Practice Questions

Question 1

Which of the following are “major causes” of fire? Indicate all that apply.
A. Arson
B. Misuse of Ignition Sources
C. Accident
D. Malfunction

Answer 1

A, B, D

Question 2

Under your basic fire insurance policy’s extensions of coverage, the necessary removal of property is covered for how many days?

Answer 2

7 Days

Coverage is extended to 30 days in more “high-end” policies.

Question 3

Your client, Bob, bought the most basic fire policy available on the market for his ice cream shop. They had been in their commercial unit for a long time when they bought a new fridge. They plugged it into the wall socket and a power surge destroyed the fridge and caused a fire that consumed his ice cream cones but didn’t damage anything else. Which of the following would be insured?

A. Fridge only
B. Ice cream cones only
C. Fridge and the ice cream cones
D. None of the above property

Answer 3

B.

Damage to electrical devices due to artificial electricity are excluded in the fire policy. However, resultant damage would still be covered.

Question 4

A building with a lack of habitual human presence is known as…

A. A Vacant Building
B. An Unoccupied Building

Answer 4

Unoccupied building

Vacant means there are no normal occupants as they have left with no intention to return.

Question 5

Under the named perils coverage form, there is explosion coverage. Which of the following is NOT excluded under THAT definition of explosion?

A. Explosions caused by gas turbines
B. Explosions caused by tanks subject to > 15 PSI of pressure
C. Explosion caused by gas escaping into open air
D. Explosion caused by a fire box.

Answer 5

C - Explosion caused by gas escaping into open air

Question 6

Under broad form, injury to pets are excluded under all circumstances. True or false?

Answer 6

False - Damage to your pets are covered if the loss was caused by a named peril or by theft.

Question 7

One of the advantages of broad form coverage is that it insures explosions caused by domestic boilers < 24 inches in diameter. True or false?

Answer 7

True

Question 8

Rate credits are given if you are the sole occupant of your building. True or false?

Answer 8

True

Question 9

Briefly explain some of the advantages and disadvantages of using a package policy.

Answer 9

Your answer is correct if it includes these points:

Advantages:

• Simple application form
• Price for package policies are often determined on the spot (fast quote turnaround times are important for your sales people).
• Adequate protection for most businesses
• Broad enough to cover most exposures (a package policy typically comes with property, business interruption, liability & crime insurance as a bundle).

Disadvantages:

• One size doesn’t fit all. Some business have special exposures that would require the use of a manuscript or custom solution.
• There is no standard package between insurance companies. One company’s barbershop package policy might be different from another’s which means you need to know multiple packages and can’t simply replace 1 package with another.

Question 10

Which of the following does not need to appear on the declarations page of a commercial property policy?
A. Loss Payable or Loss Payees
B. Policy Period
C. Description of the Property Insured
D. A line indicating the existence of other insurance policies.

Answer 10

D - A line indicating the existence of other insurance policies.

Question 11

Your client Bob has a building worth $250,000 that he has insured for $100,000. He has a loss valued at $200,000 and a mortgage of $75,000 on the policy. How much would Bob receive in indemnity?
A. $250,000
B. $100,000
C. $200,000
D. $25,000

Answer 11

D. $25,000

According to the indemnity agreement, he would get the lesser of the loss amount, limit of insurance and insurable interest. The loss amount is $200,000, the limit of insurance is $100,000 and his insurable interest is only $25,000 (<- because the bank owns $75,000 worth of the property). The bank get their $75,000 and Bob gets the rest.

Question 12

The insured has purchased an equipment breakdown policy with an added business interruption - gross profits form. The business interruption is costing him $10,000 per month. It look 6 months to rebuild everything and an additional 3 months to get back to the same level of earnings as before. How much would this insured get in indemnity from the insurer?

A. $10,000
B. $60,000
C. $90,000
D. $30,000

Answer 12

C. $90,000

The gross profits form pays business interruption costs until the insured’s income is restored to pre-loss levels

Question 13

When it comes to the by-laws endorsement, which of the following statements is not true.

