BOMI L&RM PE Flashcards
Practice Exam
1
Q
Before underwriting a pollution legal liability policy, insurance underwriters and technical experts analyze all the following except:
a. the health of the insured’s employees.
b. the quantity of hazardous material being stored.
c. the quality of the management of environmental exposures
d. the quality of the physical measures being taken to control the pollutant.
A
a. the health of the insured’s employees.
2
Q
In commercial general liability insurance, physical injury, sickness and disease sustained by a person are each known as:
a. bodily injury.
b. personal injury.
c. advertising injury.
d. individual injury.
A
a. bodily injury.
3
Q
All of the following are generally true about commercial general liability insurance except:
a. policies usually have deductibles for claims of negligence involving bodily injury or property damage.
b. a claim or claims can arise from a single accident or repeated exposure to the same harmful conditions.
c. coverage applies only to incidents that occur during the policy period.
d. claims can be unlimited and are restricted only by the amount of court-awarded damages.
A
a. policies usually have deductibles for claims of negligence involving bodily injury or property damage.
4
Q
Premiums that are calculated by the amount of exposure, with that exposure changing annually, are called:
a. deposit premiums.
b. minimum earned premiums.
c. earned and unearned premiums.
d. packaged premiums.
A
a. deposit premiums.
5
Q
Under the covenant of possession, the landlord may not, without the tenant’s consent:
a. increase the rent at will.
b. evict the tenant for a default.
c. enter the property to make repairs.
d. expect the tenant to care for the property.
A
c. enter the property to make repairs.
6
Q
As a buyer, prior to closing, you conduct due diligence for the following reasons except:
a. to determine if the asking price is reasonable and fair.
b. to assess potential environmental liability.
c. to examine the structural soundness of the building.
d. to review the survey and title reports on the property.
A
a. to determine if the asking price is reasonable and fair.
7
Q
A temporary insurance policy that is issued before the actual policy is processed is called a(n):
a. policy endorsement.
b. declaration.
c. insurance binder.
d. certificate of insurance.
A
c. insurance binder.
8
Q
Lee has used 1997 Cadillac. Lee had one speeding ticket 6 months ago. Kevin has an older, cheaper car. Kevin had a driving-under-the-influence violation 3 years ago. In comparing Lee and Kevin, which statement is true?
a. Lee will have higher premiums because of this driving record.
b. Kevin will have higher premiums because of his driving record.
c. Kevin will have lower premiums because his vehicle cost less when new.
d. Lee will have lower premiums because his vehicle was bought used.
A
b. Kevin will have higher premiums because of his driving record.
9
Q
When an insurance company pays a claim to an insured for damage caused by a third party and then goes to the third party for reimbursement, this procedure is called:
a. triad settlement.
b. reinsurance.
c. subrogation.
d. coinsurance.
A
c. subrogation.
10
Q
Because Tri-Towers Complex had 23 owners, the governance method recommended as most effective was:
a decentralized management.
b. centralized management.
c. concentrated management.
d. deconcentrated management.
A
b. centralized management.
11
Q
A company buys some property to develop and later discovers that the property was previously used for storage of electric company transformers and old batteries. This property is possibly contaminated by:
a. lead and lead byproducts.
b. chemical fumes from cleaning materials.
c. asbestos-containing materials.
d. polychlorinated biphenyls (PCBs)
A
d. polychlorinated biphenyls (PCBs)
12
Q
Insurance coverage that protects a business from a hit-and-run driver is called:
a. uninsured motorist insurance.
b. no-fault insurance.
c. non-owned automobile liability insurance.
d. personal injury protection insurance.
A
a. uninsured motorist insurance.
13
Q
The responsibility for loss control is shared by several entities. Ensuring that loss control activities encompass all loss exposures identified in the risk identification process is the role of:
a. government
b. industry organizations
c. insurance companies
d. individual businesses
A
d. individual businesses
14
Q
The obligation of the insured after the discovery of a first-party loss includes all of the following except:
a. providing written notification to the insurer.
b. submitting a damaged property list.
c. singing a waiver of subrogation.
d. resuming business operation.
A
c. singing a waiver of subrogation.
15
Q
A receiver is a person who:
a. processes the various loan documents or settlement.
b. researches and approves the mortgage for a property.
c. takes action to force a defaulting borrower to pay its debts.
d. takes custody of property and applies its income to creditors’ claims
A
d. takes custody of property and applies its income to creditors’ claims
16
Q
The party bringing legal action for a contract breach may be denied recovery for those damages if he or she has failed to:
a. file withing 30 days of injury.
b. liquidate the damages.
c. demand a maximum amount.
d. mitigate the damages.
A
d. mitigate the damages.
17
Q
A man who trips and falls in the parking lot of your building files a claim alleging negligence on your part. This is an example of a:
a. property loss.
b. net income loss.
c. personnel loss.
d. liability loss.
A
d. liability loss.
18
Q
Rollo Company wants to find a new agent or broker for its insurance needs. The property manager has decided to ask two agents and two brokers to analyze her company’s loss exposures and risk management programs and propose a coverage and service plan. She then selects a broker to solicit various insurance companies to obtain a proposal. This process is called:
a. conceptual competition.
b. underwriting competition.
c. uniform specifications.
d. competitive bidding.
