AIC 304 STUDY GUIDE EXAM
QUESTIONS WITH CORRECT
ANSWERS
In a property loss, statements may be taken from the insured and any witnesses to
establish the extent of the loss, the cause of the loss, and the property's - Answer- A.
Ownership.
B. Age.
C. Jurisdiction.
D. Size.
A
To determine the unknown cost of goods sold for the period leading up to a loss,
commercial property damages claims rep Harold first divides the last period's cost of
goods sold by that same period's total net sales. This calculation results in the - Answer-
A. Depreciation factor.
B. Cost-to-sales ratio.
C. Book value.
D. Net profit.
B
Magnus is a claims adjuster who has just received a claim for water damage to a home
from a broken pipe. At this point, Magnus' priority is to - Answer- A. Make sure the
insured has begun the drying process.
B. Send the insured a reservation of rights letter.
C. Obtain a nonwaiver agreement from the insured.
D. Identify any coverage issues and notify the insured.
A
Aside from fraud, the two most common policy violations leading to coverage disputes
are an insured's failure to cooperate with the insurer's investigation and an insured's
failure to - Answer- A. Provide prompt notice of a loss.
B. Understand policy exclusions.
C. Remain up to date on premium payments.
D. Mitigate damages from the loss.
A
, Which one of the following statements regarding bailee liability policies is correct? -
Answer- A. They are written to transfer liability from the property owner to the bailee.
B. They are written to protect bailees against legal liability for damage to the property in
their care.
C. The property owner is a named insured under the policy.
D. The insurer would make any payment to the property owner, regardless of liability.
B
When a policy calls for the primary/excess method to be used and both insurers agree
which policy is excess and which is primary, - Answer- A. The primary insurer pays the
full loss amount and subrogates for the excess insurer's portion.
B. The primary and excess insurers place an amount adequate to cover the loss in
escrow.
C. The excess insurer pays first, up to its applicable limit of insurance.
D. The primary insurer pays first, up to its applicable limit of insurance.
D
Under the BPP coinsurance provision, if an insured does not carry enough insurance,
loss payments are reduced proportionately, an outcome known as the - Answer- A.
Coverage adjustment.
B. Underinsurance surcharge.
C. Coinsurance penalty.
D. Insurance-to-value provision.
C
A widely used financial institution bond is - Answer- A. The Insurance Services Office
Financial Institution Crime Policy for Banks and Saving Institutions.
B. The fidelity bond.
C. The commercial general liability fiduciary bond.
D. Standard Form No. 24.
D
Shondra owns a commercial office building and holds an insurance policy that applies
one deductible for most causes of loss but a different, higher deductible for other
specified causes. This is called a(n) - Answer- A. Conditional deductible.
B. Hybrid deductible.
C. Split deductible.
D. Percentage deductible.
C
QUESTIONS WITH CORRECT
ANSWERS
In a property loss, statements may be taken from the insured and any witnesses to
establish the extent of the loss, the cause of the loss, and the property's - Answer- A.
Ownership.
B. Age.
C. Jurisdiction.
D. Size.
A
To determine the unknown cost of goods sold for the period leading up to a loss,
commercial property damages claims rep Harold first divides the last period's cost of
goods sold by that same period's total net sales. This calculation results in the - Answer-
A. Depreciation factor.
B. Cost-to-sales ratio.
C. Book value.
D. Net profit.
B
Magnus is a claims adjuster who has just received a claim for water damage to a home
from a broken pipe. At this point, Magnus' priority is to - Answer- A. Make sure the
insured has begun the drying process.
B. Send the insured a reservation of rights letter.
C. Obtain a nonwaiver agreement from the insured.
D. Identify any coverage issues and notify the insured.
A
Aside from fraud, the two most common policy violations leading to coverage disputes
are an insured's failure to cooperate with the insurer's investigation and an insured's
failure to - Answer- A. Provide prompt notice of a loss.
B. Understand policy exclusions.
C. Remain up to date on premium payments.
D. Mitigate damages from the loss.
A
, Which one of the following statements regarding bailee liability policies is correct? -
Answer- A. They are written to transfer liability from the property owner to the bailee.
B. They are written to protect bailees against legal liability for damage to the property in
their care.
C. The property owner is a named insured under the policy.
D. The insurer would make any payment to the property owner, regardless of liability.
B
When a policy calls for the primary/excess method to be used and both insurers agree
which policy is excess and which is primary, - Answer- A. The primary insurer pays the
full loss amount and subrogates for the excess insurer's portion.
B. The primary and excess insurers place an amount adequate to cover the loss in
escrow.
C. The excess insurer pays first, up to its applicable limit of insurance.
D. The primary insurer pays first, up to its applicable limit of insurance.
D
Under the BPP coinsurance provision, if an insured does not carry enough insurance,
loss payments are reduced proportionately, an outcome known as the - Answer- A.
Coverage adjustment.
B. Underinsurance surcharge.
C. Coinsurance penalty.
D. Insurance-to-value provision.
C
A widely used financial institution bond is - Answer- A. The Insurance Services Office
Financial Institution Crime Policy for Banks and Saving Institutions.
B. The fidelity bond.
C. The commercial general liability fiduciary bond.
D. Standard Form No. 24.
D
Shondra owns a commercial office building and holds an insurance policy that applies
one deductible for most causes of loss but a different, higher deductible for other
specified causes. This is called a(n) - Answer- A. Conditional deductible.
B. Hybrid deductible.
C. Split deductible.
D. Percentage deductible.
C