A. This endorsement removes the exclusion for additional costs required to comply with new bylaws when rebuilding the building after an insured peril

B. Additional costs due to by-laws and zoning changes are covered

C. The by-law endorsement is recommended for insureds who own older buildings

D. All of the above are true.

Answer 13

B. Additional costs due to by-laws and zoning changes are covered

Zoning changes are excluded

Question 14

Your client has purchased a Broad Form commercial property policy, which of the following losses would be covered?

A. The insured runs an insurance office with a small 20 inch household boiler inside the unit to supply his and the neighbouring office with some hot water. This boiler one day ruptures due to overpressure and floods the insured’s office

B. The insured, Bob, lends some tools to his customer, Paul, to use while Bob is repairing the tools Paul brought in. While at Paul’s house, the tools are stolen out of his garage.

C. The insured has plants growing outside his building that are damaged when he accidentally crashes his car into the building

D.
A water main from underneath the sidewalk bursts and causes the insured’s basement to flood with water

Answer 14

A. The insured runs an insurance office with a small 20 inch household boiler inside the unit to supply his and the neighbouring office with some hot water. This boiler one day ruptures due to overpressure and floods the insured’s office

Domestic-type boilers under 24 inches in diameter are covered by Broad Form but NOT Named Perils. For C, outside plants are excluded (aside for the coverage provided by the extensions - limited to $500 per plant & $5000 per occurrence). And for D, water mains beyond the bearing walls are excluded.

Question 15

Your client, Veronica is Monica’s twin sister and has also purchased commercial property insurance with you on her building for $300,000. The building is valued at $500,000 with an 80% coinsurance clause. One night, her building catches fire. Unfortunately, the fire department was not able to get there in time and her factory burns to the ground - its a total loss. How much in indemnity would she receive from the insurance company for her loss?

Answer 15

Co-Insurance Penalty = Insurance You Did Buy / Insurance You Should have Bought * Loss amount

= ($300,000 / $500,000) * $500,000 = $300,000

The coinsurance clause doesn’t apply because it’s a total loss. She gets her limit $300,000 and that’s all. If coinsurance applied, she would get more than her limit of insurance (try the math out yourself).

Question 16

Your client has purchased a Broad Form commercial property policy, which of the following losses would be covered?

A. The insured’s computers and business records are damaged in a flood after an uncharacteristically large rainstorm

B. An employee of the insured discovers some old water damage while cleaning out the basement. It appears water has been seeping through the cracks in the basement wall for quite some time now.

C. The insured is shipping his goods to Seattle, while travelling through BC, his shipment is damaged when an earthquake hits the city

D. An employee of the insured just finished up in the bathroom. As he flushes the toilet, it clogs and backs up into the washroom damaging the flooring.

Answer 16

C.

Flood losses are excluded. Continuous seepage of water is excluded. Earthquake damage is normally excluded unless his property was in transit at the time (which it was in this case). Sewer back-up is excluded.

Question 17

There are some common exclusions that apply to property policies. Which of the following would be covered by an insurance company?

A. Losses caused by the application of heat
B. Losses to vacant or unoccupied property
C. The insured plugs in a new computer but it gets fried due to a power surge
D. The insured is a boat dealer and has some boats stored in his showroom

Answer 17

D.

Watercraft or amphibious vehicles held for sale is covered (think of it as stock).

Question 18

The coverage section of the EDP policy that insures data processing systems is called…

A. Hardware
B. Media
C. Software
D. Extra Expenses

Answer 18

A. Hardware

Question 19

You client rents a storefront to open an icecream store, he installs plumbing, a walk-in refrigerator and some other permanent fixtures. If they were damaged by an insured peril, which of the following categories of commercial property insurance would provide coverage?

A. Building
B. Stock
C. Equipment
D. Not Covered - the landlord would be responsible for insuring it.

Answer 19

C. Equipment

You might have thought that permanent fixtures are part of the building coverage. And you would be right. But in this case, the fixtures and upgrades were made by a tenant - the landlord who owns the building has no insurable interest in the property. It would be covered under Tenant Improvements (a part of Equipment). Secondly, a tenant’s commercial property insurance would not have a section for Building since they don’t own the building. Any damage to the building caused by the insured tenant could be covered under their commercial liability insurance though.

