CIC COMMERCIAL PROPERTY EXAM
QUESTIONS WITH CORRECT ANSWERS
Vacancy Permit Endorsement - Answer-extends the time before vacancy provision kicks
in
Vacancy Changes - Answer-can lower the occupancy requirement for owners
List the 4 optional coverages: - Answer-Agreed Value (suspends coinsurance),
Inflation Guard,
Replacement Cost,
Extension of Replacement Cost to PPO
What are the financial elements of a business income loss: - Answer-Gross revenue,
Operating expenses (both continuing and non-continuing), net profit
Whats the basic form of an Income Statement? - Answer-Sales, less COGS, less
Operating Expenses = EBITDA (Net Income)
Define extra expense - Answer-expenses you would not have incurred BUT FOR the
covered loss
What's the 4 coverage forms available for time-element coverage: - Answer-Business
Income w EE, Business Income wo EE, Extra Expense form, Leasehold Interest Form
List the 7 other methods for providing Business Income Coverage: - Answer-Builders
Risk, BOP, Auto, Contractors Equipment, Equipment Breakdown, EDP, and DIC Policy
Define Business Income: - Answer-NET INCOME that the business would have made if
it wasn't for the loss, and CONTINUING normal operating EXPENSES, including payroll
Rental Income includes: - Answer-rent received from tenants (and fair rental value of
insured's occupied portion), and and obligations of the tenant that must not be assumed
by the landlord (taxes, insurance utilities, etc.)
Manufacturing risks Net Income is based on: - Answer-net sales from products that
would have been PRODUCED during the period of shut down...it does not include
finished good or the time to replace the finished goods
Manufactured Selling Price Endorsement (BI) adds coverage for - Answer-selling price
of finished goods
How do you calculate the business income payment: - Answer-Net Income/Loss PLUS
Continuing Expenses...this must be > $0 to receive any payment
, Define Suspension: - Answer-slowdown/cease of the named insured's business
operations or part or all of a described premises is rendered untenantable (if rental
value applies)
When does the period of restoration begin for Business Income coverage? - Answer-72
hours after direct physical loss or damage at described premises as a result of a
covered cause of loss
When does the period of restoration begin for Extra Expense coverage begin? -
Answer-IMMEDIATELY upon direct physical loss or damage
When does the period of restoration end? - Answer-when the property should
reasonably be repaired, rebuilt, or replaced OR when the insured's operations resume
at a new permanent location
What are the requirements to trigger Business Income Coverage? - Answer-1. Provable
loss
2. Due to necessary suspension of operations
3. Loss sustained during period of restoration
4. direct physical loss to property
5. must be at described premises
6. from a covered cause of loss
What are the four kinds of dependent property exposures: - Answer-Contributing
locations, recipient locations, manufacturing locations, leader locations
What are the four additional coverages in the BI and EE form - Answer-Civil Authority,
Alterations and New Buildings, Extended Business Income, Interruption of Computer
Operations.
What triggers the Civil Authority additional coverage? - Answer-government prohibits
access to the described premises within one mile of the damaged property; damage to
property not at the described premises; damage must be as a result of a covered cause
of loss on the insured's policy --- coverage lasts 4 continuous weeks
List the four conditions of Business Income Coverage Form - Answer-Appraisal, Duties,
Loss Determination, Loss Payment
When does the period of restoration begin for Extended Business Income coverage? -
Answer-the date property is repaired AND operations are resumed -- lasts 60 days
Newly Acquired Coverage Extension on the BI&EE form - Answer-maximum $100k per
location; extension ends 30 days after property is acquired or built
QUESTIONS WITH CORRECT ANSWERS
Vacancy Permit Endorsement - Answer-extends the time before vacancy provision kicks
in
Vacancy Changes - Answer-can lower the occupancy requirement for owners
List the 4 optional coverages: - Answer-Agreed Value (suspends coinsurance),
Inflation Guard,
Replacement Cost,
Extension of Replacement Cost to PPO
What are the financial elements of a business income loss: - Answer-Gross revenue,
Operating expenses (both continuing and non-continuing), net profit
Whats the basic form of an Income Statement? - Answer-Sales, less COGS, less
Operating Expenses = EBITDA (Net Income)
Define extra expense - Answer-expenses you would not have incurred BUT FOR the
covered loss
What's the 4 coverage forms available for time-element coverage: - Answer-Business
Income w EE, Business Income wo EE, Extra Expense form, Leasehold Interest Form
List the 7 other methods for providing Business Income Coverage: - Answer-Builders
Risk, BOP, Auto, Contractors Equipment, Equipment Breakdown, EDP, and DIC Policy
Define Business Income: - Answer-NET INCOME that the business would have made if
it wasn't for the loss, and CONTINUING normal operating EXPENSES, including payroll
Rental Income includes: - Answer-rent received from tenants (and fair rental value of
insured's occupied portion), and and obligations of the tenant that must not be assumed
by the landlord (taxes, insurance utilities, etc.)
Manufacturing risks Net Income is based on: - Answer-net sales from products that
would have been PRODUCED during the period of shut down...it does not include
finished good or the time to replace the finished goods
Manufactured Selling Price Endorsement (BI) adds coverage for - Answer-selling price
of finished goods
How do you calculate the business income payment: - Answer-Net Income/Loss PLUS
Continuing Expenses...this must be > $0 to receive any payment
, Define Suspension: - Answer-slowdown/cease of the named insured's business
operations or part or all of a described premises is rendered untenantable (if rental
value applies)
When does the period of restoration begin for Business Income coverage? - Answer-72
hours after direct physical loss or damage at described premises as a result of a
covered cause of loss
When does the period of restoration begin for Extra Expense coverage begin? -
Answer-IMMEDIATELY upon direct physical loss or damage
When does the period of restoration end? - Answer-when the property should
reasonably be repaired, rebuilt, or replaced OR when the insured's operations resume
at a new permanent location
What are the requirements to trigger Business Income Coverage? - Answer-1. Provable
loss
2. Due to necessary suspension of operations
3. Loss sustained during period of restoration
4. direct physical loss to property
5. must be at described premises
6. from a covered cause of loss
What are the four kinds of dependent property exposures: - Answer-Contributing
locations, recipient locations, manufacturing locations, leader locations
What are the four additional coverages in the BI and EE form - Answer-Civil Authority,
Alterations and New Buildings, Extended Business Income, Interruption of Computer
Operations.
What triggers the Civil Authority additional coverage? - Answer-government prohibits
access to the described premises within one mile of the damaged property; damage to
property not at the described premises; damage must be as a result of a covered cause
of loss on the insured's policy --- coverage lasts 4 continuous weeks
List the four conditions of Business Income Coverage Form - Answer-Appraisal, Duties,
Loss Determination, Loss Payment
When does the period of restoration begin for Extended Business Income coverage? -
Answer-the date property is repaired AND operations are resumed -- lasts 60 days
Newly Acquired Coverage Extension on the BI&EE form - Answer-maximum $100k per
location; extension ends 30 days after property is acquired or built
