CAIB 2 Chapter 7 Practice Test 1
Questions With 100% Complete
Solutions Latest Update 2024/2025
Provide four sources of Business Interruption losses and an example of each. -
CORRECT ANSWER-i) Physical damage to business
example: Fire destroys business and customers cannot make purchases
ii) Failure of public utilities
example: Ice storm damages power lines and power cannot be restored for several
weeks. This results in sales at the business to plummet
iii) Transportation related accidents
example: Railcar containing hazardous gas overturns causing evacuation of town.
As a result, of this railcar accident, sales at business cease.
iv) Physical damage to neighbouring premises
example: Your client, who is a tenant in a shopping mall, experiences drop in
sales when anchor store burns to the ground
Identify three sources of funding available to businesses when their operations are
interrupted. - CORRECT ANSWER-i) Reduce capital reserves
ii) Take out a bank loan
iii) Purchase adequate amounts of business interruption insurance
What are the two key coverages provided by business interruption policies? -
CORRECT ANSWER-i) Insure lost net profit of the business which it could have earned
had there been
no loss
ii) Insure expense that must continue during period of business interruption
Questions With 100% Complete
Solutions Latest Update 2024/2025
Provide four sources of Business Interruption losses and an example of each. -
CORRECT ANSWER-i) Physical damage to business
example: Fire destroys business and customers cannot make purchases
ii) Failure of public utilities
example: Ice storm damages power lines and power cannot be restored for several
weeks. This results in sales at the business to plummet
iii) Transportation related accidents
example: Railcar containing hazardous gas overturns causing evacuation of town.
As a result, of this railcar accident, sales at business cease.
iv) Physical damage to neighbouring premises
example: Your client, who is a tenant in a shopping mall, experiences drop in
sales when anchor store burns to the ground
Identify three sources of funding available to businesses when their operations are
interrupted. - CORRECT ANSWER-i) Reduce capital reserves
ii) Take out a bank loan
iii) Purchase adequate amounts of business interruption insurance
What are the two key coverages provided by business interruption policies? -
CORRECT ANSWER-i) Insure lost net profit of the business which it could have earned
had there been
no loss
ii) Insure expense that must continue during period of business interruption