Question 20

Equipment breakdown policies insure against 3 main costs. Which of the following is not one of them?

A. Loss to equipment caused by sudden & accidental breakdown
B. Loss of income resulting from damage to a piece of equipment
C. Resultant damage
D. Other people’s equipment if the insured is liable for it

Answer 20

B - Loss of income resulting from damage to a piece of equipment

Question 21

Which of the following statements about the Verification of Values clause is not true?

A. The insurer can inspect the insured’s property at any reasonable time during the policy period and for up to 2 years after

B. Inspections help the insurer verify information, confirm that the property exists and that the values are accurate

C. One reason for this clause is to check compliance with coinsurance

D. One reason for this clause is to let the insurer check for concurrent insurance

Answer 21

A. The insurer can inspect the insured’s property at any reasonable time during the policy period and for up to 2 years after

NOT TRUE - They only have inspection rights for up to 1 year after the policy

Question 22

Your client has purchased a Named Perils commercial property policy, which of the following losses would not be covered?

A. The insured has an explosion in his factory caused by electrical arcing

B. Water pressure builds up inside a sprinkler pipe causing it to burst and damage the insureds computers

C. It’s been a stressful few weeks and the insured’s employee tries to park his car at the office one morning but accidentally backs it into the the building damaging the glass window in front of the insured’s store

D. A heavy windstorm shatters the insured’s office window and damages the interior contents

Answer 22

C. It’s been a stressful few weeks and the insured’s employee tries to park his car at the office one morning but accidentally backs it into the the building damaging the glass window in front of the insured’s store

Vehicle impact is covered, but not when it’s done by an insured (i.e. his employee). The windstorm damage to the interior is covered because the windstorm opened a hole in the exterior first.

Question 23

When it comes to subrogation, which of the following is not true?

A. The insurer has the right to recover from the at-fault party

B. The insurer cannot subrogate against the insured unless they violated a policy condition

C. Barring some exceptions, those who receive compensation from the insurance policy cannot be sued

D. The insurer cannot subrogate against anyone whom the insured has held harmless

Answer 23

D. The insurer cannot subrogate against anyone whom the insured has held harmless

The insured cannot waive the liability of another person. The insurer will still sue. For example, if your friend comes over and accidentally damages something. You cannot forgive your friend and claim it against your insurance company. Well, you can, but the insurer will sue your friend on your behalf to recoup their losses.

Question 24

Under equipment, there is coverage for employee property. What is the limit on employee property insurance?

Answer 24

$250

Question 25

Your client has purchased a Broad Form commercial property policy, which of the following losses would be covered? A. Stock and money from the cash register has been stolen by an employee B. The insured runs a costume rental business catering to the movie industry. She hands her clothes over to a drycleaner to clean after a shoot. She never gets her clothes back. It is later discovered after a police investigation that the drycleaner had stolen the clothes. C. Some rats find their way into the insureds restaurant and eat all of his very expensive cheese. They also find their way into the wine cellar breaking and drinking quite a few bottles before leaving. D. The insured purchases and moves into a newly constructed building. Because of the loose soil it was built on, it settles a bit causing the concrete on one side of the building to crack - necessitating $50,000 in repairs

Answer 25

B. Losses involving criminal acts by "insiders" is excluded - but bailees for hire are not considered insiders in this case.

