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AINS 103 NEWEST ACTUAL EXAM &
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Sue is injured at work, and her job responsibilities are reduced for 30 days, after which time she is fully recovered. Sue has which one of the following types of workers compensation disabilities? Select one: A. Temporary total disability B. Permanent partial disability C. Temporary partial disability D. Permanent total disability Correct Answer C. Temporary partial disability Meat Products Company (MPC) runs packing plants in three Midwest states. The company was in the news recently because of its labor practices. The Department of Labor (DOL) investigated complaints from five female employees that MPC discriminated against them. The DOL found the claim was true. The Immigration and Naturalization Service (INS) found that the company employed illegal immigrants and paid them less than the minimum wage. When this news became public, MPC's reputation was severely harmed. This scenario illustrates which source of reputation risk? Select one: A. Corporate governance and leadership
B. Corporate social responsibility C. Regulatory and legal compliance D. Communication and crisis management Correct Answer C. Regulatory and legal compliance The two categories of property that are exposed to loss from cyber risk are Select one: A. Insured and uninsured. B. Covered and not covered. C. Tangible and intangible. D. Real and personal. Correct Answer C. Tangible and intangible. Perils are an important aspect of property insurance. Which one of the following statements is correct with respect to perils? Select one: A. A peril is the actual means by which property is damaged or destroyed such as fire, lightning, windstorm, hail, or theft. B. In order to be covered by an insurance policy, a peril must be defined and described in that policy. C. Property insurance policies can cover specific perils and cannot exclude other perils. D. A peril is anything that increases the frequency or the severity of a loss. Correct Answer A. A peril is the actual means by which property is damaged or destroyed such as fire, lightning, windstorm, hail, or theft.
D. The cost of disposing of undeliverable goods. Correct Answer A. The compensation the carrier receives for transporting cargo. The typical workers compensation statute provides payment for which one of the following? Select one: A. Medical bills sustained while an employee commutes to work on public transit B. Injuries to customers on the insured premises C. Medical bills for an injury sustained by an employee while working D. Any property damage that accompanies a bodily injury Correct Answer C. Medical bills for an injury sustained by an employee while working When a clothing manufacturer decides to expand the sale of its clothing line by offering internet purchases, it creates new exposures not otherwise covered, or not fully covered, by a traditional policy. These include Select one: A. Loss or damage caused by computer viruses. B. Fire damage to clothing items currently listed for sale online. C. Lightning damage to the computer system used for internet sales. D. Theft of clothing items in their store. Correct Answer A. Loss or damage caused by computer viruses. The unauthorized intrusion into a company's computer network resulting in damage to intellectual property is best
classified as which one of the following types of cyber liability exposures? Select one: A. Loss of use B. Tangible property C. Intangible property D. Loss of business income Correct Answer C. Intangible property In property insurance, the term "property in transit" refers to which one of the following? Select one: A. Owned property while located anywhere other than the insured location B. Property while being moved from one building to another at the insured location only C. Mobile equipment while moving under its own power from one work location to another D. Property while being transported by trucks, cars, buses, trains, airplanes, and ships Correct Answer D. Property while being transported by trucks, cars, buses, trains, airplanes, and ships During a business interruption, some of the organization's expenses, called continuing expenses, will continue, and other expenses, called noncontinuing expenses, will not continue. Which one of the following is an example of a continuing expense? Select one: A. Cost to rent temporary office space B. Cost of overnight air shipment of needed repair parts
C. Products and completed operations liability applies because the contractor was completing the work. D. Premises and operations liability applies because the contractor was working at the customer's premises. Correct Answer B. Premises and operations liability applies because the contractor was in the process of installing the cabinets. The management of Maryland Marine Co. (MMC) must ensure that proper coverage is obtained for work-related injuries. The employee population of MMC is a mixture of full-time and part-time employees as well as some casual employees for one-time tasks. Much of MMC's work is done by independent contractors and temporary employees during peak seasons. Which one of the following statements about these persons is true? Select one: A. Many states workers compensation statutes exclude casual labor (temporary employees). B. Injuries to MMC's full-time ship captains are likely to be covered under state workers compensation laws. C. Temporary employees are considered employees of MMC rather than employees of the firm supplying them to MMC. D. The independent contractors are automatically employees under common law. Correct Answer A. Many states workers compensation statutes exclude casual labor (temporary employees).
