AIC 41 Assignment 4

Which one of the following statements is correct with respect to the Recovered Property condition of the Building and Personal Property Coverage Form (BPP)?
Select one:
A. The insured has the option of taking the recovered property and refunding the loss

A. The insured has the option of taking the recovered property and refunding the loss payment to the insurer.

Which one of the following statements is correct with respect to the condition Duties in the Event of Loss or Damage of the Building and Personal Property Coverage Form (BPP)?
Select one:
A. If the insured fails to perform any of them, the insurer may not

A. If the insured fails to perform any of them, the insurer may not have to pay for the loss.

The policy valuation approach that determines the basis for using new property of like kind and quality and adjusts for depreciation to determine the amount to be paid at the time of a loss is called
Select one:
A. Reporting value.
B. Agreed value.
C. Act

C. Actual cash value.

Which one of the following statements is correct with respect to the Valuation condition of the Building and Personal Property Coverage Form (BPP)?
Select one:
A. Stock sold but not delivered is valued at replacement cost.
B. Improvements and betterments

D. Subject to certain exceptions, insured property is valued at its actual cash value (ACV).

An insured's office building is valued $500,000, contents valued $100,000 and leased computers valued $50,000. The insured wants to be certain covered property can be repaired or replaced without any coinsurance or depreciation penalties in the event of p

D. Building $500,000 with Replacement Cost and Agreed Value Optional Coverages; Contents $100,000 with Replacement Cost and Agreed Value Optional Coverages; Extension of Replacement Cost to Personal Property of Others $50,000

Which one of the following optional coverages would obligate the insurer to pay for new property of like kind and quality, without any deduction for depreciation?
Select one:
A. Actual Cash Value
B. Replacement Cost
C. Functional Replacement Cost
D. Agree

B. Replacement Cost

A building is insured for $200,000 under an agreed value policy. The policy has a $10,000 deductible and the agreed value of the building is $220,000. After suffering a $43,000 loss, the insurer will pay (rounded to the nearest $10)
Select one:
A. $29,090

A. $29,090.
[($200,000/220,000) X 43,000] -10,000 = $29,090

An insured chooses the "Agreed Value" option for its Building and Personal Property Coverage Form (BPP). The agreed value for the property is $100,000 and the limit of insurance is $120,000. The building is totally destroyed by a covered cause of loss. At

C. $120,000.

Omicron Incorporated is insured under an ISO commercial property policy and an ISO equipment breakdown policy. Both policies include the Other Insurance provision. In the case of a loss for which both policies provide coverage under the same plan, terms,

C. Each policy pays in relation to all applicable policies.

Which one of the following statements is correct with respect to the Control of Property condition of the Commercial Property Conditions Form?
Select one:
A. It states that a violation of a policy condition at one location will suspend coverage at all loc

C. It states that coverage under the policy will not be affected by acts or omissions of persons other than the insured, if the others are not acting under the direction or control of the insured.

Which one of the following is correct with respect to the Transfer of Rights of Recovery Against Others to Us condition of the Commercial Property Conditions Form?
Select one:
A. Any waiver given by the insured, either before or after the loss, impairs th

B. Waiver of recovery against any other party may be given by the insured, provided the waiver is made in writing before the loss occurs.

Which one of the following statements is the purpose of the No Benefit to Bailee condition of the Commercial Property Conditions Form?
Select one:
A. It reinforces the insurer's right of subrogation against the bailee.
B. It allows bailees to limit their

A. It reinforces the insurer's right of subrogation against the bailee.

According to the Common Policy Conditions used with the ISO Commercial Package Policy, if a cancellation results in a return payment, the refund would be sent to
Select one:
A. The first named insured.
B. All named insureds, regardless of how many there a

A. The first named insured.

Which one of the following is a Common Policy Condition found in the ISO Commercial Package Policy (CPP)?
Select one:
A. Cancellation
B. Subrogation
C. Duties in the event of a loss
D. Exclusions

A. Cancellation

Which one of the following common policy conditions permits the insurer to verify property and business income values necessary for premium rating purposes?
Select one:
A. Inspections and surveys
B. Changes condition
C. Examination of books and records
D.

C. Examination of books and records

Which one of the following is correct with respect to the Inspections and Surveys common condition of the Insurance Services Office (ISO) Commercial Package Policy?
Select one:
A. The inspections must be made by the insurer's own personnel.
B. The insurer

B. The insurer does not make safety inspections, and does not guarantee that conditions are safe or healthful.

Which one of the following best describes the Ordinance or Law Coverage endorsement to the Building and Personal Property Coverage Form's Coverage B?
Select one:
A. It covers the value of the undamaged portion of a building that must be demolished.
B. It

D. It covers the cost to demolish the undamaged portion of a building and remove its debris when demolition is required by the building code.

