Question 1

One of the additional coverages under the building and personal property coverage form is "increased cost of construction." The coverage is payable if

Accepted Answer

A) a skilled artisan is needed to duplicate the construction of the damaged property. 
B) a labor strike or materials shortage increases construction costs. 
C) an ordinance or building code increases the cost of construction. 
D) the materials necessary to rebuild the damaged structure are more expensive than ordinary building materials. 
A) a skilled artisan is needed to duplicate the construction of the damaged property. 
B) a labor strike or materials shortage increases construction costs. 
C) an ordinance or building code increases the cost of construction. 
D) the materials necessary to rebuild the damaged structure are more expensive than ordinary building materials. C

Question 2

Which of the following statements describes a Difference in Conditions (DIC)Policy?

Accepted Answer

A) It is a type of commercial umbrella liability policy. 
B) It is an all-risk policy that covers perils not insured by basic property insurance contracts. 
C) It is designed to cover indirect losses for which the insured has direct damage coverage. 
D) It is used to settle disputes when an insured has more than one insurance policy with differing policy provisions. 
A) It is a type of commercial umbrella liability policy. 
B) It is an all-risk policy that covers perils not insured by basic property insurance contracts. 
C) It is designed to cover indirect losses for which the insured has direct damage coverage. 
D) It is used to settle disputes when an insured has more than one insurance policy with differing policy provisions. B

Question 3

The exterior walls,the roof,and the plumbing,heating and air conditioning systems of a residential condominium can be insured through the purchase of which of the following forms?
I.Condominium association coverage form
II.Condominium commercial unit-owners coverage form

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II A

Question 4

Which of the following is included in the common declarations page of a commercial package policy?
I.A description of the insured property.
II.A listing of the causes-of-loss that are covered by the policy.

Accepted Answer

A) I only 
B) the policy period. 
C) the premium paid. 
D) the policy cancellation provisions. 
A) I only 
B) the policy period. 
C) the premium paid. 
D) the policy cancellation provisions.

Question 5

All of the following causes of loss are included in the causes-of-loss basic form of the ISO commercial package policy EXCEPT

Accepted Answer

A) fire. 
B) lightning. 
C) explosion. 
D) flood. 
A) fire. 
B) lightning. 
C) explosion. 
D) flood.

Question 6

One inland marine coverage form is the accounts receivable coverage form.In which of the following cases would the purchaser of this form be indemnified through the coverage?

Accepted Answer

A) If the purchaser cannot pay amounts owed because the purchaser has become insolvent. 
B) If the purchaser cannot pay amounts owed because the purchaser has suffered an insured physical damage loss. 
C) If the purchaser cannot collect accounts receivable because of the destruction of records. 
D) If the purchaser cannot collect accounts receivable because the purchaser extended credit to a poor credit risks. 
A) If the purchaser cannot pay amounts owed because the purchaser has become insolvent. 
B) If the purchaser cannot pay amounts owed because the purchaser has suffered an insured physical damage loss. 
C) If the purchaser cannot collect accounts receivable because of the destruction of records. 
D) If the purchaser cannot collect accounts receivable because the purchaser extended credit to a poor credit risks.

Question 7

Which of the following statements about the businessowners policy is (are)true?
I.It is designed to meet the insurance needs of large manufacturing firms.
II.It is a package policy designed to meet the basic property and liability needs of an insured in a single contract.

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Question 8

A navigation error caused a cargo ship to run aground on a reef.The ship,valued at $1.5 million,was carrying $1.5 million in grain and $1.5 in electronic devices.The ship sustained $150,000 in physical damage.If this loss is a "particular average" loss,how will the loss be settled?

Accepted Answer

A) the owners of each of the three interests are responsible for $50,000 
B) the owner of the ship is responsible for the entire $150,000 loss 
C) the two cargo owners are each responsible for $75,000 of the loss 
D) the owner of the ship is responsible for the first $100,000 of the loss,and the two cargo owners are each responsible for $25,000 of the loss 
A) the owners of each of the three interests are responsible for $50,000 
B) the owner of the ship is responsible for the entire $150,000 loss 
C) the two cargo owners are each responsible for $75,000 of the loss 
D) the owner of the ship is responsible for the first $100,000 of the loss,and the two cargo owners are each responsible for $25,000 of the loss

Question 9

Tom opened a store in a mall.His store is located between a theater and a department store.Tom counts on the theater and department store to generate walk-in business at his store.While his store has been successful,Tom knows that if either or both of the other businesses closed,his store would suffer an economic loss.What type of dependent property situation is illustrated in this scenario?

Accepted Answer

A) contributing location 
B) recipient location 
C) manufacturing location 
D) leader location 
A) contributing location 
B) recipient location 
C) manufacturing location 
D) leader location

Question 10

Inter-Ocean Transfer owns 12 large cargo ships which transport goods.Inter-Ocean Transfer can obtain physical damage insurance on these vessels by purchasing

Accepted Answer

A) hull insurance. 
B) cargo insurance. 
C) protection and indemnity insurance. 
D) freight insurance. 
A) hull insurance. 
B) cargo insurance. 
C) protection and indemnity insurance. 
D) freight insurance.

Question 11

Which of the following statements is (are)true concerning the value reporting form?
I.Failure to report accurately suspends coverage.
II.If the insured underreports the property values at a location,and a loss occurs at that location,recovery is limited to the proportion that the last value reported bears to the value that should have been reported.

