AIC 304 EXAM PREP 2026/2027 | COMPLETE STUDY GUIDE |
HIGH-YIELD PRACTICE QUESTIONS & CORRECT ANSWERS |
LATEST UPDATE
1. What types of structures are included under Coverage B in a homeowners
policy?
Structures used for business purposes
Personal property within the home
The main dwelling only
Detached structures such as a garage or kennel
2. Which of the following constitutes an insurable interest?
the policyowner must expect to benefit from the insured's death
the policyowner must expect to suffer a loss when the insured dies
or becomes disabled
the beneficiary, by definition, has an insurable interest in the insured
the insured must have a personal or business relationship with the
beneficiary
3. Obsolescence refers to loss in:
inventory value due to theft.
inventory value due to breakage.
inventory value due to a decline in market value.
4. The claims adjusting process begins when:
The claim investigation begins.
A loss notice is provided to the insurer.
, The claim is assigned to the adjuster.
A claim file is created.
5. The basic principle of business interruption insurance is
to restore the income that would have been earned had the
business not been interrupted
to arrange alternate employment for employees while the building is
being repaired following an insured loss
To restore the premises to the condition they were in before the loss
to cover the cost of relocation the business
6. If a policyholder feels that their insurance claim has been undervalued, what
action can they take involving a public adjuster?
Contact the insurance company to request a policy change.
File a lawsuit against the insurance company immediately.
Accept the insurance company's offer without question.
Hire a public adjuster to negotiate a better settlement.
7. What does the Monthly Period of Indemnity in business income insurance
provide to the insured?
Coverage for property damage
Assistance with claims documentation
Benefits for each month of business interruption
A one-time payment for total loss
8. Specified causes of loss coverage is
, Not often defined in the policy
Coverage for a loss that is specifically listed or named in the policy
Property insurance coverage covering all causes of loss
Also called open-perils coverage
9. What is the first step in the claims adjustment process?
Reporting the claim
Negotiating the settlement
Documenting the loss
Assessing the damage
10. A new adjuster is asked by his boss to learn all he can about ocean marine.
His study finds that ocean marine insurance
Covers risks and perils associated with the transportation of good
over land
Covered ocean-front property
Insures businesses that pollute the ocean
Covers risks/perils associated with transportation of good over
water
11. Describe the difference between replacement cost and actual cash value in
insurance claims.
Replacement cost is always higher than actual cash value.
Actual cash value is the preferred method for all insurance claims.
Replacement cost covers the cost to replace an item without
depreciation, while actual cash value accounts for depreciation.
, Replacement cost is used only for business income insurance.
12. Describe how the actual cash value method differs from the replacement
cost method in property insurance.
The actual cash value method is used for commercial properties,
while the replacement cost method is for residential properties.
The replacement cost method includes depreciation, while the actual
cash value method does not.
Both methods are identical in how they calculate insurance payouts.
The actual cash value method considers depreciation, while the
replacement cost method does not.
13. What types of property does marine insurance typically cover?
Buildings, vehicles, and machinery
Ships, cargo, terminals, and transport methods
Liabilities and legal fees
Personal belongings and health expenses
14. Describe the significance of inland marine insurance in relation to property
transportation.
Inland marine insurance is significant because it protects against all
types of property damage.
Inland marine insurance is significant because it is the only type of
insurance that covers marine vessels.
Inland marine insurance is significant because it provides coverage
for property that is in transit over land, protecting against risks
associated with transportation.
HIGH-YIELD PRACTICE QUESTIONS & CORRECT ANSWERS |
LATEST UPDATE
1. What types of structures are included under Coverage B in a homeowners
policy?
Structures used for business purposes
Personal property within the home
The main dwelling only
Detached structures such as a garage or kennel
2. Which of the following constitutes an insurable interest?
the policyowner must expect to benefit from the insured's death
the policyowner must expect to suffer a loss when the insured dies
or becomes disabled
the beneficiary, by definition, has an insurable interest in the insured
the insured must have a personal or business relationship with the
beneficiary
3. Obsolescence refers to loss in:
inventory value due to theft.
inventory value due to breakage.
inventory value due to a decline in market value.
4. The claims adjusting process begins when:
The claim investigation begins.
A loss notice is provided to the insurer.
, The claim is assigned to the adjuster.
A claim file is created.
5. The basic principle of business interruption insurance is
to restore the income that would have been earned had the
business not been interrupted
to arrange alternate employment for employees while the building is
being repaired following an insured loss
To restore the premises to the condition they were in before the loss
to cover the cost of relocation the business
6. If a policyholder feels that their insurance claim has been undervalued, what
action can they take involving a public adjuster?
Contact the insurance company to request a policy change.
File a lawsuit against the insurance company immediately.
Accept the insurance company's offer without question.
Hire a public adjuster to negotiate a better settlement.
7. What does the Monthly Period of Indemnity in business income insurance
provide to the insured?
Coverage for property damage
Assistance with claims documentation
Benefits for each month of business interruption
A one-time payment for total loss
8. Specified causes of loss coverage is
, Not often defined in the policy
Coverage for a loss that is specifically listed or named in the policy
Property insurance coverage covering all causes of loss
Also called open-perils coverage
9. What is the first step in the claims adjustment process?
Reporting the claim
Negotiating the settlement
Documenting the loss
Assessing the damage
10. A new adjuster is asked by his boss to learn all he can about ocean marine.
His study finds that ocean marine insurance
Covers risks and perils associated with the transportation of good
over land
Covered ocean-front property
Insures businesses that pollute the ocean
Covers risks/perils associated with transportation of good over
water
11. Describe the difference between replacement cost and actual cash value in
insurance claims.
Replacement cost is always higher than actual cash value.
Actual cash value is the preferred method for all insurance claims.
Replacement cost covers the cost to replace an item without
depreciation, while actual cash value accounts for depreciation.
, Replacement cost is used only for business income insurance.
12. Describe how the actual cash value method differs from the replacement
cost method in property insurance.
The actual cash value method is used for commercial properties,
while the replacement cost method is for residential properties.
The replacement cost method includes depreciation, while the actual
cash value method does not.
Both methods are identical in how they calculate insurance payouts.
The actual cash value method considers depreciation, while the
replacement cost method does not.
13. What types of property does marine insurance typically cover?
Buildings, vehicles, and machinery
Ships, cargo, terminals, and transport methods
Liabilities and legal fees
Personal belongings and health expenses
14. Describe the significance of inland marine insurance in relation to property
transportation.
Inland marine insurance is significant because it protects against all
types of property damage.
Inland marine insurance is significant because it is the only type of
insurance that covers marine vessels.
Inland marine insurance is significant because it provides coverage
for property that is in transit over land, protecting against risks
associated with transportation.
