Download AINS 103 Questions With All Verified Answers 2023-2024 and more Exams Corporate Finance in PDF only on Docsity!
AINS 103 Questions With All Verified Answers 2023-
Which one of the following best describes real property?
Select one:
A. Property being shipped to or from others.
B. Business personal property that includes furniture, machinery and equipment, and stock/inventory.
C. Tangible property that includes land, structures permanently attached to the land, and whatever is growing on the land.
D. Vehicles, merchandise, furniture, tools, and similar items. - Correct Ans-C. Tangible property that includes land, structures permanently attached to the land, and whatever is growing on the land.
Extra expenses are expenses, in addition to ordinary expenses, that an organization incurs to mitigate the effects of a business interruption. Which one of the following is an example of an extra expense?
Select one:
A. Cost to rent temporary office space
B. Insurance premiums
C. Debt repayments
D. Payroll of key employees - Correct Ans-A. Cost to rent temporary office space
Upon entering a restaurant, a customer grasped a handrail that broke off, causing the customer to fall and break his wrist. This is an example of which one of the following types of commercial general liability loss?
Select one:
A. Premises and operations liability
B. Personal and advertising injury liability
C. Absolute liability
D. Products and completed operations liability - Correct Ans-A. Premises and operations liability
The liability loss exposure that exists when an organization is legally responsible for bodily injury or property damage caused by an accident that occurs on an organization's owned, leased, or rented property is
Select one:
A. Professional liability.
B. Property liability.
C. Operations liability.
D. Premises and operations liability. - Correct Ans-D. Premises and operations liability.
Automobile liability exposures can result from
Select one:
A. Damage to or destruction of an owned vehicle.
B. Loss of use of an owned automobile.
C. Workers compensation laws.
D. Hiring or borrowing an automobile. - Correct Ans-D. Hiring or borrowing an automobile.
To be covered under a workers compensation statute, an injury or disease (in most states) must meet which one of the following requirements?
Select one:
A. Result from the employer's negligence
B. Occur away from the regular work premises
C. Arise out of employees' job-related injuries and diseases
D. Result in total disability - Correct Ans-C. Arise out of employees' job-related injuries and diseases
Cyber risk intellectual property loss exposures include
Select one:
A. Cyber extortion of trade secrets.
Select one:
A. Products liability
B. Premises and operations liability
C. Completed operations liability
D. Employers liability - Correct Ans-C. Completed operations liability
Which one of the following is an example of injury or damage arising from an occurrence that would be covered by the products and completed operations liability portion of the Commercial General Liability (CGL) Coverage Form?
Select one:
A. A defective gas range manufactured by the insured explodes causing injury.
B. A customer's house is set on fire while the insured is doing plumbing work.
C. A dissatisfied customer sues an insured for slander.
D. A customer is injured when she slips on a wet floor in a store. - Correct Ans-A. A defective gas range manufactured by the insured explodes causing injury
Joe Motors, which services automobiles, wants to maintain the goodwill of its customers. This is best accomplished by
Select one:
A. Purchasing garage liability insurance.
B. Purchasing garagekeepers insurance.
C. Lowering the physical damage deductible under its business auto insurance.
D. Raising liability limits under its business auto insurance. - Correct Ans-B. Purchasing garagekeepers insurance.
Workers compensation benefits include which one of the following?
Select one:
A. Death benefits of 100 percent of wage loss
B. Pain and suffering benefits
C. Rehabilitation benefits
D. Property damage benefits - Correct Ans-C. Rehabilitation benefits
An email was sent to a company's employees containing a harmful attachment. Several employees opened the attachment which allowed hackers to obtain customer contact information. This cyber risk loss is
Select one:
A. Damage to intangible property.
B. Damage to personal property.
C. Damage to tangible property.
D. Errors and omissions liability. - Correct Ans-A. Damage to intangible property.
An individual owns a web-based business. All sales records and contact data are maintained on the same network server as the website. Someone hacks into the server and deletes all of the saved data. Which one of the following types of loss is this?
Select one:
A. Tangible property
B. Personal injury
C. Intangible property
D. Contingent business income - Correct Ans-C. Intangible property
Property insurance policies use the term "personal property" to refer to the
Select one:
A. Property in transit.
B. Contents in and around a building.
D. Products liability - Correct Ans-B. Completed operations liability
Inland marine insurance is insurance that covers
Select one:
A. Businesses that own or operate watercraft, or import or export goods.
B. Many different classes of property that typically involve an element of transportation on land.
C. Companies that ship goods by commercial vessel on inland waterways.
D. Miscellaneous lines such as burglary, glass, and steam boilers. - Correct Ans-B. Many different classes of property that typically involve an element of transportation on land.