A
a. conceptual competition.
19
Q
The non-freehold estate that has no initially designated duration is the:
a. estate for years.
b. tenancy at will.
c. periodic tenancy.
d. life estate.
A
b. tenancy at will.
20
Q
The pricing policy that allows the underwriter to compare a business’s losses with the statistics of similar type businesses and apply a rate is called:
a. schedule rating.
b. retrospective rating.
c. experience rating.
d. judgement rating.
A
c. experience rating.
21
Q
The fact that you exercise control over the house you live in means that you have:
a. ownership of the property.
b. title of the property.
c. possession of the property.
d. legal tenancy of the property.
A
c. possession of the property.
22
Q
The formal rules and regulations by which a corporation is internally governed are referred to as the:
a. bylaws.
b. charter.
c. articles of incorporation.
d. corporate agreement.
A
a. bylaws.
23
Q
Title defects that might impair the sale of commercial property include all of the following except:
a. existing leases in the property.
b. adverse claims of other parties.
c. encroachments on an adjacent property.
d. flaws in the chain of ownership.
A
a. existing leases in the property.
24
Q
Trade fixtures are generally considered to be:
a. removable by the tenant at lease termination.
b. items that act to reduce the base rent.
c. non-removable and belonging to the landlord.
d. owned jointly by the landlord and tenant.
A
a. removable by the tenant at lease termination.
25
In an insurance policy, the named insured and details of what is covered are stated in the:
a. exclusions
b. conditions.
c. insuring agreement.
d. declarations.
c. insuring agreement.
26
Under the agent' duty to disclose information to the principal, if someone gives information to the agent, then the principal is considered to:
a. possess that knowledge as well.
b. owe the agent for the information.
c. have disclosed all knowledge to the agent.
d. have a duty to keep records of the information imparted.
a. possess that knowledge as well.
27
Jerome is your insurance agent, and you have reported to him that a dump truck was hauling fill materials when a stone flew off and cracked your windshield. Jerome can act as a claims adjuster if:
a. he has been property trained and certified.
b. the regular claims adjusted is unavailable.
c. the insurance company has given him draft authority.
d. the claim is a third-party claim only.
c. the insurance company has given him draft authority.
28
Having common expiration and inception dates for insurance policies:
a. requires the financing of premiums.
b. eases negotiation multiple policies.
c. causes difficulties in financing premiums.
d. requires extended insurance.
b. eases negotiation multiple policies.
29
A lease can be considered a conveyance because it:
a. creates an estate in the property.
b. involves different possessors.
c. requires periodic payments.
d. is in effect for a specific period.
a. creates an estate in the property.
30
An agent who owns the rights to his or her own business and, after assessing a client's needs, may bind coverage for different insurance companies, is involved in:
a. direct selling.
b. direct writing.
c. independent agency marketing.
d. exclusive agency marketing.
c. independent agency marketing.
31
(Fill in the blanks) In contracting, the __ and ___ process resulting in mutual assent is called "a meeting of the minds."
a. offer; acceptance
b. offer; a consideration
c. consideration; enforcement
d. offer; enforcement
a. offer; acceptance
32
Damage to office furniture, machinery, stock, equipment, and moveable fixtures is covered by:
a. building insurance.
b. extra expense insurance.
c. co-insurance.
d. business personal property insurance.
d. business personal property insurance.
33
If a tenant alleges sick building syndrome (SBS) and files a suit for injuries based on exposure to pollution conditions in the insured building, what kind of exposure is being covered by the pollution legal liability insurance?
a. claims for on-site cleanup of unknown pre-existing conditions triggered by discovery or a third-party claim.
b. third-party claims for bodily injury caused by on-site pollution.
c. claims for on-site cleanup of new conditions triggered by discovery or a third-party claim.
d. third-party claims for off-site bodily injury resulting from on-site conditions.
b. third-party claims for bodily injury caused by on-site pollution.
34
Claims adjusters hired by the insured to assist with large, complex, or difficult claims are called:
a. independent claims adjusters.
b. public claims adjusters.
c. national firm adjusters.
d. insurance company staff adjusters.
b. public claims adjusters.
35
During the period of a tenant's lease, the landlord can ordinarily be held liable for:
a. nondisclosure of previously concealed dangerous conditions.
b. the inspection and repair of the leased premises
c. conditions that develop and cause injuries in the space.
d. the condition of the premises at the end of the lease period.
a. nondisclosure of previously concealed dangerous conditions.
36
A new property owner has just discovered soil contamination undisclosed by the previous owner. The new owner's current pollution legal liability insurance will generally cover:
a. a Phase II Environmental Assessment.
b. liability of the previous owner.
c. cleanup of a pre-existing condition.
d. nothing.
c. cleanup of a pre-existing condition.
37
The responsibility for helping a business implement and monitor a loss control program rests with:
a. government.
b. industry organizations.
c. insurance companies.
d. individual businesses.
c. insurance companies.
38
If a parcel of land would be cut off from any access to public way, an easement may be implied by:
a. necessity.
b. reservations.
d. prescription.
d. scop of use.
a. necessity.
