AIC 304 EXAM QUESTIONS AND
THEIR 100% REVIEWED SOLUTIONS
Paris Cuisine, a fine-dining restaurant, rents space in
a commercial building, which is insured by its owner.
Paris Cuisine spends $50,000 on wallpaper, floor
coverings, windows, and other improvements that
would remain in the building if Paris Cuisine were to
move out. Paris Cuisine's interest in these
improvements is insured under which one of the
following?
A. The business personal property section of Paris
Cuisine's BPP
B. The leasehold improvements section of the building
owner's BPP
C. The property of others section of the building owner's
BPP
D. The building portion of Paris Cuisine's Building and
Personal Property Coverage Form (BPP)
A
Insureds who want to suspend the coinsurance
provision may do so through
A. The BPP's Agreed Value optional coverage.
B. Engaging a reinsurer.
C. Arbitration with the insurer.
D. The insurance-to-value provision.
,A
In a property loss, a list of damaged areas with
proposed remediation actions for each area is called
A. A loss plan.
B. A scope.
C. An inventory.
D. A checklist.
B
Sho is investigating a large merchandise loss for an
insured. He has avoided making commitments that
may waive policy conditions, outlined the claims
handling process, learned how the insured business
operates, and inspected the premises and the
damaged merchandise. Which one the following
actions by Sho is part of the preliminary survey?
A. Avoided commitments
B. Inspection of premises
C. Outline of the process
D. Learned the operation
B
Julio's washing machine malfunctions, flooding his
basement. The appliance is covered by a service
agreement, which pays for the repairs to the machine
itself. Julio's insurer covers the rest of the loss. This
other-insurance method is often called
A. The primary/excess method.
B. The pro-rata method.
C. Contribution by limits.
, D. The proportional-share method.
A
Jack owns a souvenir shop in a beach resort town,
doing most of his business during the summer
months. In considering coverage beyond his policy
limits, which one of the following is most likely to be
useful to Jack?
A. Peak season endorsement
B. Increased cost of construction
C. Inflation guard
D. Extended replacement cost coverage
A
Luis is handling a claim for property damage in which
the insured maintains that his manufacturing
equipment was damage by a power surge from
lightning. He referenced the National Weather Service
and determined that there was a lightning strike in the
area on the date of the loss, but it did not strike the
insured property directly. Luis should
A. Deny the claim because the damage was not caused
by a latent defect.
B. Hire a repair professional to confirm the damage was
caused by lightning.
C. Accept the claim because the property policy covers
mechanical breakdown.
D. Deny the claim because the lightning did not strike the
insured property
B
THEIR 100% REVIEWED SOLUTIONS
Paris Cuisine, a fine-dining restaurant, rents space in
a commercial building, which is insured by its owner.
Paris Cuisine spends $50,000 on wallpaper, floor
coverings, windows, and other improvements that
would remain in the building if Paris Cuisine were to
move out. Paris Cuisine's interest in these
improvements is insured under which one of the
following?
A. The business personal property section of Paris
Cuisine's BPP
B. The leasehold improvements section of the building
owner's BPP
C. The property of others section of the building owner's
BPP
D. The building portion of Paris Cuisine's Building and
Personal Property Coverage Form (BPP)
A
Insureds who want to suspend the coinsurance
provision may do so through
A. The BPP's Agreed Value optional coverage.
B. Engaging a reinsurer.
C. Arbitration with the insurer.
D. The insurance-to-value provision.
,A
In a property loss, a list of damaged areas with
proposed remediation actions for each area is called
A. A loss plan.
B. A scope.
C. An inventory.
D. A checklist.
B
Sho is investigating a large merchandise loss for an
insured. He has avoided making commitments that
may waive policy conditions, outlined the claims
handling process, learned how the insured business
operates, and inspected the premises and the
damaged merchandise. Which one the following
actions by Sho is part of the preliminary survey?
A. Avoided commitments
B. Inspection of premises
C. Outline of the process
D. Learned the operation
B
Julio's washing machine malfunctions, flooding his
basement. The appliance is covered by a service
agreement, which pays for the repairs to the machine
itself. Julio's insurer covers the rest of the loss. This
other-insurance method is often called
A. The primary/excess method.
B. The pro-rata method.
C. Contribution by limits.
, D. The proportional-share method.
A
Jack owns a souvenir shop in a beach resort town,
doing most of his business during the summer
months. In considering coverage beyond his policy
limits, which one of the following is most likely to be
useful to Jack?
A. Peak season endorsement
B. Increased cost of construction
C. Inflation guard
D. Extended replacement cost coverage
A
Luis is handling a claim for property damage in which
the insured maintains that his manufacturing
equipment was damage by a power surge from
lightning. He referenced the National Weather Service
and determined that there was a lightning strike in the
area on the date of the loss, but it did not strike the
insured property directly. Luis should
A. Deny the claim because the damage was not caused
by a latent defect.
B. Hire a repair professional to confirm the damage was
caused by lightning.
C. Accept the claim because the property policy covers
mechanical breakdown.
D. Deny the claim because the lightning did not strike the
insured property
B