Which one of the following statements is correct regarding the Additional Covered Property endorsement to the Building and Personal Property Coverage Form, also referred to as the BPP?
Select one:
A. The endorsement provides coverage for the increased cos

B. Almost all types of property that are excluded in the BPP can be insured.

Harry's Holiday Shop has limited sales from January through September and increased sales from October through December. Based on that information, which one of the following endorsements to the Building and Personal Property Coverage Form might be approp

C. Peak Season Limit of Insurance

Which one of the following statements is correct regarding the Spoilage Coverage endorsement to the Building and Personal Property Coverage Form?
Select one:
A. The coverage is subject to coinsurance.
B. For coverage to apply to damage resulting from a po

D. It covers damage to perishable stock resulting from on-premises breakdown, among other causes.

Which one of the following correctly describes an optional coverage, often needed by condominium unit owners, that can be attached by endorsement to the unit-owners coverage form?
Select one:
A. The Additional Structures Endorsement provides coverage for

D. Loss assessment coverage provides coverage for the unit owner's share of any assessment made by the association against all unit owners because of physical loss or damage to condominium property caused by a covered cause of loss.

Which one of the following statements is correct with respect to the covered causes of loss under the Builders Risk Coverage Form?
Select one:
A. The builders risk form specifically covers collapse occurring during construction caused by certain named per

C. The builders risk form does not cover theft of uninstalled building materials.

Which one of the following statements is correct with respect to builders risk insurance?
Select one:
A. It is never provided on a reporting basis because of the difficulty of making timely and accurate reports of value.
B. It is usually written on a comp

B. It is usually written on a completed-value basis, which means that the amount of insurance equals the expected value of the completed building.

Which one of the following statements is correct with respect to condominiums?
Select one:
A. A condominium association is a group of condominiums that provides a risk-sharing mechanism for its members.
B. In a condominium, each unit's owner owns that par

D. Insurers often use condominium forms to insure cooperative corporations and planned unit developments.

Which one of the following statements is correct with respect to the Condominium Association Coverage Form?
Select one:
A. The business personal property section of the Condominium Association Coverage Form covers business personal property owned both by

C. Many condominiums have community clubhouses, health clubs, and so forth. The furnishings and equipment of these facilities can be covered as business personal property.

Which one of the following statements is correct with respect to additional coverages and coverage extensions under the Builders Risk Coverage Form?
Select one:
A. The builders risk form contains all of the additional coverages found in the BPP.
B. A buil

B. A builders risk coverage extension provides up to $5,000 at each covered location for damage to building materials or supplies owned by others, such as a plumbing or roofing subcontractor.

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 tor

D. $40,000

Justin 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 Justin's building and the strong winds tore mo

A. The losses are not covered.

Peter 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 the area near Peter's building and the strong

C. $10,000
The BPP's definition of Building includes outdoor fixtures and windstorm is a covered cause of loss in the Broad Form. Outdoor fixtures do not fall under the Outdoor Property coverage extension, which excludes coverage for windstorm damage.

Taunton Company (Taunton) has a Commercial Package Policy (CPP) that has a Building and Personal Property Coverage Form (BPP) with a Causes of Loss�Broad Form. Because the building is older and has unique architectural features, Taunton decided to insure

D. $498,000
Fire and lightning would be covered under the Causes of Loss�Broad Form. Once the repairs have been completed, Taunton's insurer will pay the replacement cost of $500,000 minus the $2,000 deductible. No reinsurance penalty will apply because t

The condition of the Building and Personal Property Coverage Form (BPP) that establishes a method for the insurer and the insured to resolve disputes about the insured property's value or amount of loss is referred to as the
Select one:
A. Mediation condi

B. Arbitration condition.

The cost to replace property with new property of like kind and quality less depreciation is referred to as the
Select one:
A. Depreciated value.
B. Replacement cost.
C. Selling price.
D. Actual cash value.

D. Actual cash value.

Which one of the following statements is correct with regard to Loss Payment of the Building and Personal Property Coverage Form (BPP)?
Select one:
A. The Loss Payment condition states that the insurer will pay the cost of repairing or replacing the damag

D. The condition states that regardless of the value of the loss, the insurer will pay no more than the insured's financial interest in the covered property.

Which one of the following is correct with respect to the Vacancy condition of the Building and Personal Property Coverage Form (BPP)?
Select one:
A. The conditions under which a building is considered to be vacant are different for a tenant than for an o

A. The conditions under which a building is considered to be vacant are different for a tenant than for an owner.

Which one of the following statements is true if the Replacement Cost optional coverage of the Building and Personal Property Coverage Form (BPP) is activated?
Select one:
A. The coinsurance percentage is amended from 80 percent to 100 percent of ACV.
B.

C. The amount of insurance required by the Coinsurance condition is calculated by multiplying replacement cost by the coinsurance percentage.

