS C. An adverse financial consequence
All of the following are causes of loss to property, EXCEPT:
A. Transit
B. Earthquake
C. Theft
D. Windstorm - ANS A. Transit
The risk manager of a midsize manufacturing company would like several coverage
enhancements and a seamless approach to insurance for their Building and Business Personal
,Property, Inland Marine and Crime insurance. What type of policy format would best suit the risk
manager's needs?
A. Commercial Package policy
B. Businessowners policy
C. Output policy
D. Broker policy - ANS C. Output policy
In addition to coverage parts, a commercial package policy includes which one of the following
forms?
A. Common Exclusions form
B. General Conditions form
C. General Forms List
D. Common Policy Conditions form - ANS D. Common Policy Conditions form
An insured requiring specialty commercial property coverage, such as flood insurance, will most
likely purchase which one of the following types of policies?
A. Package policy
B. Output policy
C. Businessowners policy
D. Monoline policy - ANS D. Monoline policy
The inspections and surveys condition clarifies that the insurer does not make
A. Inspections of books and records.
B. Safety inspections.
C. Health inspections.
D. Physical inspections. - ANS B. Safety inspections.
A multiline insurance policy is also known as a:
A. Broker form.
B. Standard policy.
C. Manuscript form.
D. Package policy. - ANS D. Package policy.
Why might an insured elect to purchase an output policy instead of a commercial package
policy (CPP)?
A. Output policies provide only essential coverages at a cheaper price than a CPP.
B. Output policies are composed of different policy provisions than a CPP.
C. Output policies contain coverage tailored to smaller businesses.
, D. Output policies often provide coverage enhancements not contained in the standard CPP. -
ANS D. Output policies often provide coverage enhancements not contained in the standard
CPP.
An insured who owns a large business is comparing the different types of commercial insurance
policies. The insured would likely choose a Commercial Package Policy because it will provide
A. The option to add lines of insurance for all coverages that are needed.
B. Automatic coverage for equipment breakdown at no additional premium.
C. An option for all coverages in one policy at an economical premium.
D. Coverage enhancements that are not included in standard forms. - ANS A. The option to
add lines of insurance for all coverages that are needed.
Which one of the following statements is true regarding manuscript forms of insurance policies?
A. They tend to have more endorsements attached to them than standard forms.
B. The wording is often poor and unacceptable to insurers.
C. They are structured for smaller accounts.
D. They usually offer more favorable terms for insureds than standard forms. - ANS D. They
usually offer more favorable terms for insureds than standard forms.
Which one of the following is a reason that an insurance organization might develop their own,
non-standard forms?
A. To differentiate their product from those of their competitors.
B. To provide coverage consistent with ISO forms.
C. To write a type of coverage for which there are standard forms.
D. To differentiate between mono-line and multi-line policies. - ANS A. To differentiate their
product from those of their competitors.
In addition to using standard forms developed by ISO or other advisory organizations, insurers
may choose to develop their own nonstandard forms. Which one of the following is a main
reason why insurers would use nonstandard forms?
A. Incorporate provisions that are more favorable to insurers
B. Differentiate their products
C. Write insurance with higher coverage limits.
D. Streamline the underwriting process - ANS B. Differentiate their products
Which one of the following is true regarding underwriting indivisible combination policies?
A. Underwriters have little flexibility regarding pricing and coverage.
B. The underwriting process is longer because indivisible combination policies are more
susceptible to adverse selection.