39
Who is likely to experience the greatest increase in his premium?
a. Rob for driving km/h over the speed limit and getting ticketed.
b. Bill for amassing 10 parking tickets.
c. Vince for getting a ticket for driving under the influence of alcohol.
d. Dave for being hit while backing out of a parking space,
c. Vince for getting a ticket for driving under the influence of alcohol.
40
Insurance purchased to cover the cost of temporarily relocating or paying the overtime wages for regular employees during the period of restoration of the business's permanent location is called:
a. loss of profits insurance.
b. business interruption insurance.
c. business personal property insurance.
d. extra expense insurance.
d. extra expense insurance.
41
If a management firm attempts to handle a claim by itself, it can:
a. be covered as the insurer's adjuster.
b. increase the amount of the claim.
c. void insurance coverage for the claim.
d. expedite the settlement of the claim.
c. void insurance coverage for the claim.
42
Legal constructive eviction occurs after all of the following actions except:
a. the LL deprives the TT of the use and enjoyment of the premises.
b. the LL gives the TT notice of default and a chance to cure it.
c. the TT vacates the premises.
d. the TT terminates the lease.
b. the LL gives the TT notice of default and a chance to cure it.
43
In most property forms, a provision that ensures that buildings are insured to their proper values is the:
a. business personal property provision.
b. agreed-amount provision.
c. replacement cash value provision.
d. co-insurance provision.
d. co-insurance provision.
44
When an independent contractor is hired, the employer's liability for the independent contractors' injuries on the job is:
a. in effect if the injury occurred on the job.
b. non-existent unless the employer meddles in the job.
c. debateable and fixed by a court of law.
d. covered by workers' compensation insurance.
b. non-existent unless the employer meddles in the job.
45
Having all your insurance policies expire on the same date will:
a. increase your deductibles.
b. require extended insurance.
c. cause difficulties in financing premiums.
d. ease obtaining competitive proposals.
d. ease obtaining competitive proposals.
46
A commercial or industrial property that is abandoned, underutilized, or has actual or perceived environmental problems is referred to as a(n):
a. toxic dump.
b. brownfield.
c. empty hazard.
d. urban blight.
b. brownfield.
47
Personal liability for a corporation's shareholders is:
a. high,
b. variable.
c. slight.
d. non-existent.
d non-existent.
48
The last step in the risk management process is to:
a. monitor loss exposures.
b. identify loss exposures.
c. measure loss exposures.
d. implement loss reduction.
a. monitor loss exposures.
49
In contrast to licensees, people who are considered to be invitees are present on a property:
a. for business that benefits the possessor.
b. to bring something to the possessor.
c. as part of the general public.
d. for a longer period of time.
a. for business that benefits the possessor.
50
To satisfy the statute of frauds, a signed contract for the sale of land must include all of the following except:
a. the identity of both buyer and seller.
b. a description of the property.
c. an indication of the intent to sell the property.
d. the identity of the attorneys acting for both sides.
d. the identity of the attorneys acting for both sides.
51
Strict liability extends to all of the following situations except:
a. captive wild animals.
b. ultrahazardous activities.
c. product liability.
d. negligence.
d. negligence.
52
All of the following are defences to negligence except:
a. contributory negligence.
b. proximate cause.
c. comparative negligence.
d. assumption risk.
b. proximate cause.
53
In proving an intentional tort, the plaintiff must always show the:
a. plaintiff suffered grievous harm.
b. defendant was responsible for a wilful action:
c. defendant intended to harm the plaintiff or a third person.
d. plaintiff was not contributorily negligent.
b. defendant was responsible for a wilful action:
54
A customer is dissatisfied with a construction company that fails to live up to terms of a contract. The customer sues the construction company. In court a breach of contract is shown, but no actual damage is proven. The court awards a small sum to the plaintiff. This judgement is an example of:
a. punitive damages.
b. liability coverage.
d. compensatory damages.
d. nominal damages.
d. nominal damages.
55
A TT is injured because a security guard is negligent in the line of duty. The TT can recover damages from:
a. only the employee (the guard)
b. only the guard's employer
c. either the employee or employer
d. neither unless intent is established.
c. either the employee or employer
56
A civil lawsuit generally involves all of the following expect a:
a. possible jail sentence for the defendant.
b. private plaintiff.
c request for monetary damages.
d. wrongful act or omission.
a. possible jail sentence for the defendant.
57
A duty of care is breached if a person is subjected to an injury that is:
a. life-threatening.
b. foreseeable.
c. recoverable.
d. knew about the danger.
b. foreseeable.
58
Under premises liability, the person who is held accountable for an injury to a person entering a property is the one who:
a. is in possession and control of the property.
b. acted as a leasing agent for the property.
c. constructed the building.
d. knew about the danger.
a. is in possession and control of the property.
59
To satisfy the statute of frauds, an agreement forming a general partnership to trade or otherwise deal with real estate:
a. must always be in writing
b. must be in writing if the partnership is to last over a year.
c. does not need to be in writing.
d. must be in writing if the partnership engages in the sale of land.
c. does not need to be in writing.
