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The liability loss exposure that exists when an organization is legally responsible for bodily injury or property damage caused by an accident that occurs on an organization's owned, leased, or rented property is Select one: A. Professional liability. B. Property liability. C. Operations liability. D. Premises and operations liability. - ANSWER D. Premises and operations liability. Automobile liability exposures can result from Select one: A. Damage to or destruction of an owned vehicle. B. Loss of use of an owned automobile. C. Workers compensation laws. D. Hiring or borrowing an automobile. - ANSWER D. Hiring or borrowing an automobile. To be covered under a workers compensation statute, an injury or disease (in most states) must meet which one of the following requirements? Select one: A. Result from the employer's negligence B. Occur away from the regular work premises C. Arise out of employees' job-related injuries and diseases D. Result in total disability - ANSWER C. Arise out of employees' job-related injuries and diseases Cyber risk intellectual property loss exposures include Select one: A. Cyber extortion of trade secrets. B. Personal and advertising injury liability. C. Loss to tangible property. D. Property damage liability. - ANSWER A. Cyber extortion of trade secrets. The extent of an organization's product of human intelligence that has economic value refers to which one of the following? Select one: A. Business income B. Intellectual property C. Personal property
D. Real property - ANSWER B. Intellectual property Renata owns a valuable antique sculpture by a famous artist. One day she accidentally dropped the sculpture and a piece of it broke off. Renata took the sculpture to an art restorer, who reattached the broken piece and repaired the surface. From a distance, the statue looks the same as it did before Renata dropped it, but a close inspection reveals the repair. Which one of the following best describes the financial consequences of the accident? Select one: A. There are no financial consequences because the piece looks the same as it did before the accident. B. The financial consequences include the cost of the repair and the reduction in value resulting from the repaired damage. C. Renata has incurred a total loss because original artwork is impossible to replace. D. The only financial consequence of the accident is the money Renata paid the art restorer for the repair. - ANSWER B. The financial consequences include the cost of the repair and the reduction in value resulting from the repaired damage. As part of its assessment of its cyber risk, an organization should consider whether there are any intangible property exposures. Which one of the following would best be classified as an intangible property loss? Select one: A. Two disgruntled employees use the computer system to transfer office funds into their own personal bank accounts. B. The computer system is hacked and data including credit card numbers are stolen. C. Thieves break into the main office and steal several desktop computers. D. There is a fire in the storage area which destroys the backup copy of the office computer system. - ANSWER B. The computer system is hacked and data including credit card numbers are stolen. A commercial building may contain furniture, machinery and equipment and finished products. Which one of the following is the term generally used in property insurance policies to refer to all these types of property? Select one: A. Business personal property B. Stock C. Inventory D. Commercial property - ANSWER A. Business personal property A family recently purchased a new home constructed by a residential home builder. Two months after taking possession, several of the family members were injured when the roof suddenly collapsed. The family sued the construction company and was awarded monetary damages for their injuries. This is an example of which one of the following types of commercial liability loss exposure for the construction company? Select one:
C. Intangible property D. Contingent business income - ANSWER C. Intangible property Property insurance policies use the term "personal property" to refer to the Select one: A. Property in transit. B. Contents in and around a building. C. Buildings not attached to the main building. D. Company's copyrights and trademarks. - ANSWER B. Contents in and around a building. In business income insurance, the expenses that an organization would not have incurred if the business interruption had not occurred are called Select one: A. Continuing expenses. B. Contingent expenses. C. Excludable expenses. D. Extra expenses. - ANSWER D. Extra expenses. A vehicle owner had a tire store install four new wheels and tires on the vehicle. On the way home from the store, one of the wheels came off, causing the vehicle to accidentally run off the road and strike a tree. The vehicle owner sued the tire store for failing to properly tighten the lug nuts on the vehicle. The loss exposure faced by the tire store in this case is known as Select one: A. Employers liability. B. Completed operations liability. C. Automobile liability. D. Products liability. - ANSWER B. Completed operations liability. Which one of the following loss exposures exist when a business can be held legally liable for bodily injury or property damage caused by their repair or contracting work? Select one: A. Operations liability B. Completed operations liability C. Workers' compensation liability D. Products liability - ANSWER B. Completed operations liability Inland marine insurance is insurance that covers Select one: A. Businesses that own or operate watercraft, or import or export goods. B. Many different classes of property that typically involve an element of transportation on land. C. Companies that ship goods by commercial vessel on inland waterways. D. Miscellaneous lines such as burglary, glass, and steam boilers. - ANSWER B. Many different classes of property that typically involve an element of transportation on land.
