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Exam 25: Commercial Property Insurance

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Question 1

Multiple Choice

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One of the additional coverages under the building and personal property coverage form is "increased cost of construction." The coverage is payable if

A) a skilled artisan is needed to duplicate the construction of the damaged property.
B) a labor strike or materials shortage increases construction costs.
C) an ordinance or building code increases the cost of construction.
D) the materials necessary to rebuild the damaged structure are more expensive than ordinary building materials.

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C

Question 2

Multiple Choice

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Inter-Ocean Transfer owns 12 large cargo ships which transport goods. Inter-Ocean Transfer can obtain physical damage insurance on these vessels by purchasing

A) hull insurance.
B) cargo insurance.
C) protection and indemnity insurance.
D) freight insurance.

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Question 3

Multiple Choice

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XYZ, Inc. would suffer serious financial consequences if either of its two major customers were shut down and could not purchase XYZ products. Which of the following types of consequential loss protection would provide protection against this exposure?

All of the following statements about inland marine forms are true EXCEPT

An Inter-Ocean Transfer cargo ship was forced to jettison some cargo in heavy seas. The various interests in the voyage at the time the property was jettisoned were If $400,000 worth of iron ore was jettisoned, for how much of this amount would Inter-Ocean Transfer be responsible under general average?

The business income and extra expense coverage form covers loss of business income and continuing normal operating expenses. How is business income (revenue) defined?

All of the following statements about the businessowners policy are true EXCEPT

One inland marine coverage form is the accounts receivable coverage form. In which of the following cases would the purchaser of this form (the insured) be indemnified through the coverage?

Which of the following statements describes a Difference in Conditions (DIC) Policy?

Which of the following perils is not included in the causes-of-loss basic form of the ISO commercial package policy?

Which of the following forms is used to insure buildings that are under construction?

The building and personal property coverage form provides several optional coverages. Under one optional coverage, no deduction is taken for depreciation when settling a covered loss. This optional coverage is called

The exterior walls, the roof, and the plumbing, heating and air conditioning systems of a residential condominium can be insured through the purchase of which of the following forms? I.Condominium association coverage form II.Condominium commercial unit-owners coverage form

Which of the following is (are) included in the common declarations page of a commercial package policy? I.A description of the insured property II.A listing of the causes-of-loss that are covered by the policy

Which of the following statements about the equipment breakdown protection coverage form is (are) true? I.The covered cause of loss is a breakdown of covered equipment, including boilers, machinery, and electrical and mechanical equipment. II.It provides coverage for the reasonable cost of expediting permanent repair or replacement of damaged property.

Frank's property insurance requires periodic reporting of inventory values. Frank believes he can save money by under-reporting the inventory. Last period, Frank reported $200,000 when the value was really $400,000. Shortly after filing the report, when the value was $500,000, the inventory was destroyed. Ignoring any deductible, how much will Frank's insurer pay?

Which of the following statements concerning terrorism insurance is (are) true? I. Terrorism insurance covers direct physical damage to the insured's property resulting from an act of terrorism. II. Terrorism insurance and be added through an endorsement to the commercial property insurance policy or purchased as a separate, stand-alone policy.

Reimbursement for spoilage of frozen food caused by failure of a refrigeration unit at a frozen foods processor can be covered under

Which of the following statements about the building and personal property coverage form is (are) true? I.A limited amount of coverage is provided for pollutant cleanup and removal at the described premises if the release or discharge of the pollutant results from a covered cause of loss. II.Fire department service charges are specifically excluded because they are a normal cost of doing business.

A firm wishing to insure a single shipment of merchandise sent by a common carrier would purchase a(n)