Question 26

Which of the following is not an example of something that the insurance company would consider when looking at the insureds exposure or location? A. Distance from and occupancy & construction of nearby buildings B. Characteristic of the neighbourhood C. Both A & B D. Business operations of the insured

Answer 26

D. - Business Operations of the insured.

Question 27

When it comes to the Peak Season Endorsement, which of the following statements is not true? A. You would recommend business with seasonal stock fluctuations use this B. The client would track their monthly stock values on their own C. This endorsement helps insureds save money by making sure they're not paying a high premium for slow months D. All of the above are true

Answer 27

D. all of the above

Question 28

When would a broker recommend a glass rider to a commercial insurance client? A. When the insured has large amounts of exterior glass B. When the insured has extensive glass panelling in the interior of the building C. When the insured has glass objects like tables or wall dividers D. When the insured has lettering, stained glass or other special designs on the glass

Answer 28

D. When the insured has lettering, stained glass or other special designs on the glass

Question 29

The sewer back-up endorsement removes some exclusions for the ordinary commercial property policies. Which of the following is not an exclusion that is removed by this endorsement? A. Loss caused by water or sewage entering the building through a sewer B. Loss caused by water or sewage entering the building through a sump pump C. Loss to the locker room carpeting caused by water or sewage entering the building through a shower drain at the local gym D. Loss caused by water or sewage entering the building by continuously seeping through walls in underground parts of the building

Answer 29

D. The Water Damage endorsement is for "sudden" occurrences, seepage would not be considered sudden as it occurs slowly over time.

Question 30

Some commercial property has a special basis of valuations. Which of the following types of property is covered for actual cash value and the cost of labour and materials used? A. Sold stock B. Property given to the insured for work, repairs, etc. C. Business records D. Tenant improvements

Answer 30

B - Property given to the insured for work/repairs etc.

Question 31

Of the following types of construction, which of the following would be the least susceptible to fire losses? A. Fire Resistive B. Non-Combustible C. Non-Combustible with Non-Masonry Walls D. Masonry/Joist

Answer 31

A. - Fire Resistive

Question 32

The Earthquake Endorsement is used to delete the earthquake exclusion from the primary policy. When it comes to this endorsement, which of the following is not true? A. Coverage is on a per occurrence basis B. Aftershocks are considered individual earthquakes and insured seperately C. The deductible is usually the larger of some percentage of the limit or a fixed dollar figure D. The earthquake endorsement excludes fire, explosion, theft & flood losses because they are insured elsewhere

Answer 32

B. Any aftershocks within 72 hours counts as 1 occurrence

Question 33

The water escape endorsement covers direct damages due to freezing or escape of water from pipes but there are some exclusions. Which of the following would not be excluded? A. Freezing in an unheated part of the building during the heating season B. Back-up of water from a toilet or drain C. Water come out of a trough or downspout D. Water bursting from pipes supplying sprinkler systems

Answer 33

D - Water bursting from pipes supplying sprinkler systems

Question 34

Commercial property insurance insures many types of property. Which of the following is not one of them? A. Building B. Stock C. Equipment D. Inventory

Answer 34

Inventory If you picked inventory, that is correct - though similar to stock, it is not insured by commercial property insurance.

Question 35

Some commercial property has a special basis of valuations. Which of the following types of property is covered for the blanks and the cost to recopy from an alternate source? A. Other property B. Stock C. Drawings and manuscripts D. Books sold at a book store

Answer 35

C. Drawings & Manuscripts Business records like documents, accounting records, etc. are insured for blanks + cost to recopy

Question 36

The insured has purchased an equipment breakdown policy with an added business interruption - gross earnings form. The business interruption is costing him $10,000 per month. It look 6 months to rebuild everything and an additional 3 months to get back to the same level of earnings as before. How much would this insured get in indemnity from the insurer? A. $10,000 B. $60,000 C. $90,000 D. $30,000

Answer 36

B - $60,000 The gross earnings form only pays business interruption costs until the property has been restored. Profits form is the one that pays until his income reaches the same level as before.

Question 37

When the insured opts for a Glass Rider, the broker must identify… A. The type, number & size of the glass B. The location of the glass C. Description of the glass D. All of the above

Answer 37

D. All of the above A. The type, number & size of the glass B. The location of the glass C. Description of the glass

Question 38

Your client is a dry cleaner and has purchased commercial property insurance. Because he carelessly forgot to turn off the steamer, the store is burnt to the ground. His customer's clothes would be covered under which category? A. Building B. Stock C. Equipment D. Not Covered

Answer 38

B - the customer's clothes are covered as they are in the care, custody, and control of the Insured.