Sue is injured at work, and her job responsibilities are reduced for 30 days, after which time she is fully recovered. Sue has which one of the following types of workers compensation disabilities? Select one: A. Temporary total disability B. Permanent partial disability C. Temporary partial disability D. Permanent total disability - ANSWER C. Temporary partial disability Meat Products Company (MPC) runs packing plants in three Midwest states. The company was in the news recently because of its labor practices. The Department of Labor (DOL) investigated complaints from five female employees that MPC discriminated against them. The DOL found the claim was true. The Immigration and Naturalization Service (INS) found that the company employed illegal immigrants and paid them less than the minimum wage. When this news became public, MPC's reputation was severely harmed. This scenario illustrates which source of reputation risk? Select one: A. Corporate governance and leadership B. Corporate social responsibility C. Regulatory and legal compliance D. Communication and crisis management - ANSWER C. Regulatory and legal compliance The two categories of property that are exposed to loss from cyber risk are Select one: A. Insured and uninsured. B. Covered and not covered. C. Tangible and intangible. D. Real and personal. - ANSWER C. Tangible and intangible. Perils are an important aspect of property insurance. Which one of the following statements is correct with respect to perils? Select one: A. A peril is the actual means by which property is damaged or destroyed such as fire, lightning, windstorm, hail, or theft. B. In order to be covered by an insurance policy, a peril must be defined and described in that policy. C. Property insurance policies can cover specific perils and cannot exclude other perils. D. A peril is anything that increases the frequency or the severity of a loss. - ANSWER A. A peril is the actual means by which property is damaged or destroyed such as fire, lightning, windstorm, hail, or theft. A contractor is hired to install a new concrete sidewalk in front of a store. Several weeks after the sidewalk was installed, the concrete buckles and a passerby trips and
The unauthorized intrusion into a company's computer network resulting in damage to intellectual property is best classified as which one of the following types of cyber liability exposures? Select one: A. Loss of use B. Tangible property C. Intangible property D. Loss of business income - ANSWER C. Intangible property In property insurance, the term "property in transit" refers to which one of the following? Select one: A. Owned property while located anywhere other than the insured location B. Property while being moved from one building to another at the insured location only C. Mobile equipment while moving under its own power from one work location to another D. Property while being transported by trucks, cars, buses, trains, airplanes, and ships
- ANSWER D. Property while being transported by trucks, cars, buses, trains, airplanes, and ships During a business interruption, some of the organization's expenses, called continuing expenses, will continue, and other expenses, called noncontinuing expenses, will not continue. Which one of the following is an example of a continuing expense? Select one: A. Cost to rent temporary office space B. Cost of overnight air shipment of needed repair parts C. Payroll of key employees D. Overtime wages to employees - ANSWER C. Payroll of key employees Pedestrian Wilma was injured as a result of a contractor's negligence when the contractor failed to adequately warn the public of a hazard when paving a road. Any resulting liability claim by Wilma against the contractor would be considered to have arisen from the contractor's Select one: A. Products and completed operations liability exposure. B. Premises and operations liability exposure. C. Personal liability exposure. D. Absolute liability exposure. - ANSWER B. Premises and operations liability exposure. XYZ contractor, covered under an unendorsed Commercial General Liability (CGL) Coverage Form, is installing kitchen cabinets in a customer's home. The contractor manufactured the cabinets. While the contractor is fastening a cabinet, it falls and injures the customer. Which one of the following best explains how coverage under the contractor's CGL Coverage Form applies in this case? Select one: A. Products and completed operations liability applies because the contractor was installing cabinets it manufactured.
