AU 61 Chapter 7
The Ralok Corporation recently suffered a direct fire loss to its property and will be out
of operation for several months. The business wants to reduce as many of its expenses
as possible during this period. Which one of the following expenses would be most
difficult to reduce immediately?
Select one:
A. Heat, light, and power
B. Postage
C. Property taxes
D. Payroll - answerC. Property taxes
The extent to which a business depends on a particular piece of property varies
according to all of the following, EXCEPT:
Select one:
A. Existence of business continuity and disaster recovery plans
B. Its protection class rating
C. The time required to replace it
D. Its importance to the insured's operations - answerB. Its protection class rating
Under ISO rules, which one of the following represents the coinsurance percentages
that insurers can offer for business income coverage?
Select one:
A. 30, 40, 50, 60, 70, 80, 90, or 100
B. 50, 60, 70, 80, 90, 100, or 125
C. 60, 80, 100, 110, 125, or 150
D. 80, 100, 125, 150, or 200 - answerB. 50, 60, 70, 80, 90, 100, or 125
The proper way to determine how much business income coverage an insured needs is
to start with a probable maximum loss expressed as
Select one:
A. A gross payroll amount.
B. A percentage of total revenue amount.
C. An estimated value amount.
D. A dollar amount. - answerC. An estimated value amount.
Although several of the same factors are used when underwriting both direct damage
coverage and business income coverage, there are also some additional underwriting
considerations when evaluating a business income exposure. Which one of the
following is such a consideration?
Select one:
A. Occupancy
B. Estimating probable maximum loss (PML)
C. External exposures
, D. Protection - answerB. Estimating probable maximum loss (PML)
Which one of the following statements about the business income coverage of
Businessowners Policies with an actual loss sustained coverage feature is true?
Select one:
A. They usually contain both a coverage dollar limit and a time limit.
B. They usually contain a coverage dollar limit, but no time limit.
C. They usually contain a time limit, but no coverage dollar limit.
D. They usually contain neither a coverage dollar limit nor a time limit. - answerC. They
usually contain a time limit, but no coverage dollar limit.
Which one of the following statements about important considerations to underwriters of
business income insurance is true?
Select one:
A. Income is most likely to go down from year to year.
B. Most businesses earn their income evenly throughout the year.
C. The insured can almost always take at least some steps to reduce the amount of
loss.
D. The business income worksheet measures the exposure to loss. - answerC. The
insured can almost always take at least some steps to reduce the amount of loss.
Which one of the following statements about determining the value at risk for business
income loss exposures is true?
Select one:
A. The business income worksheet makes no distinction between expenses that
continue after a direct loss and those that do not.
B. The business income worksheet provides income and expense values for at least the
prior three years.
C. The value at risk is much more straightforward to determine for business income loss
exposures than it is for direct damage loss exposures.
D. The current values in the business income worksheet may be estimates depending
on the timing of the insured's financial statements. - answerD. The current values in the
business income worksheet may be estimates depending on the timing of the insured's
financial statements.
Factors underwriters must consider when evaluating a business income exposure
include all of the following, EXCEPT:
Select one:
A. Probable maximum loss
B. Probability of indirect loss
C. Adequate insurance to value
D. Measures available to reduce loss - answerB. Probability of indirect loss
Which one of the following statements about key factors that influence the time
necessary to replace a building is true?
Select one:
The Ralok Corporation recently suffered a direct fire loss to its property and will be out
of operation for several months. The business wants to reduce as many of its expenses
as possible during this period. Which one of the following expenses would be most
difficult to reduce immediately?
Select one:
A. Heat, light, and power
B. Postage
C. Property taxes
D. Payroll - answerC. Property taxes
The extent to which a business depends on a particular piece of property varies
according to all of the following, EXCEPT:
Select one:
A. Existence of business continuity and disaster recovery plans
B. Its protection class rating
C. The time required to replace it
D. Its importance to the insured's operations - answerB. Its protection class rating
Under ISO rules, which one of the following represents the coinsurance percentages
that insurers can offer for business income coverage?
Select one:
A. 30, 40, 50, 60, 70, 80, 90, or 100
B. 50, 60, 70, 80, 90, 100, or 125
C. 60, 80, 100, 110, 125, or 150
D. 80, 100, 125, 150, or 200 - answerB. 50, 60, 70, 80, 90, 100, or 125
The proper way to determine how much business income coverage an insured needs is
to start with a probable maximum loss expressed as
Select one:
A. A gross payroll amount.
B. A percentage of total revenue amount.
C. An estimated value amount.
D. A dollar amount. - answerC. An estimated value amount.
Although several of the same factors are used when underwriting both direct damage
coverage and business income coverage, there are also some additional underwriting
considerations when evaluating a business income exposure. Which one of the
following is such a consideration?
Select one:
A. Occupancy
B. Estimating probable maximum loss (PML)
C. External exposures
, D. Protection - answerB. Estimating probable maximum loss (PML)
Which one of the following statements about the business income coverage of
Businessowners Policies with an actual loss sustained coverage feature is true?
Select one:
A. They usually contain both a coverage dollar limit and a time limit.
B. They usually contain a coverage dollar limit, but no time limit.
C. They usually contain a time limit, but no coverage dollar limit.
D. They usually contain neither a coverage dollar limit nor a time limit. - answerC. They
usually contain a time limit, but no coverage dollar limit.
Which one of the following statements about important considerations to underwriters of
business income insurance is true?
Select one:
A. Income is most likely to go down from year to year.
B. Most businesses earn their income evenly throughout the year.
C. The insured can almost always take at least some steps to reduce the amount of
loss.
D. The business income worksheet measures the exposure to loss. - answerC. The
insured can almost always take at least some steps to reduce the amount of loss.
Which one of the following statements about determining the value at risk for business
income loss exposures is true?
Select one:
A. The business income worksheet makes no distinction between expenses that
continue after a direct loss and those that do not.
B. The business income worksheet provides income and expense values for at least the
prior three years.
C. The value at risk is much more straightforward to determine for business income loss
exposures than it is for direct damage loss exposures.
D. The current values in the business income worksheet may be estimates depending
on the timing of the insured's financial statements. - answerD. The current values in the
business income worksheet may be estimates depending on the timing of the insured's
financial statements.
Factors underwriters must consider when evaluating a business income exposure
include all of the following, EXCEPT:
Select one:
A. Probable maximum loss
B. Probability of indirect loss
C. Adequate insurance to value
D. Measures available to reduce loss - answerB. Probability of indirect loss
Which one of the following statements about key factors that influence the time
necessary to replace a building is true?
Select one:
