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AINS23 practice Questions with Complete
Answers
1.Which one of the following lists the covered causes of loss (basic, broad, or special); the deductible amount;
and any optional coverages? Select one:
A. Causes of loss forms
B. Commercial property declarations
C. Commercial property conditions
D. Commercial property coverage forms: B. Commercial property declarations
2.Ace Accounting has a Building and Personal Property Coverage Form (BPP) through Delta Insurance with a
limit of $300,000 on business personal property. The insured's computer system is valued at $150,000 and it is insured for $100,000 under a separate electronic data processing (EDP) equipment policy issued by Omicron Insurance. The computer system is totally destroyed by fire, a cause of loss insured under both policies. Which one of the following correctly describes how the loss would be settled? Select one:
A. Because Omicron and Delta both cover the equipment, each insurer would pay half of the loss, or $75,000.
B. The BPP policy is primary and would pay the full amount of the loss because it is within the BPP policy limits.
C. Because Omicron's policy more specifically describes the computer sys- tem, it must pay its limit before
Delta pays anything; Delta would pay the remaining $50,000.
D. The BPP specifically excludes property otherwise insured, so Omicron would pay $100,000 and the insured
2 / would have to pay the remaining $50,000 of the loss.: C. Because Omicron's policy more specifically describes the computer system, it must pay its limit before Delta pays anything; Delta would pay the remaining $50,000.
3.Under the Building and Personal Property Coverage Form (BPP), which one of the following extensions covers
loss only by fire, lightning, explosion, riot or civil commotion, and aircraft? Select one:
A. Newly Acquired or Constructed Property
B. Property Off-Premises
C. Outdoor Property
D. Personal Effects and Property of Others: C. Outdoor Property
4.Which one of the following losses would be considered covered water damage under the commercial property
policy Causes of Loss—Broad Form? Select one:
A. Flooding
B. Sudden and accidental discharge of water from the breaking apart of an insured's water pipe
C. Continued or repeated leakage or seepage of water that occurs over 14 days or more
D. Surface water: B. Sudden and accidental discharge of water from the breaking apart of an insured's water pipe
5.Which one of the following statements is correct with regard to the Causes of Loss—Broad Form?
Select one:
A. The form specifically excludes the cost of tearing out and replacing any part of an insured building to repair
damage to any appliance or system that leaked water or steam.
B. The water damage cause of loss includes coverage for damage due to discharge or leakage from roof drains,
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8.Which one of the following is correct with respect to the Vacancy condition of the Building and Personal
Property Coverage Form (BPP)? Select one:
A. The conditions under which a building is considered to be vacant are different for a tenant than for an
owner.
B. If the building has been vacant for more than ten consecutive days, the insurer will pay only for loss
caused by vandalism.
C. If the building has been vacant for more than one year, loss payments for all covered causes of loss are
reduced by 50 percent.
D. Buildings under construction or renovation are considered to be vacant.: A. The conditions under which a
building is considered to be vacant are different for a tenant than for an owner.
9.An insured's office building is valued $500,000, contents valued $100,000 and leased computers valued $50,000.
The insured wants to be certain covered property can be repaired or replaced without any coinsurance or depreciation penalties in the event of physical loss or damage. Which Limits and Optional Coverage(s) on the Building and Personal Property Coverage Form would best suit this insured's wants? Select one:
A. Building $500,000 with Agreed Value Optional Coverage; Contents $100,000 with Agreed Value Optional
Coverage; Extension of Replacement Cost to Personal Property of Others $50,
B. Seek no Optional Coverages but make sure to provide the insurer a signed statement of values
C. Building $500,000 with Replacement Cost and Agreed Value Optional Cov- erages; Contents $100,000 with
Replacement Cost and Agreed Value Optional Coverages; Extension of Replacement Cost to Personal Property of Others $50,
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D. Building $480,000 with Replacement Cost Optional Coverages; Contents
$80,000 with Replacement Cost and Agreed Value Optional Coverages; Exten- sion of Replacement Cost to Personal Property of Others $40,000: C. Building $500,000 with Replacement Cost and Agreed Value Optional Coverages; Contents $100,000 with Replacement Cost and Agreed Value Optional Coverages; Extension of Replacement Cost to Personal Property of Others $50,
10. Which one of the following statements is correct with respect to the Control of Property condition of the
Commercial Property Conditions Form? Select one:
A. It requires the insured to give the insurer access to the premises in order to make inspections and to review
the insured's accounting and other records.
Select one:
7 / 42 coverage forms to cover physical loss to covered drones.
C. Provides coverage only on a scheduled basis, with an individual limit of insurance for each drone.
D. Covers physical damage to the drone or related covered property if the drone is carrying or delivering
goods or merchandise to others.: B. Can be added to the Building and Personal Property Coverage Form and a few other commercial property coverage forms to cover physical loss to covered drones.
