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1|Page AINS 103 (Associate In General Insurance) Exam (3 newest versions) BANK VERSION AND STUDY GUIDE | ACTUAL EXAM QUESTIONS AND ANSWERS AND RATIONALES | EXPERT VERIFIED FOR GUARANTEED PASS | LATEST UPDATE /BRAND NEW A family recently purchased a new home constructed by a residential home b uilder. Two months after taking possession, several of the family members w ere injured when the roof suddenly collapsed. The family sued the constructi on company and was awarded monetary damages for their injuries. This is a n example of which one of the following types of commercial liability loss ex posure for the construction company? Select one: A. Products liability B. Premises and operations liability C. Completed operations liability D. Employers liability ......answer.....C. Completed operations liability Which one of the following is an example of injury or damage arising from a n occurrence that would be covered by the products and completed operatio ns liability portion of the Commercial General Liability (CGL) Coverage For m? Select one: A. A defective gas range manufactured by the insured explodes causin g injury. 2|Page B. A customer's house is set on fire while the insured is doing plumbing work C. A dissatisfied customer sues an insured for slander. D. A customer is injured when she slips on a wet floor in a store. ......answer.. ..A. A defective gas range manufactured by the insured explodes causing inj ury Joe Motors, which services automobiles, wants to maintain the goodwill of it s customers. This is best accomplished by Select one: A. Purchasing garage liability insurance. B. Purchasing garagekeepers insurance. C. Lowering the physical damage deductible under its business auto insuranc e. D. Raising liability limits under its business auto insurance. ......answer.....B. Purchasing garagekeepers insurance. Workers compensation benefits include which one of the following? Select one: A. Death benefits of 100 percent of wage loss B. Pain and suffering benefits C. Rehabilitation benefits D. Property damage benefits ......answer.....C. Rehabilitation benefits 4|Page D. Company's copyrights and trademarks. ......answer.....B. Contents in and ar ound a building. In business income insurance, the expenses that an organization would not h ave 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 vehi cle. 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 s ued the tire store for failing to properly tighten the lug nuts on the vehicle. T he 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 c ontracting work? Select one: 5|Page 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 tr ansportation on land. Sue is injured at work, and her job responsibilities are reduced for 30 days, af ter which time she is fully recovered. Sue has which one of the following type s 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 7|Page A. A peril is the actual means by which property is damaged or destroyed suc has 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 ot her 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 de stroyed such as fire, lightning, windstorm, hail, or theft. A contractor is hired to install a new concrete sidewalk in front of a store. Se veral weeks after the sidewalk was installed, the concrete buckles and a passe rby trips and falls on the buckled sidewalk. The passerby sues the contractor to recover medical expenses incurred due to the fall. This commercial liabilit y loss is categorized as Select one: A. Products liability. B. Environmental liability. C. Professional liability. D. Completed operations liability. ......answer.....D. Completed operations lia bility. Which one of the following entities would likely have the greatest completed operations loss exposure? Select one: A. Paul the plumber 8| Page B. Doris the physician C. Moe the manufacturer D. Sam the accountant ......answer.....A. Paul the plumber A carrier that is prevented by an accident from delivering the cargo aboard it s ship may face an exposure called loss of freight, which is Select one: A. The compensation the carrier receives for transporting cargo. B. A penalty the carrier pays the shipper for nondelivery. C. The liability for loss or damage to the cargo entrusted to it. D. The cost of disposing of undeliverable goods. ......answer.....A. The compe nsation the carrier receives for transporting cargo. The typical workers compensation statute provides payment for which one o f the following? Select one: A. Medical bills sustained while an employee commutes to work on public tr ansit B. Injuries to customers on the insured premises C. Medical bills for an injury sustained by an employee while working D. Any property damage that accompanies a bodily injury ......answer.....C. M edical bills for an injury sustained by an employee while working 1o | Page C. Mobile equipment while moving under its own power from one work loca tion to another D. Property while being transported by trucks, cars, buses, trains, airplanes, and ships ......answer.....D. Property while being transported by trucks, cars, b uses, trains, airplanes, and ships During a business interruption, some of the organization's expenses, called c ontinuing expenses, will continue, and other expenses, called noncontinuing expenses, will not continue. Which one of the following is an example of ac ontinuing 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 t he 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 liabil ity exposure. u|Page XYZ contractor, covered under an unendorsed Commercial General Liability (CGL) Coverage Form, is installing kitchen cabinets in a customer's home. T he contractor manufactured the cabinets. While the contractor is fastening a cabinet, it falls and injures the customer. Which one of the following best ex plains how coverage under the contractor's CGL Coverage Form applies in th is case? Select one: A. Products and completed operations liability applies because the contracto r 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 contracto r was completing the work. D. Premises and operations liability applies because the contractor was work ing at the customer's premises. ......answer.....B. Premises and operations liabi lity applies because the contractor was in the process of installing the cabine ts. The management of Maryland Marine Co. (MMC) must ensure that proper c overage 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 te mporary employees during peak seasons. Which one of the following statem ents about these persons is true? Select one: A. Many states workers compensation statutes exclude casual labor (tempora ry employees). 