60
What happens to a contract offer if the offeror dies?
a. the death terminates the power of the offeree dies.
b. the offer may be transferred to a third party.
c. a representative may sign the offer.
d. the offeree may change the consideration.
a. the death terminates the power of the offeree dies.
61
Mark and Beth have a contract in which Beth will provide furniture for Mark's office for $43,000. She delivers the furniture in the agreed-upon time frame, and he pays her for this. This is an example of contractual duties discharged via:
a. performance.
b. tender.
c. accord and satisfaction.
d. novation.
a. performance.
62
In terms of contracts, "mistake" refers to:
a. a belief of the contracting parties that is not in accord with existing facts.
b. a poorly drafted contract.
c. a negligent act that overcomes free will.
d. bad judgement shown by one or more parties related to a contract.
a. a belief of the contracting parties that is not in accord with existing facts.
63
If an amendment to a contract is not accepted:
a. the entire contract is terminated.
b. a counteroffer must be made.
c. the terms of the original contract still pertain.
d. the contract is temporarily suspended.
c. the terms of the original contract still pertain.
64
Types of contracts that involve interest in land and that fall within the statues of frauds include all of the following except:
a. mortgages.
b. easements.
c. leases longer than one year.
d. licenses.
d. licenses.
65
A remedy that attempts to restore the parties to the same status they had before a contract was formed is called a(n):
a. injunction.
b. liquidation.
c. restitution.
d. specific performance.
c. restitution.
66
Damages that arise directly from the default of a party under a contract are:
a. general.
b. punitive.
c. consequential.
d. liquidated.
a. general.
67
The agency relationship is fiduciary, meaning that it requires:
a. a consideration such as a salary.
b. general authority to conduct business.
c. disclosure to third parties.
d. conditions of trust and confidence.
d. conditions of trust and confidence.
68
Direct concurrent ownership can include all of the following except:
a. tenancy by the entity.
b. joint tenancy.
c. general partnership.
d. tenancy in common.
c. general partnership.
69
Dual agency can property occur when:
a. the agent's intention is to benefit all principals.
b. any third parties are made aware of and consent to it.
c. two agents work on the same project together.
d. all principals are made aware of and consent to it.
d. all principals are made aware of and consent to it.
70
In the joint tenancy form of concurrent ownership, if any joint tenant dies without having transferred his or her ownership interest, then:
a. his or her interest passes through the intestacy laws.
b. the surviving joint tenants become the owners of the entire estate.
c. a court must decide how to divide his or her interest among the survivors.
d. his or her interest must be sold to satisfy the law of governing joint tenancy.
b. the surviving joint tenants become the owners of the entire estate.
71
The biggest 'disadvantage' of doing business as a corporation is in its:
a. taxation structure.
b. formation procedures.
c. transfer of interest.
d. required number of owners.
a. taxation structure.
72
In at-will employment, the term of employment can ordinarily be ended for any lawful reason by:
a. either party.
b. the employer only.
c. the employee only.
d. an arbitrator.
a. either party.
73
A person who entrusts and authorizes another to act on his or her behalf is a(n):
a. member.
b. principal.
c. agent.
d. partner.
b. principal.
74
Under the agent's duty to disclose information to the principal, if someone gives information to the agent, then the principal is considered to:
a. possess that knowledge as well.
b. owe the agent for the information.
c. have disclosed all knowledge to the agent.
d. have a duty to file written records of the information.
a. possess that knowledge as well.
75
Real estate investment trust (REITs) are divided into the following two categories:
a. liquid and illiquid.
b. equity and mortgage.
c. general and limited.
d. double and single taxation.
b. equity and mortgage.
76
Vicarious liability is:
a. holding the employer responsible for employees's acts.
b. a principal acting for another.
c. the temporary surrender of property.
d. engaging in inherently dangerous activities.
a. holding the employer responsible for employees's acts.
77
The exercise of control over property is called:
a. ownership.
b. possession.
c. title.
d. equity.
b. possession
78
Paul purchase goods from Tom. Paul pays for the goods with a bad cheque and takes possession of them before Tom discovers the fraud. Paul then sells the goods to Bill, who takes possession of them. Who has legal right to the goods.
a. Paul
b. Tom
c. Bill
d. no one until the courts decide
c. Bill
79
All of the following accurately describes the responsibilities of a bailee except:
a. not legally regarded as the insurer of the bailed property.
b. legally obligated to care for the bailed property.
c. always legally liable for damages to the bailed property.
d. legally responsible for rhte redelivery of the bailed property to the bailer.
c. always legally liable for damages to the bailed property.
80
The right of one party to lawfully use the land of another for a beneficial purpose is called a(n):
a. title.
b. freehold estate.
c. easement.
d. assignment.
c. easement.
81
Which is false regarding the termination of covenants?
a. zoning laws do not automatically cancel covenants.
b. covenants may be abandoned after repeated unremedied violations.
c. an expiration period may be imposed on covenants.
d. property owners may vote to terminate covenant on their properties.
b. covenants may be abandoned after repeated unremedied violations.
82
A thief steals a piece of equipment and sells it to another person who has no knowledge that it is stolen. Legally, who has true title to the property?
a. the thief
b. the original owner.
c. the innocent purchaser.
d. the two owners, who must split the value.
b. the original owner.