13.Harry's Holiday Shop has limited sales from January through September and increased sales from October
through December. Based on that informa- tion, which one of the following endorsements to the Building and Personal Property Coverage Form might be appropriate? Select one:
A. Peak Season Limit of Insurance
B. Value Reporting Form
C. Spoilage Coverage
D. Ordinance or Law Coverage: A. Peak Season Limit of Insurance
14.Which one of the following statements is correct with respect to coinsur- ance used with commercial
property policies? Select one:
A. When the coinsurance requirement is less than 80 percent, the rate is decreased.
B. The 80 percent coinsurance rate is reduced when a policy requires a higher coinsurance percentage.
C. The rates ordinarily used for insuring buildings and personal property are calculated with the assumption
that they will be used with a 100 percent coinsurance clause.
Select one:
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D. When a policy requires a coinsurance percentage higher than 80 percent, the 80 percent coinsurance rate
remains the same.: B. The 80 percent coinsur- ance rate is reduced when a policy requires a higher coinsurance percentage.
15.Peter 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 the area near Peter's building and the strong winds tore most of the shingles from the building's roof and shattered multiple windows with flying debris. An outside fixture also sustained heavy damage due to the wind.The total amount of damages was $40,000 for the windows and shingles; and $10,000 for the outside fixture. How much will Peter's insurer pay for damage to his outside fixture? Select one:
A. The loss is not covered.
B. $5,
C. $10,
D. $20,000: C. $10,
16.Taunton Company (Taunton) has a Commercial Package Policy (CPP) that has a Building and Personal
Property Coverage Form (BPP) with a Causes of Loss—Broad Form. Because the building is older and has unique architectural features, Taunton decided to insure the building on a replacement cost basis. There is a $2 million coverage limit on the building, with a 90 percent coinsur- ance clause and $2,000 deductible. The building was struck by lightning and a resulting fire caused substantial damage to the building. The cost to repair the damaged portion of the building with materials of like kind and quality was $500,000. At the time of the loss, the replacement cost value of the building was determined to be $2.2 million. How much would the insurer pay when the
Select one:
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D. Only to the extent that they actually reduce the business income loss: D. Only to the extent that they actually
reduce the business income loss
19.In which one of the following additional coverages in a Business Income Coverage Form are losses covered
that continue after the period of restoration ends? Select one:
A. Extended business income
B. Alterations and new buildings
C. Civil Authority
D. Expenses to reduce loss: A. Extended business income
20.Which one of the following is the coinsurance basis under a Business Income Coverage Form (BIC)?
Select one:
A. The replacement cost of the building
B. The same as the property covered
C. The actual cash value of the building
D. The projected net income and all operating expenses except for certain deductible items: D. The projected net
income and all operating expenses except for certain deductible items
21.Which one of the following is an option in the business income coverage form that suspends the coinsurance
clause as long as the insured carries an amount of business income insurance that is equal to the value agreed on by the policyholder and the insurer?
Select one:
11 / Select one:
A. Maximum Period of Indemnity coverage option
B. Business Income Agreed Value coverage option
C. Extended Period of Indemnity coverage option
D. Monthly Limit of Indemnity coverage option: B. Business Income Agreed Value coverage option
22.Carol's Dance Studio (CDS) is insured under a Business Income (and Extra Expense) Coverage Form with a
$1 million Business Income limit of insurance. None of the optional coverages of the Business Income (and Extra Expense) are in effect and no endorsements apply to CDS's Business Income (and Extra Expense) Coverage Form. The one year policy period shown in the declarations began on July 1, 20X1. On October 1, 20X1, access was denied to CDS for four weeks by civil authorities because of fire damage to a shop next door to CDS. The resulting loss of business income that CDS sustained was $45,000. The business income loss for the first 72 hours following the time of action by civil authority totaled $4,000. After the first 72 hours, CDS sustained $9,000 business income loss in week 1, $10,000 business income loss in week 2, $11,000 business income loss in week 3 and $11,000 business income loss in week 4. How much of CDS's business income loss would be covered under the Business Income (and Extra Expense) Coverage Form? Select one:
A. $19,
B. $30,
C. $32,
D. $41,000: D. $41,
Select one:
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B. The National Council on Compensation Insurance (NCCI).
C. The Federal Deposit Insurance Corporation (FDIC).
D. The Surety and Fidelity Association of America (SFAA).: D. The Surety and Fidelity Association of America
(SFAA).
25.Which one of the following is a type of covered property under employee theft coverage?
Select one:
A. Electronic data
B. Intangible property
C. Computer programs
D. Securities: D. Securities
26.Which one of these would not be covered under the Forgery or Alteration insuring agreement?