Which one of the following supply chain exposures can a business mitigate by carefully wording contracts and diversifying suppliers? Select one: A. Strikes or other employment issues B. Changes in demand C. Production bottlenecks D. Loss of supply due to external events Correct Answer D. Loss of supply due to external events The extent of an organization's product of human intelligence that has economic value refers to which one of the following? Select one: A. Business income B. Intellectual property C. Personal property D. Real property Correct Answer B. Intellectual property Renata owns a valuable antique sculpture by a famous artist. One day she accidentally dropped the sculpture and a piece of it broke off. Renata took the sculpture to an art restorer, who reattached the broken piece and repaired the surface. From a distance, the statue looks the same as it did before Renata dropped it, but a close inspection reveals the repair. Which one of the following best describes the financial consequences of the accident? Select one: A. There are no financial consequences because the piece looks the same as it did before the accident.
A. Premises and products liability B. Premises and operations liability C. Completed operations liability D. Incompleted operations liability Correct Answer B. Premises and operations liability Joe signs a contract with Home Builders to install the electrical wiring for a new home. He uses his own tools and follows the specifications in the contract. Joe is burned while installing the wiring. Does Home Builders' workers compensation policy cover Joe's injury? Select one: A. Yes, because the injury arose out of and in the course of employment B. No, because Joe probably contributed to the injury C. Yes, because Home Builders must provide no-fault protection for employees D. No, because Joe is not an employee of Home Builders Correct Answer D. No, because Joe is not an employee of Home Builders Bio-Pharma was a highly-regarded pharmaceutical company. That changed last year when it was revealed that Bio-Pharma researchers had fabricated test results of the company's new hypertension drug, and a company official bribed a key regulator to get the drug approved. These revelations led to a sharp decline in sales of all of Bio-Pharma's drugs, a sharp decline in net income, and a decline in Bio-Pharma's stock price. This scenario clearly indicates the value of a corporation's Select one:
A. Patents. B. Intellectual property. C. Internal security. D. Reputation. Correct Answer D. Reputation. Sally is a commercial property claims adjuster. When she is first assigned a claim, she reviews the commercial property part of the policy to make sure that the property that suffered the loss matches the description of the property insured. She also reviews the kinds and amount of coverage provided. Which one of the following components of the commercial property part will provide Sally with this information? Select one: A. Commercial property declarations page B. Building and personal property coverage form C. Causes of loss form D. Commercial property conditions Correct Answer A. Commercial property declarations page Which one of the following perils would be covered under the commercial property policy broad form but not covered under the basic form? Select one: A. Damage due to explosion. B. Damage due to vehicles C. Damage due to vandalism D. Damage due to weight of snow Correct Answer D. Damage due to weight of snow
When Sylvester Properties suffered a $500,000 loss of business income, it filed a claim under the Business Income (and Extra Expense) Coverage Form (BIC) of its commercial package policy. In order for the loss to be covered, the loss of business income must be due to a necessary suspension in operations caused by a direct physical loss or damage to property at the premises for which BIC is shown in the policy declarations. Which one of the following is also part of the criteria for the loss to be covered? Select one: A. The loss or damage must be caused by a covered cause of loss. B. The suspension of operations must be less than a year. C. The insured must continue operations at a new location. D. The suspension of operations must be greater than 60 days. Correct Answer A. The loss or damage must be caused by a covered cause of loss. Which one of the following would be considered an extra expense under the Business Income (and Extra Expense) Coverage Form of the commercial package policy? Select one: A. The increased cost of construction to meet new building codes or ordinances B. The salary of key employees who will continue to work at a temporary location C. The cost to remove damaged equipment and machinery
D. The increased cost of rent at a temporary location Correct Answer D. The increased cost of rent at a temporary location The coinsurance basis for business income coverage is Select one: A. Net income plus continuing operating expenses. B. Net income plus all operating expenses that would have been incurred in the absence of a loss. C. Gross income plus payroll and utilities. D. Gross income less continuing operating expenses. Correct Answer B. Net income plus all operating expenses that would have been incurred in the absence of a loss. The commercial property coverage part of a commercial package policy contains one or more commercial property coverage forms. Each coverage form typically includes all of the following, EXCEPT: Select one: A. A range of covered peril B. What property is covered and property that is not covered C. An insuring agreement D. Definitions and provisions Correct Answer A. A range of covered peril Which one of the following is a covered cause of loss under the Causes of Loss—Basic Form? Select one: A. Weight of ice, snow, or sleet B. Falling objects
