AIC 304 CORE MAIN EXAMINATION SET
QUESTIONS AND ANSWERS SURE A+
✔✔Which one of the following has special limits of liability within Coverage C of the HO-
3 policy?
Select one:
A. Flood damage to a fur coat
B. Fire damage to silverware
C. Fire damage to jewelry
D. Theft of firearms - ✔✔D. Theft of firearms
✔✔Policies for the crime loss exposure for financial institutions are called "bonds"
because
Select one:
A. Many insurers have developed their own forms.
B. Employee dishonesty, a key coverage, was traditionally called a "fidelity bond."
C. Forgery or alteration, a key coverage, was traditionally called a "fidelity bond."
,D. They do not resemble typical insurance policies. - ✔✔B. Employee dishonesty, a key
coverage, was traditionally called a "fidelity bond."
✔✔Which one of the following statements about the Business and Personal Property
Coverage Form, also referred to as the BPP, is most accurate?
Select one:
A. Almost all of the items of property that are excluded in the BPP can be insured.
B. Crime coverage for money and securities is most effectively covered under the BPP.
C. Requests to add coverage for excluded items under the BPP pose problems for
insurers.
D. None of the items of property that are excluded in the BPP can be insured. - ✔✔A.
Almost all of the items of property that are excluded in the BPP can be insured.
✔✔When Peter recommended the Legal Liability Coverage Form to an insured, the
businessowner asked how the rates compared with direct property insurance rates.
When compared to direct commercial property contents or building rates, the rate
charged for the Legal Liability Coverage Form is
Select one:
A. Lower.
B. Lower or higher depending on the type of contents and building.
C. Higher.
D. The same. - ✔✔A. Lower.
✔✔Ace Accounting has a Building and Personal Property Coverage Form (BPP)
through Delta Insurance with a limit of $300,000 on business personal property. The
insured's computer system is valued at $150,000 and it is insured for $100,000 under a
separate electronic data processing (EDP) equipment policy issued by Omicron
Insurance. The computer system is totally destroyed by fire, a cause of loss insured
under both policies. Which one of the following correctly describes how the loss would
be settled?
Select one:
A. Because Omicron and Delta both cover the equipment, each insurer would pay half
of the loss, or $75,000.
B. The BPP policy is primary and would pay the full amount of the loss because it is
within the BPP policy limits.
, C. Because Omicron's policy more specifically describes the computer system, it must
pay its limit before Delta pays anything; Delta would pay the remaining $50,000.
D. The BPP specifical - ✔✔C. Because Omicron's policy more specifically describes the
computer system, it must pay its limit before Delta pays anything; Delta would pay the
remaining $50,000
✔✔Extra expenses are expenses, in addition to ordinary expenses, that an organization
incurs to mitigate the effects of a business interruption. Which one of the following is an
example of an extra expense?
Select one:
A. Cost to rent temporary office space
B. Debt repayments
C. Payroll of key employees
D. Insurance premiums - ✔✔A. Cost to rent temporary office space
✔✔Many inland marine policies contain a special valuation provision to address unique
valuation issues. Which one of the following is one of these provisions?
Select one:
A. Valuation at selling price
B. Valuation at agreed value
C. Valuation at replacement cost
D. Valuation at actual cash value - ✔✔B. Valuation at agreed value
✔✔The HO-3 policy Ordinance or Law additional coverage applies to
Select one:
A. Increased costs incurred due to the enforcement of any ordinance or law regulating
the construction, demolition, remodeling, renovation, or repair of the insured building.
B. Increased construction costs resulting from ordinances or laws that deal with building
and safety codes and those that do not deal with building and safety codes.
C. Increased construction costs resulting from ordinances or laws requiring a response
to the effects of pollutants in or on the covered building.
QUESTIONS AND ANSWERS SURE A+
✔✔Which one of the following has special limits of liability within Coverage C of the HO-
3 policy?
Select one:
A. Flood damage to a fur coat
B. Fire damage to silverware
C. Fire damage to jewelry
D. Theft of firearms - ✔✔D. Theft of firearms
✔✔Policies for the crime loss exposure for financial institutions are called "bonds"
because
Select one:
A. Many insurers have developed their own forms.
B. Employee dishonesty, a key coverage, was traditionally called a "fidelity bond."
C. Forgery or alteration, a key coverage, was traditionally called a "fidelity bond."
,D. They do not resemble typical insurance policies. - ✔✔B. Employee dishonesty, a key
coverage, was traditionally called a "fidelity bond."
✔✔Which one of the following statements about the Business and Personal Property
Coverage Form, also referred to as the BPP, is most accurate?
Select one:
A. Almost all of the items of property that are excluded in the BPP can be insured.
B. Crime coverage for money and securities is most effectively covered under the BPP.
C. Requests to add coverage for excluded items under the BPP pose problems for
insurers.
D. None of the items of property that are excluded in the BPP can be insured. - ✔✔A.
Almost all of the items of property that are excluded in the BPP can be insured.
✔✔When Peter recommended the Legal Liability Coverage Form to an insured, the
businessowner asked how the rates compared with direct property insurance rates.
When compared to direct commercial property contents or building rates, the rate
charged for the Legal Liability Coverage Form is
Select one:
A. Lower.
B. Lower or higher depending on the type of contents and building.
C. Higher.
D. The same. - ✔✔A. Lower.
✔✔Ace Accounting has a Building and Personal Property Coverage Form (BPP)
through Delta Insurance with a limit of $300,000 on business personal property. The
insured's computer system is valued at $150,000 and it is insured for $100,000 under a
separate electronic data processing (EDP) equipment policy issued by Omicron
Insurance. The computer system is totally destroyed by fire, a cause of loss insured
under both policies. Which one of the following correctly describes how the loss would
be settled?
Select one:
A. Because Omicron and Delta both cover the equipment, each insurer would pay half
of the loss, or $75,000.
B. The BPP policy is primary and would pay the full amount of the loss because it is
within the BPP policy limits.
, C. Because Omicron's policy more specifically describes the computer system, it must
pay its limit before Delta pays anything; Delta would pay the remaining $50,000.
D. The BPP specifical - ✔✔C. Because Omicron's policy more specifically describes the
computer system, it must pay its limit before Delta pays anything; Delta would pay the
remaining $50,000
✔✔Extra expenses are expenses, in addition to ordinary expenses, that an organization
incurs to mitigate the effects of a business interruption. Which one of the following is an
example of an extra expense?
Select one:
A. Cost to rent temporary office space
B. Debt repayments
C. Payroll of key employees
D. Insurance premiums - ✔✔A. Cost to rent temporary office space
✔✔Many inland marine policies contain a special valuation provision to address unique
valuation issues. Which one of the following is one of these provisions?
Select one:
A. Valuation at selling price
B. Valuation at agreed value
C. Valuation at replacement cost
D. Valuation at actual cash value - ✔✔B. Valuation at agreed value
✔✔The HO-3 policy Ordinance or Law additional coverage applies to
Select one:
A. Increased costs incurred due to the enforcement of any ordinance or law regulating
the construction, demolition, remodeling, renovation, or repair of the insured building.
B. Increased construction costs resulting from ordinances or laws that deal with building
and safety codes and those that do not deal with building and safety codes.
C. Increased construction costs resulting from ordinances or laws requiring a response
to the effects of pollutants in or on the covered building.
