AIC Questions and Verified
Correct Answers 100%
1) Your insured, a sole proprietor, purchased a building valued at $1 million. The insurance
policy has a coinsurance clause based on the replacement cost value of 90%. Contrary to your
advice, your insured insures the building for only $500,000. He suffers a windstorm loss totaling
$150,000. How much will the insurer pay?
a) $75,000
b)$83,333
c)$150,000
d) $93,755 answer - b
2) An insured property is covered by two separate commercial policies placed with two different
insurers. Insurer A's policy has a limit of $100,000 and Insurer B's policy has a limit of $200,000.
The insured suffers an insurable loss of $230,000. Assuming no deductibles apply, how much
will each insurer pay?
a) Insurer A will pay $100,000. Insurer B will pay $130,000
b)Insurer A will pay $100,000. Insurer B will pay $200,000
c) Insurer A will pay $76,659. Insurer B will pay $153,341
d) Neither insurer will pay. Two policies on the same property are prohibited answer - c
3) On a Commercial Building, Equipment, and Stock Form, that insures the building owner,
which of the following would not be included under the "building" definition?
,a) Growing plants and trees inside the building used for decorative purposes
b)Building maintenance supplies
c) Fixed structures pertaining to the building
d) Temporary fixtures and fittings answer - d
7) On a commercial crime insurance policy, employee dishonesty insurance
a) is provided on a discovery basis
b)is also known as fidelity insurance
c) protects insured against dishonest acts committed by employees, alone or in collusion with
others
d) all of the above answer - d
8) Which of the following losses normally excluded under a boiler and machinery policy can be
added by endorsement?
a) Fireb)Nuclear reaction or radioactive contamination
c) Increased costs due to the enforcement of a bylaw regulating building construction
d) War related losses answer - c
9) A surety bond
a) is a contract between two parties
b)protects the surety
c) provides security to a party entering into a contractual agreement with another
d) protects the insurer answer - c
,10) A marine insurance policy provides coverage for
a) the hull and cargo
b)the hull only
c) cargo only
d) property damage to third parties only, not the vessel itself answer - a
11) Statutory conditions which are found in all fire policies
a) impose obligations on both the insured and the insurer
b)specify the coverages provided
c) state the rights of a third party
d) are not expressly required by law answer - a
12) Actual cash value (ACV) is understood as the cost of replacing property, less any
depreciation to it. Most insurers expand their definition to recognize that a fair estimate of
depreciation at the time of loss depends on which of the following factors?
a) The property's physical condition
b)The property's resale value
c) The property's obsolescence
d) All of the above answer - d
13) A "mortgagee" is defined as a person or organization that lends money to someone to buy
property. The mortgagee under a mortgage clause on a property insurance policy has certain
rights and obligations. Which of the following is a right of the mortgagee?
, a) The right to share in the loss payment, as long as the insured owes something on the
mortgage
b)The right to share in the loss payment, unless the mortgagor neglects the property
c) The right to share in the loss payment, unless occupation of the premises is for purposes
more hazardous than those permitted by the policy
d) All of the above answer - a
14) In anticipation of building an addition to his home, which you insure under a homeowner
package policy for $320,000, your client purchases and stores on his property $4,000 worth of
lumber. A serious windstorm strikes the area and your insured's lumber pile is destroyed. What
coverage would be available under your policy?
a) None. The lumber is not yet part of the building
b)The lumber would be fully covered under Coverage A—Dwelling Building
c) The loss would be paid under the 10% extension of Coverage C—Personal Property for
property outside the building
d) None. The policy excludes damage to property in the open caused by windstorm answer - b
15) Motorized vehicles are excluded under Coverage C—Personal Property of a homeowner
policy. Coverage is provided as an exception to the exclusion for which of the following?
a) Mobility scooter
b)Lawn mower
c) Child's motorized toy car up to a maximum speed of 10 kilometres per hour
d) All of the above answer - d
16) Stamp and coin collections are best insured by a/an
Correct Answers 100%
1) Your insured, a sole proprietor, purchased a building valued at $1 million. The insurance
policy has a coinsurance clause based on the replacement cost value of 90%. Contrary to your
advice, your insured insures the building for only $500,000. He suffers a windstorm loss totaling
$150,000. How much will the insurer pay?
a) $75,000
b)$83,333
c)$150,000
d) $93,755 answer - b
2) An insured property is covered by two separate commercial policies placed with two different
insurers. Insurer A's policy has a limit of $100,000 and Insurer B's policy has a limit of $200,000.