83
A recorded easement that allows the holder of the easement to go onto the grantor's land for a specific purpose and make use of the land in accordance with the easement is referred to as a(n):
a. negative easement.
b. easement by necessity.
c. easement by prescription.
d. affirmative easement.
d. affirmative easement.
84
The characteristics of a licence include all of the following except it:
a. is revocable at any time.
b. is a personal privilege.
c. cannot be conveyed.
d. creates an estate in land.
d. creates an estate in land.
85
A buyer's due diligent should occur:
a. as part of pre-settlement activities.
b. as a yearly follow-up to explore the investment's progress.
c. shortly after purchasing the property.
d. only when required by the lender.
a. as part of pre-settlement activities.
86
The primary advantage of equity financing over debt financing is:
a. a quicker and less expensive sale process.
b. increased amortization over time.
c. less chance of default and foreclosure.
d. receipt of the deed at the time of closing.
a. a quicker and less expensive sale process.
87
To verify that the leasing information provided by borrowers is accurate, permanent lenders usually require tenants to sign and deliver:
a. rent rolls.
b. financial statements.
c. estoppel certificates.
d. leasing agreements.
c. estoppel certificates.
88
The legal description of property based on a sequence of courses and distances is written using the:
a. metes and bounds system.
b. Government Survey System.
c. recorded plat system.
d. Torrens system.
a. metes and bounds system.
89
A loan structured to allow the disbursement of funds periodically over the term of the loan is called a(n):
a. construction loan.
b. equity loan.
c. permanent loan.
d. periodic loan.
a. construction loan.
90
The LL of a mortgaged property will usually include an attornment clause in the lease agreement to cover the tenant's duties after:
a. loan default and foreclosure.
b. final payment of the mortgage.
c. lender approval of the mortgage.
d. ta assessment of the property.
a. loan default and foreclosure.
91
In a lease document, TT improvements that need to be made by the LL are usually described in the:
a. introduction.
b. work letter.
c. concessions.
d. use clause.
b. work letter.
92
The covenant that assures the tenant freedom from interference from the acts and claims of certain third parties is:
a. quiet enjoyment.
b. possession.
c. habitability.
d. claimant independence.
a. quiet enjoyment.
93
In a lease, one party's liability is substituted for that of the other party in a(n):
a. waiver and release cause.
b. indemnification clause.
c. limitation on recourse clause.
d. assignment clause.
b. indemnification clause.
94
In a net lease, the tenant pays:
a. a fixed rent alone.
b. a graduated rent.
c. base rent plus expenses.
d. a percentage rent alone.
c. base rent plus expenses.
95
An as-is clause in the lease relieves the landlord from all of the following except:
a. repairs and maintenance.
b. access and parking.
c. building and fire codes.
d. landscaping upkeep.
c. building and fire codes.
96
Under the covenant of possession, the LL may not, without the TT's consent:
a. increase the rent at will.
b. evict the tenant for a default.
c. enter the property to make repairs.
d. expect the tenant to care for the property.
c. enter the property to make repairs.
97
All of the following are part of the voluntary due diligent standards for the use in commercial real estate transactions developed by the American Society for Testing and Materials except the:
a. Transaction Screen Process.
b. Phase I Environmental Site Assesment.
c. Phase II Environmental Assessment.
d. EPA Toxic Substance Assessment.
d. EPA Toxic Substance Assessment.
98
An investor is looking for abandoned or underutilized commercial or industrial property with perceived or actual environmental contamination in urban areas. This individual is looking to invest in ___ properties.
a. trophy
b. risk-averse
c. brownfield
d. new dimension
c. brownfield
99
If a property's use predates the enactment of a zoning ordinance, then the zoning regulations generally provide a(n):
a. special fee.
b. nonconforming use.
c. variance.
d. easement.
b. nonconforming use.
100
Just compensation for land taken by the government is measured by:
a. the value determined by HUD.
b. the fair market value.
c. the original cost plus a CPI adjustment.
d. negotiated value.
b. the fair market value.
101
A company buys some property to develop and later discovers that the property was previously used for storage of electric company transformers and old batteries. This property is possibly contaminated by:
a. lead and lead by-products.
b, chemical fumes from cleaning materials.
c. asbestos-containing materials.
d. PCBs (polychlorinated byphenyls).
d. PCBs (polychlorinated byphenyls).
102
Which is not a typical type of business loss exposure?
a. regulatory
b. property and income
c. liability
d. personnel
a. regulatory
103
The main purpose of risk control mechanisms is to reduce the losses by the business and to:
a. increase the loss data available.
b. decrease the publicizing of losses.
c. increase the predictability of losses.
d. decrease the impact of losses.
c. increase the predictability of losses.
104
The responsibility for standardizing codes and workforce safety standards and enforcing them rests with:
a. the government.
b. industry organizations.
c. insurance companies.
d. individual businesses.
a. the government.
105
The first step in the risk management process is to:
a. monitor loss exposures.
b. identify loss exposures.
d. measure loss exposures.
d. implement a loss reduction plan.
b. identify loss exposures.
106
You decide to buy two four-story buildings in a new complex rather than an eight-story building in an adjoining business park. This action is an example of:
a. risk separation.
b. risk transfer.
c. undesirable risk.
d loss prevention.
a. risk separation.