13 | Page Renata owns a valuable antique sculpture by a famous artist. One day she ac cidentally 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 th e 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 follow ing best describes the financial consequences of the accident? Select one: A. There are no financial consequences because the piece looks the same as i t did before the accident. B. The financial consequences include the cost of the repair and the reductio n in value resulting from the repaired damage. C. Renata has incurred a total loss because original artwork is impossible to r eplace. D. The only financial consequence of the accident is the money Renata paid t he art restorer for the repair. ......answer.....B. The financial consequences incl ude the cost of the repair and the reduction in value resulting from the repai red damage. Telephone Company installs fiber- optic cable using a trenching machine that digs a trench, buries the cable, fill s in the trench, and reseeds, all in one pass. The trenching machine can insta Il cable in a fifty- home neighborhood in one day. A day after the trenching machine passes by , amember of the community steps on the trenched area, sinks in, and break s his leg. This is an example of a liability loss exposure arising out of Select one: A. Premises. B. Completed operations. 144| Page C. Professional. D. Products. ......answer.....B. Completed operations. Radley Contracting Company is installing new signage on the front of a build ing. George, a passerby walking near the building is injured when a Radley e mployee accidentally drops a tool from a crane. George likely has the ability t o assert which one the following types of claim? Select one: A. Premises and products liability B. Premises and operations liability C. Completed operations liability D. Incompleted operations liability ......answer.....B. Premises and operations liability Joe signs a contract with Home Builders to install the electrical wiring for an ew home. He uses his own tools and follows the specifications in the contrac t. Joe is burned while installing the wiring. Does Home Builders’ workers co mpensation policy cover Joe's injury? Select one: 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 16 | Page Which one of the following perils would be covered under the commercial pr operty 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 c alled 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 covera ges for leased photocopiers, computers, phone systems, and other equipmen t. 17| Page 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, th e amount of a loss is calculated according to a formula included in the additi onal 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, ev en if that amount exceeds the applicable limit of insurance. ......answer.....B. I nsureds who have selected the replacement cost option may also elect to hav e the personal property of others valued at replacement cost. When Sylvester Properties suffered a $500,000 loss of business income, it file da claim under the Business Income (and Extra Expense) Coverage Form (BI C) of its commercial package policy. In order for the loss to be covered, the | oss 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 wh ich BIC is shown in the policy declarations. Which one of the following is als o 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. ......answetr..... 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 pac kage policy? 1g | Page D. Definitions and provisions ......answer.....A. A range of covered peril Which one of the following is a covered cause of loss under the Causes of Los s—Basic Form? Select one: A. Weight of ice, snow, or sleet B. Falling objects C. Water damage D. Sprinkler leakage ......answer.....D. Sprinkler leakage Which one of the following is one of the covered causes of loss in the comme rcial property policy Causes of Loss—Basic form? Select one: A. Vandalism B. Falling objects C. Water damage D. Weight of ice ......answer.....A. Vandalism Which one of the following is correct with respect to the Increased Cost of C onstruction additional coverage of the Building and Personal Property Cover age Form (BPP)? Select one: A. The amount of insurance is equal to 25 percent of the amount of insuranc e on the building or $50,000, whichever is less. 20|Page B. It provides a small amount of insurance to cover the increased cost to com ply with ordinances or laws regulating the repair, rebuilding, or replacement of covered buildings. C. It includes coverage for the cost to demolish the undamaged portion of th e structure and remove its debris. D. It does not apply if the replacement cost option has been selected. ......ans wer.....B. It provides a small amount of insurance to cover the increased cost to comply with ordinances or laws regulating the repair, rebuilding, or replac ement of covered buildings. Dooley's Restaurant is insured under a commercial package policy (CPP) wit h the Business Income (with Extra Expense) Coverage Form. The business su ffered a $400,000 loss of business income when it was forced to suspend oper ations after flood waters damaged the basement and first floor of the restaur ant. Which one of the following is an acceptable reason for the CPP insurer t o 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 Busines s Income (and Extra Expense) Coverage Form. A fire loss caused significant d amage to the building. When Lucy learned that it would take 9 months to re pair the building, she decided to temporarily relocate to a nearby rental locat 
