Bundle 6: Final Exam UPDATED Study
Guide QUESTIONS AND CORRECT
ANSWERS
Which one of the following businesses would most likely be eligible for
coverage under an ISO Businessowners Policy? - CORRECT ANSWERS
Johnson's Hardware purchased business income insurance. Johnson's has
monthly revenues of $80,000 and monthly expenses of $60,000. Damage
caused by a covered peril forced Johnson's to close part of its store for three
months. During this time, Johnson's earned $200,000 in revenue and incurred
$150,000 in expenses. How much will Johnson's receive for loss during the
three month period? Assume any extra expenses are covered and ignore policy
limits. - CORRECT ANSWERS
Which one of the following situations would be excluded under the general
exclusions applicable to the insuring agreements in the Commercial Crime
Coverage Form? - CORRECT ANSWERS A. A cashier accepts a
counterfeit bill.
B. An employee discloses company secrets to a competitor.
C. An employee steals securities from his employer while outside the regular
policy territory for two weeks.
D. A recently fired employee uses a computer to fraudulently transfer money.
The Business Personal Property—Limited International Coverage endorsement
provides limited coverage for business personal property outside of the normal
coverage territory of the Building and Personal Property Coverage Form (BPP).
Which one of the following losses would be most likely to be covered by a
standard BPP that was modified by this endorsement and issued to a
Pennsylvania company? - CORRECT ANSWERS
,Which one of the following statements concerning the ISO Farm Personal
Property Coverage Form is most accurate? - CORRECT ANSWERS A.
Farm machinery and equipment and livestock can be insured under the Farm
Personal Property Coverage Form or under inland marine forms.
B. Coverage F—Unscheduled Farm Personal Property includes a 100 percent
coinsurance condition that can be reduced to 90 percent if the insured chooses
to add the Value Reporting Form.
C. The coverage territory in Coverage E—Scheduled Farm Personal Property is
unlimited, so there is worldwide coverage for each of the items listed in the
schedule.
D. Coverage is available for many forms of livestock, but cattle, sheep and
swine are excluded and must be insured under separate inland marine insurance
policies.
Ann's Cards and Gift Shop was insured for $30,000 under a Business Income
(and Extra Expense) Coverage Form with a 70 percent coinsurance clause. Ann
estimated her net income and all operating expenses to be $50,000 for the
coming year. A fire at the shop caused damage that took one month to repair.
During that month, Ann lost $2,000 in net income and continuing expenses and
incurred $800 to rent space for temporary operations. How much did Ann's
insurer pay for the loss under her Business Income (and Extra Expense)
Coverage Form? - CORRECT ANSWERS A. $800
B. $1,400
C. $2,400
D. $2,800
Which one of the following statements is true regarding covered property under
an unendorsed Insurance Services Office (ISO) Builders Risk Coverage Form? -
CORRECT ANSWERS A. Lawns, trees, and shrubs are covered up to
the policy limit.
B. Building materials and supplies in transit to the work site are covered.
C. Increased cost of construction due to ordinance or law is covered as an
additional coverage.
, D. Temporary structures such as scaffolding are covered, if not covered
elsewhere.
Some types of surety bonds are required by law. For example, the Miller Act is a
federal statute that requires - CORRECT ANSWERS B. That contractors
for federal projects supply a performance bond for the protection of the
government and a payment bond for the protection of suppliers of labor and
materials on the project.
Which one of the following statements best describes the Liberalization
condition in the Commercial Property Conditions Form? - CORRECT
ANSWERS A. If the insurer modifies its coverage form, an outstanding
policy will not be affected by any of the coverage modifications until the policy
is renewed after the end of the current policy period.
B. If the insurer modifies its coverage form, any broadening of coverage will
automatically apply to outstanding policies only if the insured pays an
additional premium.
C. If the insurer modifies its coverage form, the insured will automatically
receive any broadening of coverage as long as there is no additional premium
for the broader coverage.
D. If the insurer modifies its coverage form, all coverage modifications will
automatically apply to outstanding policies regardless of whether they broaden
or restrict coverage.
All of the following are differences between using layered property insurance
and standard property insurance policies, EXCEPT: - CORRECT ANSWERS
A. Coverage for perils such as flood and earthquake can more easily be
made a part of a layered property coverage program than a standard policy.
B. When layered property insurance is used, the insured must deal with several
different insurers while standard property insurance must be written by a single
insurer.
C. Layered property insurance applies only to buildings while standard property
insurance applies to buildings and contents.