107
Advantages of purchasing insurance for your company rather than retaining loss exposure include all of the following except:
a. insurance premiums are fully deductible.
b. purchase of insurance lessens the uncertainty of loss occurrence.
c. insurance is viable when the time value of money is essential to the company.
d. having insurance increases the confidence of companies doing business with yours.
c. insurance is viable when the time value of money is essential to the company.
108
you recently installed slip-resistance surfaces on the stairs in your building. This is an example of:
a. separation.
b. a contractual risk transfer.
c. a loss reduction program.
d. a loss prevention program.
d. a loss prevention program.
109
All of the following are important sources of identifying exposures to loss except:
a. making a physical inspection of the property.
b. communicating with other employees.
c. installing alarm systems and police/fire response channels.
d. using published checklists.
c. installing alarm systems and police/fire response channels.
110
The responsibility for helping a business implement and monitor a loss control program rests with:
a. government.
b. industry organizations.
c. insurance companies.
d. individual businesses.
c. insurance companies.
111
California Associates is seeking ta insurance company for its expanding needs. As a fairly large firm with complex insurance needs, it wishes to have an objective individual assess those needs and exposures and choose and agent. The best assessment method would be to:
a. hire a consultant.
b. hold an underwriting competition.
c. establish uniform specifications.
d. hold a conceptual competition.
a. hire a consultant.
112
The most important indication of the quality of insurance agent's proposed risk management program is the agent's:
a. thorough investigation of your operations and review of current programs.
b. investigation of loss run statements and a reasonable premium.
c. thorough investigation of your current programs and a reason premium.
d. proposal based on industry standards and practices as well as loss runs.
a. thorough investigation of your operations and review of current programs.
113
The financial strength of an insurance company can be indicated by its:
a. rating the 'Best's Guide.'
b. large number of agents.
c. large market share.
d. long-term commitment.
a. rating the 'Best's Guide.'
114
All of the following are commonly used methods for selecting an insurance broker except:
a. competitive quotes.
b. size and financial stability comparisons.
c. comparing services capabilities proposals.
d. hiring a consultant to management the process.
b. size and financial stability comparisons.
115
All of the following are important criteria to consider while assessing potential insurers except:
a. financial strength, market presence, and reputation.
b. cost and the insurer's ability to handle claims, loss control, and other services.
c. profitability, liquidity, and spread of risk.
d. stability and long-term market history for your type of business.
c. profitability, liquidity, and spread of risk.
116
In choosing an insurance agent, it is best to seek:
a. a larger company that offers a wide rang of policy options.
b. a company that generally handles accounts whose size and scope are comparable to yours.
c. only companies that receive an A+ rating in 'Best's Guide.'
d. an insurance firm in your community to guarantee quicker response and greater personal service.
b. a company that generally handles accounts whose size and scope are comparable to yours.
117
You have just spoken with your insurance agent about two buildings that you have sold and one building that you are purchasing. The agent has incorporated all of the changes into your policy and will send you a(n):
a. certificate of insurance.
b. exclusion.
c. endorsement.
d. declaration.
c. endorsement.
118
Having all your insurance policies expire on the same date will:
a. increase your deductibles.
b. require extended insurance.
c. cause difficulties in financing premiums.
d. ease obtaining competitive proposals.
d. ease obtaining competitive proposals.
119
For insurance purposes, mortgagees and loss payees are most often added to:
a. professional liability policies.
b. property policies.
c. general liability policies.
d. umbrella liability policies.
b. property policies.
120
The auditing function is important to the insurance company because auditing:
a. separates the desired risk from the undesired risk.
b. sets rates for various classifications of risk.
c. provides expert loss control assistance to businesses.
d. ensures that the company receives the correct premium.
d. ensures that the company receives the correct premium.
121
In an insurance policy for a sole proprietorship business, the name of the owner followed by the name of business is an example of a(n):
a. names insured.
b. additional insured.
c. mortgagee.
d. loss payee.
a. names insured.
122
All of the following are components of an underwriter's ongoing services duties except:
a. adding or deleting coverage for the policyholder.
b. pricing desired changes in coverage.
c. representing the insurance company in settling claims.
d. providing payment terms for policies.
c. representing the insurance company in settling claims.
123
All of the following are potential roles of an insurance company's loss control personnel except:
a. checking out driving records to remove poor drivers from an auto policy.
b. evaluating property insurance values for property insurance purposes.
c. assisting in planning new operations to ensure continued loss results.
d. settling or adjusting claims on behalf of the insurance company.
d. settling or adjusting claims on behalf of the insurance company.
124
The cause of loss from that covers all causes of loss in a property policy except those specifically excluded is called the:
a. specified peril form.
b. all risks form.
c. basic form.
d. broad form.
b. all risks form.
125
A disaster has reduced your office building to rubble. To recover the cost of the building, the elevator, heating and cooling plant, emergency generator landscaping equipment, portable fire fighting equipment, you will rely on the coverage provided by:
a. coinsurance.
b. building insurance.
c. extra-expense insurance.
d. commercial liability insurance.
b. building insurance.