B. Premises and operations liability applies because the contractor was in the process of installing the cabinets. C. Products and completed operations liability applies because the contractor was completing the work. D. Premises and operations liability applies because the contractor was working at the customer's premises. - ANSWER B. Premises and operations liability applies because the contractor was in the process of installing the cabinets. The management of Maryland Marine Co. (MMC) must ensure that proper coverage is obtained for work-related injuries. The employee population of MMC is a mixture of full- time and part-time employees as well as some casual employees for one-time tasks. Much of MMC's work is done by independent contractors and temporary employees during peak seasons. Which one of the following statements about these persons is true? Select one: A. Many states workers compensation statutes exclude casual labor (temporary employees). B. Injuries to MMC's full-time ship captains are likely to be covered under state workers compensation laws. C. Temporary employees are considered employees of MMC rather than employees of the firm supplying them to MMC. D. The independent contractors are automatically employees under common law. - ANSWER A. Many states workers compensation statutes exclude casual labor (temporary employees). Which one of the following supply chain exposures can a business mitigate by carefully wording contracts and diversifying suppliers? Select one: A. Strikes or other employment issues B. Changes in demand C. Production bottlenecks D. Loss of supply due to external events - ANSWER D. Loss of supply due to external events Which one of the following best describes real property? Select one: A. Property being shipped to or from others. B. Business personal property that includes furniture, machinery and equipment, and stock/inventory. C. Tangible property that includes land, structures permanently attached to the land, and whatever is growing on the land. D. Vehicles, merchandise, furniture, tools, and similar items. - ANSWER C. Tangible property that includes land, structures permanently attached to the land, and whatever is growing on the land.
A. Yes, because the injury arose out of and in the course of employment B. No, because Joe probably contributed to the injury C. Yes, because Home Builders must provide no-fault protection for employees D. No, because Joe is not an employee of Home Builders - ANSWER D. No, because Joe is not an employee of Home Builders Bio-Pharma was a highly-regarded pharmaceutical company. That changed last year when it was revealed that Bio-Pharma researchers had fabricated test results of the company's new hypertension drug, and a company official bribed a key regulator to get the drug approved. These revelations led to a sharp decline in sales of all of Bio- Pharma's drugs, a sharp decline in net income, and a decline in Bio-Pharma's stock price. This scenario clearly indicates the value of a corporation's Select one: A. Patents. B. Intellectual property. C. Internal security. D. Reputation. - ANSWER D. Reputation. Sally is a commercial property claims adjuster. When she is first assigned a claim, she reviews the commercial property part of the policy to make sure that the property that suffered the loss matches the description of the property insured. She also reviews the kinds and amount of coverage provided. Which one of the following components of the commercial property part will provide Sally with this information? Select one: A. Commercial property declarations page B. Building and personal property coverage form C. Causes of loss form D. Commercial property conditions - ANSWER A. Commercial property declarations page Which one of the following perils would be covered under the commercial property policy broad form but not covered under the basic form? Select one: A. Damage due to explosion. B. Damage due to vehicles C. Damage due to vandalism D. Damage due to weight of snow - ANSWER D. Damage due to weight of snow The commercial property policy Causes of Loss Form that provides coverage for "risks of direct physical loss," unless excluded or limited by the policy is called the Select one: A. Causes of Loss—Special Form. B. Causes of Loss—All Risks Form. C. Causes of Loss—Basic Form. D. Causes of Loss—Broad Form. - ANSWER A. Causes of Loss—Special Form.