Guide QUESTIONS AND CORRECT
ANSWERS
Which one of the following businesses would most likely be eligible for
coverage under an ISO Businessowners Policy? - CORRECT ANSWERS
Johnson's Hardware purchased business income insurance. Johnson's has
monthly revenues of $80,000 and monthly expenses of $60,000. Damage
caused by a covered peril forced Johnson's to close part of its store for three
months. During this time, Johnson's earned $200,000 in revenue and incurred
$150,000 in expenses. How much will Johnson's receive for loss during the
three month period? Assume any extra expenses are covered and ignore policy
limits. - CORRECT ANSWERS
Which one of the following situations would be excluded under the general
exclusions applicable to the insuring agreements in the Commercial Crime
Coverage Form? - CORRECT ANSWERS A. A cashier accepts a
counterfeit bill.
B. An employee discloses company secrets to a competitor.
C. An employee steals securities from his employer while outside the regular
policy territory for two weeks.
D. A recently fired employee uses a computer to fraudulently transfer money.
The Business Personal Property—Limited International Coverage endorsement
provides limited coverage for business personal property outside of the normal
coverage territory of the Building and Personal Property Coverage Form (BPP).
Which one of the following losses would be most likely to be covered by a
standard BPP that was modified by this endorsement and issued to a
Pennsylvania company? - CORRECT ANSWERS
,Which one of the following statements concerning the ISO Farm Personal
Property Coverage Form is most accurate? - CORRECT ANSWERS A.
Farm machinery and equipment and livestock can be insured under the Farm
Personal Property Coverage Form or under inland marine forms.
B. Coverage F—Unscheduled Farm Personal Property includes a 100 percent
coinsurance condition that can be reduced to 90 percent if the insured chooses
to add the Value Reporting Form.
C. The coverage territory in Coverage E—Scheduled Farm Personal Property is
unlimited, so there is worldwide coverage for each of the items listed in the
schedule.
D. Coverage is available for many forms of livestock, but cattle, sheep and
swine are excluded and must be insured under separate inland marine insurance
policies.
Ann's Cards and Gift Shop was insured for $30,000 under a Business Income
(and Extra Expense) Coverage Form with a 70 percent coinsurance clause. Ann
estimated her net income and all operating expenses to be $50,000 for the
coming year. A fire at the shop caused damage that took one month to repair.
During that month, Ann lost $2,000 in net income and continuing expenses and
incurred $800 to rent space for temporary operations. How much did Ann's
insurer pay for the loss under her Business Income (and Extra Expense)
Coverage Form? - CORRECT ANSWERS A. $800
B. $1,400
C. $2,400
D. $2,800
Which one of the following statements is true regarding covered property under
an unendorsed Insurance Services Office (ISO) Builders Risk Coverage Form? -
CORRECT ANSWERS A. Lawns, trees, and shrubs are covered up to
the policy limit.
B. Building materials and supplies in transit to the work site are covered.
C. Increased cost of construction due to ordinance or law is covered as an
additional coverage.
, D. Temporary structures such as scaffolding are covered, if not covered
elsewhere.
Some types of surety bonds are required by law. For example, the Miller Act is a
federal statute that requires - CORRECT ANSWERS B. That contractors
for federal projects supply a performance bond for the protection of the
government and a payment bond for the protection of suppliers of labor and
materials on the project.
Which one of the following statements best describes the Liberalization
condition in the Commercial Property Conditions Form? - CORRECT
ANSWERS A. If the insurer modifies its coverage form, an outstanding
policy will not be affected by any of the coverage modifications until the policy
is renewed after the end of the current policy period.
B. If the insurer modifies its coverage form, any broadening of coverage will
automatically apply to outstanding policies only if the insured pays an
additional premium.
C. If the insurer modifies its coverage form, the insured will automatically
receive any broadening of coverage as long as there is no additional premium
for the broader coverage.
D. If the insurer modifies its coverage form, all coverage modifications will
automatically apply to outstanding policies regardless of whether they broaden
or restrict coverage.
All of the following are differences between using layered property insurance
and standard property insurance policies, EXCEPT: - CORRECT ANSWERS
A. Coverage for perils such as flood and earthquake can more easily be
made a part of a layered property coverage program than a standard policy.
B. When layered property insurance is used, the insured must deal with several
different insurers while standard property insurance must be written by a single
insurer.
C. Layered property insurance applies only to buildings while standard property
insurance applies to buildings and contents.