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 Ans-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 Ans-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 Ans-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 Ans-A. A peril is the actual means by which property is damaged or destroyed such as fire, lightning, windstorm, hail, or theft.
A contractor is hired to install a new concrete sidewalk in front of a store. Several weeks after the sidewalk was installed, the concrete buckles and a passerby trips and falls on the buckled sidewalk. The passerby sues the contractor to recover medical expenses incurred due to the fall. This commercial liability loss is categorized as
Select one:
A. Products liability.
B. Environmental liability.
C. Professional liability.
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 Ans-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 Ans-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 Ans-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. Payroll of key employees
D. Overtime wages to employees - Correct Ans-C. Payroll of key employees
Pedestrian Wilma was injured as a result of a contractor's negligence when the contractor failed to adequately warn the public of a hazard when paving a road. Any resulting liability claim by Wilma against the contractor would be considered to have arisen from the contractor's
Select one:
A. Products and completed operations liability exposure.
B. Premises and operations liability exposure.
C. Personal liability exposure.
D. Absolute liability exposure. - Correct Ans-B. Premises and operations liability exposure.
XYZ contractor, covered under an unendorsed Commercial General Liability (CGL) Coverage Form, is installing kitchen cabinets in a customer's home. The contractor manufactured the cabinets. While the contractor is fastening a cabinet, it falls and injures the customer. Which one of the following best explains how coverage under the contractor's CGL Coverage Form applies in this case?
Select one:
A. Products and completed operations liability applies because the contractor was installing cabinets it manufactured.
B. Premises and operations liability applies because the contractor was in the process of installing the cabinets.
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 Ans-B. Premises and operations liability applies because the contractor was in the process of installing the cabinets.
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.
B. The financial consequences include the cost of the repair and the reduction in value resulting from the repaired damage.
C. Renata has incurred a total loss because original artwork is impossible to replace.
D. The only financial consequence of the accident is the money Renata paid the art restorer for the repair. - Correct Ans-B. The financial consequences include the cost of the repair and the reduction in value resulting from the repaired damage.
Telephone Company installs fiber-optic cable using a trenching machine that digs a trench, buries the cable, fills in the trench, and reseeds, all in one pass. The trenching machine can install cable in a fifty- home neighborhood in one day. A day after the trenching machine passes by, a member of the community steps on the trenched area, sinks in, and breaks his leg. This is an example of a liability loss exposure arising out of
Select one:
A. Premises.
B. Completed operations.
C. Professional.
D. Products. - Correct Ans-B. Completed operations.
Radley Contracting Company is installing new signage on the front of a building. George, a passerby walking near the building is injured when a Radley employee accidentally drops a tool from a crane. George likely has the ability to assert which one the following types of claim?
Select one:
A. Premises and products liability
B. Premises and operations liability
C. Completed operations liability
D. Incompleted operations liability - Correct Ans-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 Ans-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 Ans-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?
B. Insureds who have selected the replacement cost option may also elect to have the personal property of others valued at replacement cost.
C. Under the extension of replacement cost to personal property of others, the amount of a loss is calculated according to a formula included in the additional coverage wording.
D. If an insured extends replacement cost to the personal property of others, the amount of a loss is calculated as the replacement cost of that property, even if that amount exceeds the applicable limit of insurance. - Correct Ans-B. Insureds who have selected the replacement cost option may also elect to have the personal property of others valued at replacement cost.
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 Ans-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 Ans-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 Ans-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 Ans-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
C. Water damage
D. Sprinkler leakage - Correct Ans-D. Sprinkler leakage
Which one of the following is one of the covered causes of loss in the commercial property policy Causes of Loss—Basic form?
Select one:
A. Vandalism
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 Ans-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 Ans-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,
D. $300,000 - Correct Ans-B. $225,
NH Manufacturing insures its building and personal property under the commercial property coverage part of a commercial package policy (CPP). During a blizzard, a portion of the building's roof collapsed from the weight of snow. The risk manager pulled out the CPP to make sure that the building was covered for this type of loss. Which one of the following components of the commercial property coverage part would provide the risk manager with information on the covered perils?
Select one:
A. Commercial property declarations
B. Building and personal property coverage form
C. Commercial property conditions
D. Causes of loss form - Correct Ans-D. Causes of loss form
Which one of the following statements best describes the Causes of Loss—Special Form?
Select one:
A. The placement of the "burden of proof" rests with the insured as opposed to the insurer.
B. The Special Form provides coverage for direct physical losses other than those that are specifically excluded.
C. The Special Form is designed to cover any loss that would not be covered by the Basic and Broad Forms.
D. The Special Form contains exclusions that are covered in the Basic and Broad Forms for certain hard to insure perils. - Correct Ans-B. The Special Form provides 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