Which one of the following statements is correct with regard to the Building and Personal Property Coverage Form (BPP)? Select one: A. Insureds cannot obtain any coverage under the BPP or its optional coverages for leased photocopiers, computers, phone systems, and other equipment. B. Insureds who have selected the replacement cost option may also elect to have the personal property of others valued at replacement cost. C. Under the extension of replacement cost to personal property of others, the amount of a loss is calculated according to a formula included in the additional coverage wording. D. If an insured extends replacement cost to the personal property of others, the amount of a loss is calculated as the replacement cost of that property, even if that amount exceeds the applicable limit of insurance. - ANSWER B. Insureds who have selected the replacement cost option may also elect to have the personal property of others valued at replacement cost. When Sylvester Properties suffered a $500,000 loss of business income, it filed a claim under the Business Income (and Extra Expense) Coverage Form (BIC) of its commercial package policy. In order for the loss to be covered, the loss of business income must be due to a necessary suspension in operations caused by a direct physical loss or damage to property at the premises for which BIC is shown in the policy declarations. Which one of the following is also part of the criteria for the loss to be covered? Select one: A. The loss or damage must be caused by a covered cause of loss. B. The suspension of operations must be less than a year. C. The insured must continue operations at a new location. D. The suspension of operations must be greater than 60 days. - ANSWER A. The loss or damage must be caused by a covered cause of loss. Which one of the following would be considered an extra expense under the Business Income (and Extra Expense) Coverage Form of the commercial package policy? Select one: A. The increased cost of construction to meet new building codes or ordinances B. The salary of key employees who will continue to work at a temporary location C. The cost to remove damaged equipment and machinery D. The increased cost of rent at a temporary location - ANSWER D. The increased cost of rent at a temporary location The coinsurance basis for business income coverage is Select one: A. Net income plus continuing operating expenses. B. Net income plus all operating expenses that would have been incurred in the absence of a loss. C. Gross income plus payroll and utilities.
waters damaged the basement and first floor of the restaurant. Which one of the following is an acceptable reason for the CPP insurer to deny the business income claim? Select one: A. The building was damaged, but not completely destroyed. B. The business planned to resume operations within 120 days. C. The business did not earn a profit in the prior 12-month period. D. The policy's covered causes of loss did not include flood. - ANSWER D. The policy's covered causes of loss did not include flood. Lucy's Bakery is insured under a commercial package policy with the Business Income (and Extra Expense) Coverage Form. A fire loss caused significant damage to the building. When Lucy learned that it would take 9 months to repair the building, she decided to temporarily relocate to a nearby rental location. All of the following would be considered covered extra expenses under the Business Income (and Extra Expense) Coverage Form, EXCEPT: Select one: A. The cost to lease mixers and other machinery B. The salary of the assistant baker and cake decorator C. The costs to move some of the ovens to the new location D. The rent for the new location - ANSWER B. The salary of the assistant baker and cake decorator Which one of the following statements is true regarding the Business Income (without Extra Expense) Coverage Form? Select one: A. It covers only extra expenses that reduce the business income loss. B. It does not cover any extra expenses. C. It covers only extra expenses incurred within 48 hours of the loss. D. It covers extra expenses only for businesses that must continue their operations as any cost. - ANSWER A. It covers only extra expenses that reduce the business income loss. Classic Cashmere Shop (CCS) is insured by a commercial package policy. The Business Income (and Extra Expense) Coverage Form (BIC) has a $900,000 limit of insurance and an 80 percent coinsurance provision. CCS experienced a fire loss which resulted in a $300,000 loss of business income. How much will the insurer pay for this BIC loss if the coinsurance basis at the time of the loss was $1,500,000? Select one: A. $160, B. $225, C. $240, D. $300,000 - ANSWER B. $225, NH Manufacturing insures its building and personal property under the commercial property coverage part of a commercial package policy (CPP). During a blizzard, a
portion of the building's roof collapsed from the weight of snow. The risk manager pulled out the CPP to make sure that the building was covered for this type of loss. Which one of the following components of the commercial property coverage part would provide the risk manager with information on the covered perils? Select one: A. Commercial property declarations B. Building and personal property coverage form C. Commercial property conditions D. Causes of loss form - ANSWER D. Causes of loss form Which one of the following statements best describes the Causes of Loss—Special Form? Select one: A. The placement of the "burden of proof" rests with the insured as opposed to the insurer. B. The Special Form provides coverage for direct physical losses other than those that are specifically excluded. C. The Special Form is designed to cover any loss that would not be covered by the Basic and Broad Forms. D. The Special Form contains exclusions that are covered in the Basic and Broad Forms for certain hard to insure perils. - ANSWER B. The Special Form provides coverage for direct physical losses other than those that are specifically excluded. Cameron has a Commercial Package Policy (CPP) that has a Building and Personal Property Coverage Form (BPP) with a Causes of Loss - Broad Form covering his building with a $750,000 limit. A tropical storm struck Cameron's building and the strong winds tore most of the shingles from the building's roof and shattered multiple windows with flying debris. The total amount of damages was $20,000 for the windows and $20,000 for the shingles. Ignoring any deductibles that may apply, how much will Cameron's insurer pay for damage to his windows and shingles? Select one: A. The damage is not covered B. $20, C. $39, D. $40,0 00 - ANSWER D. $40, Which one of the following statements about Inflation Guard optional coverage of the Building and Personal Property Coverage Form (BPP) is true? Select one: A. It is available only on business personal property. B. It is automatically added whenever the Agreed Value optional coverage is added. C. It is automatically increases the limit of insurance by the percentage of annual increase shown in the declarations. D. It leaves policy limits unchanged while increasing the annual premium by the rate of inflation. - ANSWER C. It is automatically increases the limit of insurance by the percentage of annual increase shown in the declarations.