Select one:
A. Losses resulting from the insured's knowing acceptance of a forged check
B. Losses related to the alteration of a promissory note drawn on by the insured
C. Losses related to the forgery of a check drawn on by the insured
D. Losses related to forgery of a written promise to pay funds that is drawn on by the insured: A. Losses resulting
from the insured's knowing acceptance of a forged check
27.Which one of these would not be subject to a special limit of $5,000 per occurrence under the Inside the
Premises—Robbery or Safe Burglary of Other
Select one:
14 / Property coverage under the Commercial Crime Coverage Form? Select one:
A. Furs
B. Precious metals
C. Securities
D. Semiprecious stones: C. Securities
28.A general exclusion of the ISO Commercial Crime Coverage Form applies to acts of employees. However, an
exception is made for Select one:
A. Unauthorized use or disclosure of confidential nonpublic information.
B. Acts of employees learned of by you prior to the policy period.
C. Acts committed by the insured.
D. Coverage provided by the Employee Theft insuring agreement.: D. Coverage provided by the Employee Theft
insuring agreement.
29.Which one of these is an example of a loss that would be covered under the Commercial Crime Coverage
Form? Select one:
A. Business income losses
B. Expenses incurred in establishing the existence of loss under the policy
C. Compensatory damages arising directly from a loss covered by the policy
Select one:
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32. ABC, Inc., is a large, national retailer that sells a variety of consumer goods. ABC carries a Commercial
Package Policy that includes Insurance Services Office's Commercial Crime Coverage Form (Loss Sustained) with the follow- ing insuring agreements: Employee Theft; Forgery or Alteration; Inside the Premises—Theft of Money and Securities; and Inside the Premises—Robbery or Safe Burglary of Other Property. The limit of insurance for each one of these insuring agreements is $100,000 and the deductible per occurrence for each one of these insuring agreements is $1,000. The policy year is 20X1. On June 5, 20X1, a thief entered ABC through an open window while the store was closed and stole $2,500 worth of electronic merchandise. The thief also broke into a safe causing $1,500 damage to the safe and stole $3,000 in cash from the safe. Under which insuring agreement would the damage to the safe be covered? Select one:
A. Employee Theft
B. None
C. Forgery or Alteration
D. Inside the Premises—Theft of Money and Securities: D. Inside the Premis- es—Theft of Money and Securities
33. ABC, Inc., is a large, national retailer that sells a variety of consumer goods. ABC carries a Commercial
Package Policy that includes Insurance Service Office's Commercial Crime Coverage Form (Loss Sustained) with the follow- ing insuring agreements: Employee Theft; Forgery or Alteration; Inside the Premises—Theft of Money and Securities; and Inside the Premises—Robbery or Safe Burglary of Other Property. The limit of insurance for each one of these insuring agreements is $100,000 and the deductible per occurrence for each one of these insuring agreements is $1,000. The policy year is 20X1. During 20X1, two employees, Beth and Jim, in collusion, stole money and merchandise from ABC. Beth and Jim stole money on May 1, 20X1 and August 13, 20X1. They also stole merchandise on January 15, 20X1 and September
Select one:
17 / 29, 20X1. The amount of the money loss totaled $15,000 while the amount of the merchandise loss totaled $110,000. With respect to applying the limit of insurance applicable to the employee theft loss, how many occurrences were involved in this loss?
19 / type of inland marine coverage form would best be used to insure Lumber's equipment? Select one:
A. Contractors equipment
B. Motor truck cargo
C. Transit (transportation)
D. Builders risk: A. Contractors equipment
37.Which one of the following can be added to a builders risk policy to cover various incidental expenses that
might result from a physical loss to a building project, such as additional interest, advertising expenses, or real estate taxes? Select one:
A. Extra expense coverage
B. Incidental expense coverage
C. Contingent loss coverage
D. Soft costs coverage: D. Soft costs coverage
38.Which one of the following best describes the property covered by the filed inland marine Equipment Dealers
Coverage Form?
A. The stock in trade of office equipment dealers, including furniture and business machines such as
calculators and office supplies
B. The stock in trade of dealers that sell agricultural or construction equipment and customers' equipment in the
insured's care, custody, or control
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C. The stock in trade of dealers in "computer equipment" including medical equipment, robotics, and
computerized gaming equipment
D. The stock in trade of camera dealers or musical instrument dealers and similar property of others in the
insured's care, custody, or control: B. The stock in trade of dealers that sell agricultural or construction equipment and customers' equipment in the insured's care, custody, or control
39.A carrier that is prevented by an accident from delivering the cargo aboard its 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 cost of disposing of undeliverable goods.
D. The liability for loss or damage to the cargo entrusted to it.: A. The compen- sation the carrier receives for
transporting cargo.
40.What ocean marine insurance policy or clause covers the damage to an insured's ship if the insured ship
collides with an object in the harbor? Select one:
A. Hull insurance policy
B. Protection and indemnity (P&I) insurance
C. Collision liability clause
D. Open cargo policy: A. Hull insurance policy
41.Which one of the following ocean marine insurance policies or clauses covers the insured shipowner's
liability for injuries to crew members of the insured ship in the event it collides with another vessel?
