AIC 304 EXAM 2025 LATEST EXAM QUESTIONS AND
CORRECT ANSWERS | A+ GRADE
Period of restoration - ans -The period during which business income loss is
covered under the BIC forms; it begins 72 hours after the physical loss occurs and
ends when the property is (or should have been) restored to use with reasonable
speed. (With regard to extra expense coverage, it begins immediately after the
physical loss occurs.)
Reconciliation - ans -The process of matching the net income and continuing
expenses projections with the actual sales made and expenses incurred during
the loss period.
Ocean marine insurance - ans -Insurance that covers vessels and their cargoes,
including various vessel-related liability exposures.
Value Reporting Form - ans -A commercial property form that bases the insured's
premium for business personal property on the values that the insured reports to
the insurer periodically during the policy period.
Motor truck cargo liability policy - ans -Policy that covers a trucker's liability for
damage to cargo of others being transported by the trucker.
Bill of lading - ans -A document acknowledging receipt of goods from the shipper,
given by the carrier, which includes the terms of the contract of carriage for the
goods.
Released value bill of lading - ans -A bill of lading in which the carrier charges a
lower freight rate (called a "released rate") in return for the shipper's allowing the
carrier to limit its liability for cargo losses.
Contractors' equipment - ans -The tools and machinery used in projects involving
construction, renovation, earth-moving, and other activities.
Contractors equipment floater - ans -A policy that covers mobile equipment or
tools while located anywhere in the coverage territory.
, Manuscript form - ans -An insurance form that is drafted according to terms
negotiated between a specific insured (or group of insureds) and an insurer.
Constructive total loss - ans -A loss that occurs when the cost to repair damaged
property plus its remaining salvage value equals or exceeds the property's pre-
loss value.
Builders risk policy - ans -Policy that covers a building in the course of
construction, including building materials and supplies while on or away from the
building site.
Soft costs - ans -Various incidental expenses that may result from physical loss or
from a delay in completion of a construction project, such as interest, real estate
tax, advertising, architects and engineers fees, and legal and accounting fees.
Clerk of the works - ans -An employee of a contractor who has sole responsibility
for the daily supervision of each project component to ensure that materials,
methodology, and quality of workmanship meet engineering specifications.
Replacement cost - ans -The cost to repair or replace property using new
materials of like kind and quality with no deduction for depreciation.
Actual cash value (ACV) - ans -The cost to replace property with new property of
like kind and quality less depreciation.
Functional valuation approach - ans -A valuation method in which the insurer is
required to pay no more than the cost to repair or replace the damaged or
destroyed property with property that is its functional equivalent.
Straight-line depreciation method - ans -An accounting method of calculating
depreciation by taking an equal amount of an asset's cost as an expense for each
year of the asset's expected useful life.
Accelerated depreciation - ans -Depreciation that occurs more rapidly when an
item is first purchased and then more slowly in subsequent years.
CORRECT ANSWERS | A+ GRADE
Period of restoration - ans -The period during which business income loss is
covered under the BIC forms; it begins 72 hours after the physical loss occurs and
ends when the property is (or should have been) restored to use with reasonable
speed. (With regard to extra expense coverage, it begins immediately after the
physical loss occurs.)
Reconciliation - ans -The process of matching the net income and continuing
expenses projections with the actual sales made and expenses incurred during
the loss period.
Ocean marine insurance - ans -Insurance that covers vessels and their cargoes,
including various vessel-related liability exposures.
Value Reporting Form - ans -A commercial property form that bases the insured's
premium for business personal property on the values that the insured reports to
the insurer periodically during the policy period.
Motor truck cargo liability policy - ans -Policy that covers a trucker's liability for
damage to cargo of others being transported by the trucker.
Bill of lading - ans -A document acknowledging receipt of goods from the shipper,
given by the carrier, which includes the terms of the contract of carriage for the
goods.
Released value bill of lading - ans -A bill of lading in which the carrier charges a
lower freight rate (called a "released rate") in return for the shipper's allowing the
carrier to limit its liability for cargo losses.
Contractors' equipment - ans -The tools and machinery used in projects involving
construction, renovation, earth-moving, and other activities.
Contractors equipment floater - ans -A policy that covers mobile equipment or
tools while located anywhere in the coverage territory.
, Manuscript form - ans -An insurance form that is drafted according to terms
negotiated between a specific insured (or group of insureds) and an insurer.
Constructive total loss - ans -A loss that occurs when the cost to repair damaged
property plus its remaining salvage value equals or exceeds the property's pre-
loss value.
Builders risk policy - ans -Policy that covers a building in the course of
construction, including building materials and supplies while on or away from the
building site.
Soft costs - ans -Various incidental expenses that may result from physical loss or
from a delay in completion of a construction project, such as interest, real estate
tax, advertising, architects and engineers fees, and legal and accounting fees.
Clerk of the works - ans -An employee of a contractor who has sole responsibility
for the daily supervision of each project component to ensure that materials,
methodology, and quality of workmanship meet engineering specifications.
Replacement cost - ans -The cost to repair or replace property using new
materials of like kind and quality with no deduction for depreciation.
Actual cash value (ACV) - ans -The cost to replace property with new property of
like kind and quality less depreciation.
Functional valuation approach - ans -A valuation method in which the insurer is
required to pay no more than the cost to repair or replace the damaged or
destroyed property with property that is its functional equivalent.
Straight-line depreciation method - ans -An accounting method of calculating
depreciation by taking an equal amount of an asset's cost as an expense for each
year of the asset's expected useful life.
Accelerated depreciation - ans -Depreciation that occurs more rapidly when an
item is first purchased and then more slowly in subsequent years.