$1,500 deductible. A large fire in the store caused significant damage amounting to $310,000 in covered damages. How much would Billy's insurer pay under his BPP? Select one: A. $273, B. $275, C. $308, D. $310,000 - ANSWER B. $275, Which one of the following statements is correct with respect to the Building and Personal Property Coverage Form (BPP)? Select one: A. The deductible is subtracted from the policy limit. B. The policy limit is the maximum the insurer will pay over any one year. C. No payments under coverage extensions are made if the limit of insurance in the declarations is paid in full. D. Due to coverage extensions, it is possible for the total payment for one loss to exceed the policy limit. - ANSWER D. Due to coverage extensions, it is possible for the total payment for one loss to exceed the policy limit. Karma Tea Shop (KTS) has three locations in Boston. The business is insured by a commercial package policy with the Business Income (and Extra Expense) Coverage Form (BIC). The BIC has a $300,000 limit of insurance which applies to all three locations and a 70 percent coinsurance provision. The business income insurance for KTS is written on a Select one: A. Specific basis. B. Net basis. C. Fixed basis. D. Blanket basis. - ANSWER D. Blanket basis. Stanton Industries insures its building and business personal property under the commercial property coverage part of a commercial package policy. Anthony is the new risk manager for Stanton Industries. He wants to look at the policy to review the property insured, the kinds and amounts of coverage provided, and any optional coverages. Which one of the following component parts of the commercial property part would provide Anthony with this information? Select one: A. Commercial property conditions B. Commercial property declarations C. Coverage form D. Causes of loss form - ANSWER B. Commercial property declarations Which one of the following statements is correct with respect to the Building and Personal Property Coverage Form (BPP) deductible? Select one:
A. Under the ISO Commercial Lines Manual rules, the standard deductible must be at least $2,500. B. The insurer is not obligated to pay anything to the insured unless the loss exceeds the deductible. C. If the Coinsurance condition or the Agreed Value optional coverage applies, the amount of the loss is first reduced by the deductible before applying any penalty imposed by those provisions. D. If an occurrence involves a loss that affects more than one category of covered property and a separate limit of insurance applies to each category, losses to all categories are totaled and the deductible applied to that total amount. - ANSWER B. The insurer is not obligated to pay anything to the insured unless the loss exceeds the deductible. Gilbert Industries insures its building and personal property under the Building and Personal Property Coverage Form (BPP). A large section on the building was destroyed by fire after the building was struck by lightning. Because the building was over 25 years-old, there had been a number of building code changes since it was constructed. In order for Gilbert Industries to comply with these new codes, the cost of rebuilding would increase. Which one of the following additional coverages under the BPP would provide coverage for these costs? Select one: A. Newly acquired or constructed property coverage B. Replacement cost coverage C. Inflation guard coverage D. Increased cost of construction coverage - ANSWER D. Increased cost of construction coverage Forrest Hill Grill (FHG) operates its business out of two locations. One location is a restaurant which has seating for 30 people and serves alcohol. The other location is strictly a take-out and catering operation. FHG's Business Income (and Extra Expense) Coverage Form is written with a separate limit of insurance for each location. The business income coverage is written on a Select one: A. Specific basis. B. Per building basis. C. Per location basis. D. Blanket basis. - ANSWER A. Specific basis. The loss of or damage to property can have adverse financial consequences including reduced property value. Which one of the following statements is correct with respect to a reduction in value? Select one: A. A valuable painting that is repaired after being damaged is likely to have declined in value. B. For insurance purposes, the dollar amount of a reduction in value is the same regardless of the valuation measure used.
