Question 1

Ambiguities in insurance contracts are read in the manner most favorable to the insured because insurance is:

Accepted Answer

A) an indemnity contract. 
B) a contract of utmost good faith. 
C) a contract of subrogation. 
D) a unilateral contract. 
E) a contract of adhesion.

Question 2

Which of the following statements is true about a business owners policy?

Accepted Answer

A) It is an outgrowth of the capital asset program. 
B) It provides coverage for inland transportation and specialized equipment. 
C) It provides options to value property at actual cash value, agreed value, or (for buildings) functional replacement cost. 
D) In this policy, the bulk of the premium goes toward costs of inspection and loss control. 
E) It can be purchased either on a named-perils or an open-risk basis.

Question 3

In a commercial general liability policy, claims for injuries that occurred thirty years ago can be covered if coverage is available on a(n):

Accepted Answer

A) occurrence basis. 
B) claims-made basis. 
C) replacement basis. 
D) actual cash basis. 
E) extended replacement basis.

Question 4

The umbrella policy excludes medical expense coverages.

Accepted Answer

A) True 
 B)False

Question 5

The insured can purchase this option found in section G, optional coverages to ward off unwanted retention of loss values above the limit of insurance.This option provides for automatic periodic increases in insurance limits and ensures that the policyholder will have sufficient limits of insurance to cover a total loss.Identify this option.

Accepted Answer

A) Agreed value option 
B) Deductible option 
C) Inflation guard option 
D) Waiver 
E) Estoppel

Question 6

Which of the following is excluded in the employment practices liability program?

Accepted Answer

A) Discrimination that results in refusal to hire 
B) Retaliatory actions taken against whistleblowers 
C) Failure to promote 
D) Coercion of an employee to perform an unlawful act 
E) Defamation

Question 7

Inland marine insurance is an outgrowth of _____ insurance, which is coverage for property while being transported by water including coverage for the vessels doing the transporting.

Accepted Answer

The answer of Inland marine insurance is an outgrowth of...

Question 8

The _____ policy provides excess coverage over underlying insurance.

Accepted Answer

The answer of The _____ policy provides excess coverage over...

Question 9

This insurance policy provides businesses coverage on a blanket, replacement-cost basis without a coinsurance provision to sufficiently large accounts.The program also provides options to value property at actual cash value, agreed value, or (for buildings) functional replacement cost.Under the program, "Business income and extra expense coverages are written into the form and can be activated by entries on the policy declaration page." Identify this insurance policy.

Accepted Answer

A) Inland marine insurance 
B) Business owners program 
C) Oceans marine insurance 
D) Capital asset program 
E) Commercial aviation program

Question 10

The commercial package policy program was started by the _____ in 1986.

Accepted Answer

The answer of The commercial package policy program was started...

Question 11

In a building and personal property policy, the coinsurance policy can be overridden with an agreed value option.

Accepted Answer

A) True 
 B)False

Question 12

If the value of the property is $250,000, the coinsurance percentage for the property is 80%, the limit of insurance for the property is $100,000, and the deductible is $250.Calculate the amount paid by the insurer if the amount of loss of property is $40,000.

Accepted Answer

A) $38,750 
B) $40,000 
C) $98,750 
D) $100,000 
E) $19,750

Question 13

_____ insurance protects against loss that results from property damage to the insured's own property and to nonowned property caused by explosions or other sudden breakdowns of boilers and machinery.

Accepted Answer

The answer of _____ insurance protects against loss that results...

Question 14

The business income coverage policy protects against business interruption, but not against extra expense losses.

Accepted Answer

A) True 
 B)False

Question 15

The commercial general liability policy replaced the liability coverage previously available through the comprehensive general liability policy.

Accepted Answer

A) True 
 B)False

Question 16

The intent of this insurance policy was to provide a comprehensive policy that would omit the need for small businesses to make numerous decisions, while also incorporating coverage on exposures often overlooked.Identify this insurance policy.

Accepted Answer

A) Inland marine insurance 
B) Business owners policy 
C) Oceans marine insurance 
D) Capital asset program 
E) Commercial aviation policy

Question 17

Which of the following statements is true about a business income coverage form?

Accepted Answer

A) This policy protects the insured against business interruption losses, but not against extra expense losses. 
B) This policy covers all lost revenues because those revenues generally cover expenses. 
C) The policy's intention is to maintain the insured's same financial position with or without a loss. 
D) Under this policy, businesses that sustained losses because of the economic backlash and fear after September 11, 2001, were covered for their loss of income. 
E) Extra expenses incurred by businesses following property damage are not covered by this policy.

Question 18

If the insured chooses this basis of property insurance payment in building and personal property coverage form, then the provision 7 valuation of section E, loss conditions, applies.Identify this basis of payment.

Accepted Answer

A) Replacement cost new 
B) Virtual replacement cost 
C) Actual cash value 
D) Forecasted cash value 
E) Extended replacement cost

Question 19

This ISO's liability program, available to all ISO-participating insurance companies, was filed with state insurance regulators for approval effective April 1, 1998.It was the newest line introduced in more than twenty years.Because of an increase in the number of lawsuits filed for sexual harassment and similar liability suits, the coverage became imperative to most businesses.Identify this insurance coverage.

Accepted Answer

A) Employment practices liability program 
B) Capital asset liability program 
C) Professional liability program 
D) Inland marine liability program 
E) Business owners liability policy

Question 20

The _____ period applies if a claims-made policy is canceled and provides coverage for claims brought after the policy period has expired for events that occurred between the retroactive date and the end of the policy period.

Accepted Answer

The answer of The _____ period applies if a claims-made...

Exam 15: Multirisk Management Contracts: Business

Ambiguities in insurance contracts are read in the manner most favorable to the insured because insurance is:

Which of the following statements is true about a business owners policy?

In a commercial general liability policy, claims for injuries that occurred thirty years ago can be covered if coverage is available on a(n) :

The umbrella policy excludes medical expense coverages.

Which of the following is excluded in the employment practices liability program?

Inland marine insurance is an outgrowth of _____ insurance, which is coverage for property while being transported by water including coverage for the vessels doing the transporting.

The _____ policy provides excess coverage over underlying insurance.

The commercial package policy program was started by the _____ in 1986.

In a building and personal property policy, the coinsurance policy can be overridden with an agreed value option.

If the value of the property is $250,000, the coinsurance percentage for the property is 80%, the limit of insurance for the property is $100,000, and the deductible is $250.Calculate the amount paid by the insurer if the amount of loss of property is $40,000.

_____ insurance protects against loss that results from property damage to the insured's own property and to nonowned property caused by explosions or other sudden breakdowns of boilers and machinery.

The business income coverage policy protects against business interruption, but not against extra expense losses.

The commercial general liability policy replaced the liability coverage previously available through the comprehensive general liability policy.

The intent of this insurance policy was to provide a comprehensive policy that would omit the need for small businesses to make numerous decisions, while also incorporating coverage on exposures often overlooked.Identify this insurance policy.

Which of the following statements is true about a business income coverage form?

If the insured chooses this basis of property insurance payment in building and personal property coverage form, then the provision 7 valuation of section E, loss conditions, applies.Identify this basis of payment.

The _____ period applies if a claims-made policy is canceled and provides coverage for claims brought after the policy period has expired for events that occurred between the retroactive date and the end of the policy period.