126
For insurance, the loss-of-income coverage form combines both:
a. business interruption and loss-of-rents insurance.
b. business interruption and personal property insurance.
c. extra-expense and business personal property insurance.
d. business personal property and loss-of-rents insurance.
a. business interruption and loss-of-rents insurance.
127
A restaurant chain has purchased insurance for three buildings, each worth $70,000. The company purchases insurance in the amount of $210,000 to cover all three buildings. This kind of insurance is called:
a. specific coverage.
b. blanket coverage.
c. extra-expense coverage.
d. loss of profits coverage.
b. blanket coverage.
128
Your company uses a small tractor to cut the grass at several property sites. In transit, the landscape worker stops for lunch. When he returns to the truck, the tractor has been stolen. You will be fully covered if you have:
a. comprehensive coverage on the tractor.
b. a transportation floater.
c. an equipment floater.
d. professional liability insurance.
c. an equipment floater.
129
For blanket coverage to be written, an insurance company wants to know that the amount of coverage is accurate. To do this, an insured submits a(n):
a. replacement cost analysis.
b, business property inventory.
c. statement of values.
d. affidavit of insurability.
c. statement of values.
130
During a business errand, a business's employee driving his own car hits another motorist. The business has coverage under:
a. no-fault insurance.
b. the employee's automobile insurance.
c. non-owned automobile liability insurance.
d. commercial general liability insurance.
c. non-owned automobile liability insurance.
131
Louisa & Robert have each applied for commercial automobile insurance. Louisa runs a catering business within a 70-km radius of her kitchen, van sits in an urban parking lot. Robert's economy car, averages 30-km/week for local job sites repairing office equipment and is garaged at his suburban home. In comparison, which statement is true?
a. Louisa = premiums b/c her van travels a farther radius and is parked in an urban area.
c. Louisa = >premiums b/c her van travels a farther radius and is parked in an urban area.
d. Robert = >premiums b/c his car travels more miles and is store in a suburban area.
c. Louisa = >premiums b/c her van travels a farther radius and is parked in an urban area.
132
The basic automobile physical damage insurance that covers glass breakage to a covered vehicle is called:
a. collision insurance.
b. no-fault insurance.
c. comprehensive insurance.
d. umbrella liability insurance.
c. comprehensive insurance.
133
All of the following accurately describe umbrella liability insurance except:
a. it is liability coverage against catastrophes.
b. it generally steps in to cover liabilities after other insurance policies have reached their policy limit.
c. it can provide coverage to intentional acts that cause harm, which other liability insurance cannot.
d. it is almost always provided with liability limits in increments of $1m.
c. it can provide coverage to intentional acts that cause harm, which other liability insurance cannot.
134
In a typical CGL policy, what is the typical combined single limited for bodily and property damage per occurrence?
a. up to $100,000
b. up to $1m
c. up to $2m
d. typically, there is not set limit.
b. up to $1m
135
As far as manager of a commercial property are concerned, the most likely cause of a bodily injury claim is:
a. related to the number of tenants in the buildings.
b. related to the maintenance and upkeep of the building.
c. related to the lack of emergency preparedness.
d. related to crime in the building.
b. related to the maintenance and upkeep of the building.
136
Under a standard CGL policy covering a partnership, all of the following are covered except:
a. partners conducting company business.
b. clients conducting company business.
c. spouses conducting company business.
d. member conducting company business.
b. clients conducting company business.
137
A person slips down an icy stairway leading to an office building. The person is hurt and decides to take legal action against the building's owners due to their negligence. The owners are protected through their:
a. bodily injury policy.
b. CGL policy.
c. personal injury policy.
d. incidental injury policy.
b. CGL policy.
138
Larry & Steve are using a handcart to move their employer's large file cabinet to another office. Steve lifts the bottom of it to help move it down a step. In doing this, he drops the car's wheel on his foot, breaking serveral bones. This injury is:
a. covered only under disability insurance.
b. self-inflicted and not covered under the employee's health plan.
c. covered under worker' compensation as work-related.
d. self-inflicted and not covered under workers' compensation.
c. covered under worker' compensation as work-related.
139
An employee is fired and then files a lawsuit claiming that he was wrongfully terminated because of his age. Which type of professional liability insurance provides the business coverage of this type of exposure?
a. employee benefit liability insurance.
b. fiduciary liability insurance.
c. employment practices liability insurance.
d. directors' and officers' liability insurance.
c. employment practices liability insurance.
140
All of the following are excluded from workers' compensation policies except:
a. bodily injuries that were intentionally caused while on the job.
b. damage for an illness that arose out of employment-related actives.
c. damages that arise out of discrimination against an employee in violation of the law.
d. punitive damages because of bodily injury to a person employed in violation of the law.
b. damage for an illness that arose out of employment-related actives.
141
All of the following would be covered under employers' liability insurance except:
a. an employee claim for injuries at work resulting from doing a specific task.
b. a claim made by an employee's spouse for lost affections b/c of an employment related injury.
c. a 3rd party claim where an outside manufacturer who was sued by an injured employee files suit b/c the business allowed safety features to be removed.
d. an employee claim for injuries at work caused in a manner not covered under the worker's compensation policy.