B. Completed operations liability. C. Premises and operations liability. D. Employers liability. - ANSWER C. Premises and operations liability. An electrical contractor was hired to install a new 100-amp fuse box in the Smith's home. During installation, the contractor inadvertently left a small screwdriver in a duct space behind the panel. Three weeks later, the screwdriver caused an electrical short which led to a fire. Which one of the following loss exposures best categorizes the electrical contractor's legal liability exposure for the fire damages? Select one: A. Products liability B. Completed operations liability C. Property damage liability D. Liability for operations by others - ANSWER B. Completed operations liability John purchased a new lawnmower two years ago. After significant use, the lawnmower needed servicing. A repairman sharpened the blade, but he failed to reattach it properly to the lawnmower. When John was using the lawnmower, the blade flew off and seriously injured John's daughter. From the standpoint of a commercial liability loss for the repair shop, this is an example of Select one: A. Products liability. B. Completed operations liability. C. Premises and operations liability. D. Liability for operations by others. - ANSWER B. Completed operations liability. Which one of the following components of the commercial property part of a commercial package policy can be used to tailor the coverage to meet the specialized needs of a particular insured or eliminate exposure that the underwriter is unwilling to insure? Select one: A. Commercial property declarations B. Endorsements C. Commercial property conditions D. Causes of loss form - ANSWER B. Endorsements When trying to determine the building property limit for the Building and Personal Property Coverage Form (BPP), the owner of GGR Properties expressed a concern about the requirement to carry a certain percentage of insurance relative to the value of the covered property. The insurance producer advised the insured that the BPP has an optional coverage that would suspend this requirement. Which one of the following BPP optional coverages is the producer recommending? Select one: A. Replacement Cost option B. Agreed Value option C. Inflation Guard option
D. Actual Cash Value option - ANSWER B. Agreed Value option Richard's Clothing Store has a $500,000 Business Income (and Extra Expense) Coverage Form on which there is an 80 percent coinsurance clause. A fire swept through the store. Richard's Clothing Store estimates that its net income plus all operating expenses for the policy period would have been $1,875,000. The estimated business income loss is $300,000. How much will the insurer pay? Select one: A. $100, B. $200, C. $300, D. $375,000 - ANSWER A. $100, Hager Incorporated insures its building and business personal property under the Building and Personal Property Coverage Form (BPP). The company suffered a fire loss that destroyed a significant portion of the building and damaged the fence surrounding the building. Assuming that the building is insured for at least 80 percent of its value, coverage extensions under the BPP would provide coverage for which one of the following? Select one: A. Damage to the fence surrounding the building B. The cost to remove debris from the portion of the building that was destroyed C. Increased cost of construction to comply with new ordinances or laws D. The cost to remove pollutants from the neighboring creek - ANSWER A. Damage to the fence surrounding the building Leslie suffered a severe burn to her hand when her microwave oven manufactured by LH Appliances caught fire. The fire also caused damage to her kitchen cabinets. Two years later, Leslie decided to file a suit against the manufacturer when she learned that microwaves manufactured by LH Appliances had been found responsible for several other fires. LH Appliances was insured by an occurrence version of the commercial general liability (CGL) coverage form with no deductible or endorsements. Which one of the following correctly describes how LH Appliances' CGL will apply to the claim? Select one: A. The CGL will defend the insured, but only cover the claim for the property damages to the cabinets if found liable. B. The CGL will defend the insured, and pay both for both the bodily injury and damages to the cabinets if found liable. C. The CGL will not cover the claim because it was filed two years after the event that cau - ANSWER B. The CGL will defend the insured, and pay both for both the bodily injury and damages to the cabinets if found liable. BBC Manufacturing (BBC) has an unendorsed Commercial General Liability (CGL) Coverage Form. BBC has expanded its sales outside the United States. Due to injuries from alleged defective products of BBC, lawsuits are brought in Europe, Mexico,
