Missed Questions Flashcards
The insured and the adjuster agree on the following regarding a business income loss:Gross Revenues Lost $800,000; Noncontinuing Expenses$300,000; Continuing Expenses$750,000; Operating Loss$250,000. The business income loss under the Business Income Coverage Form (BIC) i:
Gross revenue lost $800,000 – noncontinuing expenses $300,000 = business income loss $500,000.
Amber’s business is insured under a $200,000 reporting form when a loss occurred on 7/31. Amber reported $180,000 in values when in actuality the values were $190,000. The loss agreed upon was $32,000 and there is a $250 deductible on the policy. How much will Amber recover under her reporting form policy?
$180,000 (last report of values) / $190,000 (actual values) = .9474 x $32,000 (agreed loss) = $30,317 − $250 (Amber’s deductible) = $30,067 (amount Amber will recover from her reporting form policy).
The government has made flood insurance widely available through the National Flood Insurance Program (NFIP) because of
the problems associated with flood insurance in the private market.
Claim adjuster Samuel has been attempting to settle a loss but is having difficulty with the insured’s books and records. Samuel has acquired the insured’s tax returns, bank records, a few sales receipts, and some, but not all, accounts receivable records. Samuel has been able to develop the most complete purchase information by referring to the
by referring to the bank records and by requesting information from known suppliers.
The additional coverage provided by the Business Income Coverage Form (BIC) for alterations and new buildings would provide coverage for what?
The additional coverage provided by the BIC for alterations and new buildings would provide coverage for machinery, equipment, supplies, or building materials incidental to the occupancy of new buildings within 100 feet of the described premises.
Ivan’s sporting goods store has suffered a fire loss. In Ivan’s opinion, the stock has lost at least 40 percent of its value, and he believes he could sell it for no more than 60 percent of its value. Ivan’s insurer could reimburse Ivan 100 percent and take the stock for salvage. In this case, to be fair to Ivan and to the insurer, settlement should be made at a loss figure between
40 percent (the least that the merchant would accept) and 60 percent (the most that the insurer would pay).
After a water loss, the insured discovers that he must bear a coinsurance penalty of 20 percent. The full value of the damaged stock is $50,000. The proceeds of the salvage sale are $10,000. What is the insurer’s net payment?
$50,000 (full value of damaged stock) x 20 percent coinsurance = $10,000. $10,000 (proceeds of salvage sale) x 20 percent coinsurance = $2,000. ($50,000− $10,000) = $40,000 + ($10,000− $2,000) = $8,000. $40,000− $8,000 = $32,000 = amount of insurer’s net payment.
Adjuster Andrea Scott has encountered a problem in valuing a particular item of furniture destroyed in an insured loss under the policy’s replacement cost evaluation basis. The piece of furniture was from a well-known manufacturer and was purchased as a limited or special line which is no longer available and no longer manufactured. Ignoring deductibles, what should Andrea pay the insured for the loss?
replacement cost for the purchase of furniture of like kind and quality.
The most frequent causes of catastrophes are hail, wind, and
tornadoes
Which one of the following statements regarding the Business Income Coverage Form (BIC) is true?
The causes of loss forms under the BIC also include an exclusion for a specific type of indirect loss, loss of contract.
Anti-fraud programs’ prevalence and size often depend on the
insurer’s size.
Martin, an adjuster, paid a large structural loss without checking to see whether any tax liens were on the property. What would happen if the government is looking to be paid?
The insurer may be forced to pay the tax lien in addition to the loss.
Because they may specify the good-faith practices for claim handling in a particular situation, insurance adjusters should be familiar with their state’s reporting requirements and
and immunity statutes
On any mercantile claim, what must the adjuster do?
review the applicable policy thoroughly.
The most significant difference between a third-party and a first-party policy is which clause found only on first party coverages?
The Suit Limitation Clause is the most significant difference between third-party and first-party coverages and is found only in first party coverages.
Why must adjusters document the extent of loss or damage?
to identify the property for coverage and possible coinsurance concerns.
Which one of the following types of theft accounts for the largest insurance dollar loss amount among all thefts
Burglaries
What type of policies are warehous legal liability? Third-party or first-party?
Third-party handles as first-party
Whenever an insurer voluntarily and intentionally relinquishes a known contractual right in property insurance, the insurer has ____?
Waived rights
When does extra expense coverage begin?
Immediately after a loss
Can lightining enter a building without blowing a fuse?
Yes
After a water loss, the insured discovers that he must bear a coinsurance penalty of 20 percent. The full value of the damaged stock is $50,000. The proceeds of the salvage sale are $10,000. What is the insurer’s net payment?
$50,000 (full value of damaged stock) x 20 percent coinsurance = $10,000. $10,000 (proceeds of salvage sale) x 20 percent coinsurance = $2,000. ($50,000 ? $10,000) = $40,000 + ($10,000 ? $2,000) = $8,000. $40,000 ? $8,000 = $32,000 = amount of insurer’s net payment.
Jo Ellen has prepared an estimate to paint a room. Four gallons of paint will be required at a total cost of $72. The cost of labor is $20 per hour for 7.75 hours. It will also take an additional 1.2 hours to remove and replace furniture and fixtures. Using the gross area method of estimating, how much will it cost Jo Ellen to apply one coat of paint to the room?
$251 ($72 for the paint; 7.75 hours x $20 = $155 for the basic labor; 1.2 hours x $20 = $24 for the additional labor)
A person who contracted for, or arranged for, the disposal of what the Environmental Protection Agency (EPA) considers the hazardous waste, is referred to by the EPA as the
Generator
A ________ appraiser should not be selected in a dispute resolution using the appraisal provision.
Incompetent
Claims for losses related to air conditioning are most often associated with the
Compressor
Carol and Kevin carry three insurance policies on their tool business. Policy A’s limit is 50,000; Policy B’s limit is $25,000; and Policy C’s limit is $75,000. In a situation involving a $30,000 covered loss where the insurers use the proportional share method, C will pay
$15,000
Adjuster Sally Hogan has measured the foundation of an insured’s damaged home. The foundation is 16 feet by 25 feet, and the joists are spaced 16 inches on center. How many 16-foot joists are needed for repairs?
Incorrect. (25 feet x 12 feet) / 16 inches on center = 18.75 + 1 = 19.75 or 20 is the number of 16-foot joists needed for repairs.