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Question 12

Reimbursement for spoilage of frozen food caused by failure of a refrigeration unit at a frozen foods processor can be covered under

Accepted Answer

A) equipment breakdown insurance. 
B) extra expense insurance. 
C) builders risk insurance. 
D) inland marine insurance. 
A) equipment breakdown insurance. 
B) extra expense insurance. 
C) builders risk insurance. 
D) inland marine insurance.

Question 13

Which of the following statements about the provisions of the building and personal property coverage form is (are)true?
I.A separate deductible must be satisfied for each building damaged in the same occurrence.
II.Under the replacement cost option,there is no deduction for depreciation.

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Question 14

Which of the following statements about ocean marine insurance is true?

Accepted Answer

A) The coverage is narrow and excludes perils of the sea. 
B) Hull insurance includes collision liability covering the ship's owner if the ship collides with another ship. 
C) Protection and indemnity (P&I)insurance covers the shipper of goods for cargo losses. 
D) A particular average loss is a loss incurred only if a ship is totally lost or destroyed. 
A) The coverage is narrow and excludes perils of the sea. 
B) Hull insurance includes collision liability covering the ship's owner if the ship collides with another ship. 
C) Protection and indemnity (P&I)insurance covers the shipper of goods for cargo losses. 
D) A particular average loss is a loss incurred only if a ship is totally lost or destroyed.

Question 15

All of the following are extensions of coverage under the building and personal property coverage form EXCEPT

Accepted Answer

A) newly acquired or constructed property. 
B) valuable papers and records. 
C) personal property temporarily off the premises. 
D) currency and securities. 
A) newly acquired or constructed property. 
B) valuable papers and records. 
C) personal property temporarily off the premises. 
D) currency and securities.

Question 16

What is the effect of the optional agreed value provision in the building and personal property coverage form?

Accepted Answer

A) It provides replacement cost coverage. 
B) It increases insured values along with inflation. 
C) It suspends the coinsurance clause. 
D) It reduces the deductible to $50. 
A) It provides replacement cost coverage. 
B) It increases insured values along with inflation. 
C) It suspends the coinsurance clause. 
D) It reduces the deductible to $50.

Question 17

Which of the following items is (are)contained in the common policy conditions page of the commercial package policy?
I.The policy period.
II.A provision describing the insurer's right to audit the insured's books and records.

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Question 18

XYZ,Inc.would suffer serious financial consequences if either of its two major customers were shut down and could not purchase XYZ products.Which of the following types of consequential loss protection would provide protection against this exposure?

Accepted Answer

A) leasehold interest 
B) extra expense 
C) marine insurance 
D) business income from dependent properties 
A) leasehold interest 
B) extra expense 
C) marine insurance 
D) business income from dependent properties

Question 19

Which of the following statements about the equipment breakdown protection coverage form is (are)true?
I.The covered cause of loss is a breakdown of covered equipment,including boilers,machinery,and electrical and mechanical equipment.
II.It provides coverage for the reasonable cost of expediting permanent repair or replacement of damaged property.

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Question 20

All of the following are considered to be instrumentalities of transportation and communication for purposes of inland marine insurance EXCEPT

Accepted Answer

A) trains. 
B) tunnels. 
C) transmission lines. 
D) television towers. 
A) trains. 
B) tunnels. 
C) transmission lines. 
D) television towers.

Exam 25: Commercial Property Insurance

One of the additional coverages under the building and personal property coverage form is "increased cost of construction." The coverage is payable if

Which of the following statements describes a Difference in Conditions (DIC)Policy?

The exterior walls,the roof,and the plumbing,heating and air conditioning systems of a residential condominium can be insured through the purchase of which of the following forms? I.Condominium association coverage form II.Condominium commercial unit-owners coverage form

Which of the following is included in the common declarations page of a commercial package policy? I.A description of the insured property. II.A listing of the causes-of-loss that are covered by the policy.

All of the following causes of loss are included in the causes-of-loss basic form of the ISO commercial package policy EXCEPT

One inland marine coverage form is the accounts receivable coverage form.In which of the following cases would the purchaser of this form be indemnified through the coverage?

Which of the following statements about the businessowners policy is (are)true? I.It is designed to meet the insurance needs of large manufacturing firms. II.It is a package policy designed to meet the basic property and liability needs of an insured in a single contract.

A navigation error caused a cargo ship to run aground on a reef.The ship,valued at $1.5 million,was carrying $1.5 million in grain and $1.5 in electronic devices.The ship sustained $150,000 in physical damage.If this loss is a "particular average" loss,how will the loss be settled?

Inter-Ocean Transfer owns 12 large cargo ships which transport goods.Inter-Ocean Transfer can obtain physical damage insurance on these vessels by purchasing

Reimbursement for spoilage of frozen food caused by failure of a refrigeration unit at a frozen foods processor can be covered under

Which of the following statements about the provisions of the building and personal property coverage form is (are)true? I.A separate deductible must be satisfied for each building damaged in the same occurrence. II.Under the replacement cost option,there is no deduction for depreciation.

Which of the following statements about ocean marine insurance is true?

All of the following are extensions of coverage under the building and personal property coverage form EXCEPT

What is the effect of the optional agreed value provision in the building and personal property coverage form?

Which of the following items is (are)contained in the common policy conditions page of the commercial package policy? I.The policy period. II.A provision describing the insurer's right to audit the insured's books and records.

XYZ,Inc.would suffer serious financial consequences if either of its two major customers were shut down and could not purchase XYZ products.Which of the following types of consequential loss protection would provide protection against this exposure?

All of the following are considered to be instrumentalities of transportation and communication for purposes of inland marine insurance EXCEPT

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