****a. an employee claim for injuries at work resulting from doing a specific task.
142
The purpose of workers' compensation insurance is to:
a. cover liability & benefits claims made by an employee or related third parties against the employer.
b. cover the damages an employee incurs due to an illness or accident that arises out of employment.
c. cover liability lawsuits filed by the families of employees who are injured on the job.
d. protect the employee from being injured or killed on the job.
b. cover the damages an employee incurs due to an illness or accident that arises out of employment.
143
After spending an afternoon moving boxes from one storage area to another, an office employee complains of muscle and lower back pain. The worker files a workers' compensation claim. The company's standard policy will most likely:
a. cover the employer's liability for the injury.
b. cover only the employee's medical payments.
c. not cover the employee because he is an office employee.
d. not cover the claim because the injury occurred outside the employee's regular scope of work.
a. cover the employer's liability for the injury.
144
Bob wants to offer his employees additional medical coverage as a supplement to the provincial Medicare plan. He is looking for a:
a. group disability insurance plan.
b. provincial health savings account.
c. workers' compensation medical supplement.
d. comprehensive major medical plan.
d. comprehensive major medical plan.
145
With an occurrence policy, a claim:
a. must be reported while the policy is active or occurring.
b. must be reported withing two years of the claimant being exposed to the pollutant.
c. can be reported anytime after the policy term, so long as the event occurred during the term.
d. can be reported for a preexisting condition so long as the claim is made during the policy term.
c. can be reported anytime after the policy term, so long as the event occurred during the term.
146
All of the following are expenses regularly associated with environmental compliance except:
a. health and safety training that is legally mandated.
b. disposal of raw materials and waste.
c. public relations campaigns.
d. legal costs.
c. public relations campaigns.
147
The following are all environmental hazards that are commonly found in commercial buildings except:
a. building materials that contain asbestos.
b. lead paint.
c. residual materials from decomposing plastic and oil.
d. contaminants brought in by outside air trapped in the building.
c. residual materials from decomposing plastic and oil.
148
Insurance purchased to cover potential liability for removal of asbestos-containing materials is called:
a. professional liability insurance.
b. asbestos abatement liability insurance.
c. pollution legal liability insurance.
d. asbestos-in-place insurance.
b. asbestos abatement liability insurance.
149
Underwriters evaluate all of the following for asbestos abatement an pollution legal liability coverage except:
a. the scope of the project.
b. the owner's spill liability coverage.
c. the contractor's qualifications.
d. the contractor's past job history.
b. the owner's spill liability coverage.
150
An underwriter needs information about on-site disposal sites. Examples of disposal sites of interest to the underwriter include all of the following except:
a. surface impoundments.
b. deep well injections.
c. closed landfills.
d. storm drains.
d. storm drains.
151
If a company is re-mediating a contaminated property and the projected cost is $1m, but the project comes in at $2m, what kind of insurance should the company have to cover the unanticipated costs?
a. professional liability
b. pollution legal liability
c. cost overrun
d. an owner controlled environmental plan.
c. cost overrun
152
In liability claims adjustment, immediate contact of the claiming by the insurer can lead to all of the following except:
a. restriction on future policy limits.
b. quick negotiation of the claim.
c. elimination of future legal action.
d. determination of contributory negligence
a. restriction on future policy limits.
153
An independent claims adjuster is a)n):
a. person hired by an insurance agent to provide an independent assessment of what should be covered under a specific policy.
b. person hired by an insurance company who primary responsibility is to assess the effectiveness of agents and their CGL policies
c. person hired by an insurance company when there are not enough claims in a geographic region to justify hiring their own personnel.
d. employee of an insurance agency who has a specific caseload in terms of the policies and clients they are responsible to serve.
c. person hired by an insurance company when there are not enough claims in a geographic region to justify hiring their own personnel.
154
Which of the following is not a common error made when evaluating real estate loss exposures?
a, The firm insures against small exposures but not against catastrophic losses such as hurricanes and earthquakes.
b. the firm places too much emphasis on insurance company control loss recommendations.
c. The firm fails to obtain umbrella liability insurance.
d. The firm fails to obtain employee dishonesty insurance.
b. the firm places too much emphasis on insurance company control loss recommendations.
155
If an insured has two policies that cover a property loss, the clause that prohibits collection more thank the amount of the loss is called a(n):
a. other insurance clause.
b. insurable interest clause.
c. subrogation clause.
d. agreed-amount provision.
a. other insurance clause.
156
After a claim has been made to the insurance company, the amount of the money set aside to be paid for the loss is called the:
a. incurred reserve.
b. claims reserve.
c. paid reserve.
d. recurrent reserve.
b. claims reserve.
157
If a management firm attempts to handle a claim by itself without notifying the insurer, it can:
a. be covered a the insurer's adjuster.
b. reduce the premiums on the building.
c. void insurance coverage for the claim.
d. expedite the settlement of the claim.
c. void insurance coverage for the claim.
158
It is important to notify the insurance company as soon as possible about a claim because:
a. coverage may be denied if the policy expires.
b. adjusters have such a large caseload to schedule.
c. the company needs time to decide if the claim is covered.
d. quick settlement may prevent a legal action.
d. quick settlement may prevent a legal action.