The insured suffers an insurable loss of $230,000. Assuming no deductibles apply, how much
will each insurer pay?
a) Insurer A will pay $100,000. Insurer B will pay $130,000
b)Insurer A will pay $100,000. Insurer B will pay $200,000
c) Insurer A will pay $76,659. Insurer B will pay $153,341
d) Neither insurer will pay. Two policies on the same property are prohibited answer - c
3) On a Commercial Building, Equipment, and Stock Form, that insures the building owner,
which of the following would not be included under the "building" definition?
,a) Growing plants and trees inside the building used for decorative purposes
b)Building maintenance supplies
c) Fixed structures pertaining to the building
d) Temporary fixtures and fittings answer - d
7) On a commercial crime insurance policy, employee dishonesty insurance
a) is provided on a discovery basis
b)is also known as fidelity insurance
c) protects insured against dishonest acts committed by employees, alone or in collusion with
others
d) all of the above answer - d
8) Which of the following losses normally excluded under a boiler and machinery policy can be
added by endorsement?
a) Fireb)Nuclear reaction or radioactive contamination
c) Increased costs due to the enforcement of a bylaw regulating building construction
d) War related losses answer - c
9) A surety bond
a) is a contract between two parties
b)protects the surety
c) provides security to a party entering into a contractual agreement with another
d) protects the insurer answer - c
,10) A marine insurance policy provides coverage for
a) the hull and cargo
b)the hull only
c) cargo only
d) property damage to third parties only, not the vessel itself answer - a
11) Statutory conditions which are found in all fire policies
a) impose obligations on both the insured and the insurer
b)specify the coverages provided
c) state the rights of a third party
d) are not expressly required by law answer - a
12) Actual cash value (ACV) is understood as the cost of replacing property, less any
depreciation to it. Most insurers expand their definition to recognize that a fair estimate of
depreciation at the time of loss depends on which of the following factors?
a) The property's physical condition
b)The property's resale value
c) The property's obsolescence
d) All of the above answer - d
13) A "mortgagee" is defined as a person or organization that lends money to someone to buy
property. The mortgagee under a mortgage clause on a property insurance policy has certain
rights and obligations. Which of the following is a right of the mortgagee?
, a) The right to share in the loss payment, as long as the insured owes something on the
mortgage
b)The right to share in the loss payment, unless the mortgagor neglects the property
c) The right to share in the loss payment, unless occupation of the premises is for purposes
more hazardous than those permitted by the policy
d) All of the above answer - a
14) In anticipation of building an addition to his home, which you insure under a homeowner
package policy for $320,000, your client purchases and stores on his property $4,000 worth of
lumber. A serious windstorm strikes the area and your insured's lumber pile is destroyed. What
coverage would be available under your policy?
a) None. The lumber is not yet part of the building
b)The lumber would be fully covered under Coverage A—Dwelling Building
c) The loss would be paid under the 10% extension of Coverage C—Personal Property for
property outside the building
d) None. The policy excludes damage to property in the open caused by windstorm answer - b
15) Motorized vehicles are excluded under Coverage C—Personal Property of a homeowner
policy. Coverage is provided as an exception to the exclusion for which of the following?
a) Mobility scooter
b)Lawn mower
c) Child's motorized toy car up to a maximum speed of 10 kilometres per hour
d) All of the above answer - d
16) Stamp and coin collections are best insured by a/an