Dooley's Restaurant is insured under a commercial package policy (CPP) with the Business Income (with Extra Expense) Coverage Form. The business suffered a $400,000 loss of business income when it was forced to suspend operations after flood waters damaged the basement and first floor of the restaurant. Which one of the following is an acceptable reason for the CPP insurer to deny the business income claim? Select one: A. The building was damaged, but not completely destroyed. B. The business planned to resume operations within 120 days. C. The business did not earn a profit in the prior 12-month period. D. The policy's covered causes of loss did not include flood. Correct Answer D. The policy's covered causes of loss did not include flood. Lucy's Bakery is insured under a commercial package policy with the Business Income (and Extra Expense) Coverage Form. A fire loss caused significant damage to the building. When Lucy learned that it would take 9 months to repair the building, she decided to temporarily relocate to a nearby rental location. All of the following would be considered covered extra expenses under the Business Income (and Extra Expense) Coverage Form, EXCEPT: Select one: A. The cost to lease mixers and other machinery B. The salary of the assistant baker and cake decorator
C. The costs to move some of the ovens to the new location D. The rent for the new location Correct Answer B. The salary of the assistant baker and cake decorator Which one of the following statements is true regarding the Business Income (without Extra Expense) Coverage Form? Select one: A. It covers only extra expenses that reduce the business income loss. B. It does not cover any extra expenses. C. It covers only extra expenses incurred within 48 hours of the loss. D. It covers extra expenses only for businesses that must continue their operations as any cost. Correct Answer A. It covers only extra expenses that reduce the business income loss. Classic Cashmere Shop (CCS) is insured by a commercial package policy. The Business Income (and Extra Expense) Coverage Form (BIC) has a $900,000 limit of insurance and an 80 percent coinsurance provision. CCS experienced a fire loss which resulted in a $300,000 loss of business income. How much will the insurer pay for this BIC loss if the coinsurance basis at the time of the loss was $1,500,000? Select one: A. $160, B. $225, C. $240,
coverage for direct physical losses other than those that are specifically excluded. Cameron has a Commercial Package Policy (CPP) that has a Building and Personal Property Coverage Form (BPP) with a Causes of Loss - Broad Form covering his building with a $750,000 limit. A tropical storm struck Cameron's building and the strong winds tore most of the shingles from the building's roof and shattered multiple windows with flying debris. The total amount of damages was $20,000 for the windows and $20,000 for the shingles. Ignoring any deductibles that may apply, how much will Cameron's insurer pay for damage to his windows and shingles? Select one: A. The damage is not covered B. $20, C. $39, D. $40,000 Correct Answer D. $40, Which one of the following statements about Inflation Guard optional coverage of the Building and Personal Property Coverage Form (BPP) is true? Select one: A. It is available only on business personal property. B. It is automatically added whenever the Agreed Value optional coverage is added. C. It is automatically increases the limit of insurance by the percentage of annual increase shown in the declarations. D. It leaves policy limits unchanged while increasing the annual premium by the rate of inflation. Correct Answer C.
It is automatically increases the limit of insurance by the percentage of annual increase shown in the declarations. Which one of the following would be covered under the Extra Expense insuring agreement of the Business Income (and Extra Expense) Coverage Form? Select one: A. Normal operating expenses B. Interest Expense C. Costs to move to a temporary location D. Property taxes Correct Answer C. Costs to move to a temporary location Sam's Hair Salon (SHS) is insured under a commercial package policy with the Business Income (and Extra Expense) Coverage Form (BIC). The BIC has a $500, limit of insurance and a 70 percent coinsurance provision. A fire damaged SHS's building and the business was forced to close down for 4 months while the damage could be repaired. This resulted in a BIC loss of $250,000. The salon's net income plus operating expenses that would have been incurred in the absence of the loss was $700,000. Which one of the following represents the coinsurance basis? Select one: A. $350, B. $400, C. $500, D. $700,000 Correct Answer D. $700,