When an insured is choosing between replacement cost and actual cash value on a policy, the insured should
Select one:
A. Add actual cash value if it wants to waive the coinsurance condition.
B. Determine if the policy limits are adequate for replacement

B. Determine if the policy limits are adequate for replacement cost.

Insurers underwrite Agreed Value optional coverage carefully for which one of the following reasons?
Select one:
A. If the Agreed Value coverage option is not renewed, the coinsurance condition cannot be reinstated.
B. Insureds are often tempted to underi

B. Insureds are often tempted to underinsure, knowing they will not suffer a coinsurance penalty when the agreed value option is in effect.

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 automatically increases the limit of insurance by the percentage of annual increase shown

A. It is automatically increases the limit of insurance by the percentage of annual increase shown in the declarations.

Which one of the following statements is correct with respect to the Concealment, Misrepresentation, or Fraud condition of the Commercial Property Conditions Form?
Select one:
A. Concealment involves an active misstatement of fact.
B. A misrepresentation

D. The commercial property coverage part voids coverage if the insured conceals a material fact pertaining to the covered property.

Which one of the following statements is correct with respect to the Insurance Under Two or More Coverages condition of the Commercial Property Conditions Form?
Select one:
A. It explains how to apportion the loss among multiple policies for the purpose o

C. It states that the total payment under all applicable coverage parts is limited to the actual amount of the loss.

Under the Legal Action Against Us condition of the Commercial Property Conditions Form, if the insured wishes to bring legal action against the insurer, he or she must do so within which one of the following timeframes?
Select one:
A. Sixty days after the

D. Two years after the date on which the direct physical loss occurred

Who of the following can cancel the ISO Commercial Package Policy by mailing or delivering written notice of cancellation?
Select one:
A. Anyone who is listed as a first named insured
B. Any "insured" as defined in the policy definitions
C. The first name

C. The first named insured on the declarations page

The Common Policy Conditions of the ISO Commercial Package Policy include a clause concerning changes in the policy. This clause states that
Select one:
A. The policy can be changed only by a written endorsement issued by the insurer.
B. The policy can be

A. The policy can be changed only by a written endorsement issued by the insurer.

The inspections and surveys condition, a common policy condition attached to the ISO Commercial Package Policy, makes it clear that the insurer has the right to inspect the insured premises and
Select one:
A. Will inspect books and records.
B. Will make r

C. May recommend changes.

Which one of the following is included in the Cancellation condition of the Common Policy Conditions of an ISO Commercial Package Policy?
Select one:
A. Any insured can cancel the coverage by calling his/her agent.
B. The insurer must give thirty days not

C. Notice of cancellation for nonpayment of premium must be mailed or delivered to the insured at least ten days before the date of cancellation.

Which one of the following is the maximum National Flood Insurance Program (NFIP) limit per building for commercial properties?
Select one:
A. $25,000
B. $100,000
C. $250,000
D. $500,000

D. $500,000

The Limited Coverage for Unmanned Aircraft (Scheduled and/or Blanket Coverage) endorsement
Select one:
A. Provides coverage when drones are used for racing, when drones are rented or loaned to others, and for damage to the drone caused by mechanical break

B. Can be added to the Building and Personal Property Coverage Form and a few other commercial property coverage forms to cover physical loss to covered drones.

Which one of the following statements is correct with respect to the Builders Risk Coverage Form?
Select one:
A. Coverage under the builders risk form terminates ten days after construction has been completed whether or not the building is occupied or put

D. The Valuation condition in the builders risk form is much briefer than that included in the BPP, merely indicating that the covered property will be valued at actual cash value at the time of loss.

The Condominium Commercial Unit-Owners Coverage Form is used for insuring
Select one:
A. The undivided interest of all unit owners in the jointly owned "common elements" of a commercial condominium.
B. The personal property of unit owners living in condom

C. "Your business personal property" and personal property of others for owners of commercial condominium units.

Which one of the following is covered under the Builders Risk Coverage Form?
Select one:
A. The land on which the building is being constructed
B. Temporary structures built or assembled on site, such as scaffolding or concrete forms (if not covered by ot

B. Temporary structures built or assembled on site, such as scaffolding or concrete forms (if not covered by other insurance)

Which one of the following statements is correct with respect to the Builders Risk Coverage Form?
Select one:
A. The parties that can be insured by a builders risk policy include the building owner and the building contractor.
B. The builders risk form ca

A. The parties that can be insured by a builders risk policy include the building owner and the building contractor.

Omega Holdings owns a building with an actual cash value of $200,000. The property is insured under a Building and Personal Property Coverage Form (BPP) with a building limit of $140,000, an 80 percent coinsurance clause, and a $1,000 deductible. The poli

A. $69,000
The insured should have carried 80% of $200,000 or $160,000. Instead the insured carried only $140,000. [($140,000/$160,000) x $80,000] - $1,000 = $69,000.