Question 39

The Inflation extension of coverage automatically bumps the building values up by the amount of inflation upon renewal. And losses that occur halfway through the policy are given last year's inflation number.

Answer 39

False - The limits for mid-term losses get next year's estimated inflation number

Question 40

Which of the following is not a coverage provided by the Electronic Data Processing (EDP) Policy? A. Losses due to mechanical breakdown B. Losses due to electrical/magnetic damage C. Losses due to change in temperature/humidity D. Extra expenses losses due to programming error

Answer 40

D - Extra expenses losses due to programming error

Question 41

Your client runs a hardware store online shipping hammers and other such items. With every order he ships, he puts flyers and coupons in advertising the next sale. If his flyers were damaged by an insured peril, they would be covered under… A. Building B. Stock C. Equipment D. Not Covered

Answer 41

B - Stock

Question 42

If during an equipment inspection, the insurer identifies a dangerous condition with some equipment, they can suspend coverage until that equipment is repaired and certified as per regulations. True or False?

Answer 42

True

Question 43

When the insured needs to leave a building vacant, they need to purchase a vacancy endorsement to ensure they have coverage. Which type of Vacancy Permit allows the insured to leave the building vacant for a certain period of time depending on the age of the building and the neighbourhood? A. Vacancy Permit #1 B. Vacancy Permit #2 C. Vacancy Permit #3 D. Vacancy Permit #4

Answer 43

A - Vacancy Permit #1

Question 44

Your client has purchased a Broad Form commercial property policy, which of the following losses would be covered? A. Samples and a laptop given to a sales representative is stolen from his car while out on the road seeing clients B. An antenna mounted to the outside of the insured's building damaged by windstorm C. A steam pipe carrying 20 PSI of pressure in the insured's factory bursts causing $5000 in damage D. The insured exports seafood. A shipment of BC clams on its way to France is lost when the container ship transporting it sinks

Answer 44

B. An antenna mounted to the outside of the insured's building damaged by windstorm Property in the custody of a sales rep is excluded without a special endorsement. Outside antennae, signs, clocks are excluded unless damaged by a Named Peril (but Windstorm is a Named Peril). Pipes/pressure devices carrying > 15 PSI of pressure are excluded. And D is an Ocean Marine loss which is excluded by Commercial Property policies.

Question 45

Thinking about the premium adjustment clause, which of the following statements is not true? A. The clause works by adjusting the limits of insurance to refund excess premiums caused by overinsurance B. The insured would submit an application erring on the high side of fluctuating inventory and get money back if their average stock amounts didn't hit that high limit C. The maximum refund the insured can get is 75% D. The insured can claim their premium refund by submitting an application verified by an accountant within 6 months of policy expiry

Answer 45

C. The maximum refund the insured can get is 75% NOT TRUE - the maximum is 50%

Question 46

Which method of valuing property requires the insured to first get an appraisal? A. Actual Cash Value B. Fair Market Value C. Replacement Cost D. Book Value

Answer 46

C - Replacement Cost

Question 47

There are some common exclusions that apply to property policies. Which of the following would be covered by an insurance company? A. The insured runs a hospital. A CT scanner breaks and causes a medium sized explosion inside the hospital. B. Losses to money, bullion, securities, stamps, tickets or evidence of debt C. Losses caused by radioactive contamination (i.e. in a hospital setting) D. Extra costs required to rebuild the building due to the application of new by-laws

Answer 47

A. The insured runs a hospital. A CT scanner breaks and causes a medium sized explosion inside the hospital. Nuclear incidents (radioactivity or radiation-related losses) are excluded, but resultant fire and explosion are covered.

Question 48

Your client has purchased a Broad Form commercial property policy, which of the following losses would be covered? A. A sensor in your employee's factory malfunctions causing a safety shutoff to fail and a machine to overheat and damage itself B. The insured brings a very powerful magnet from his research laboratory over to his desk to work on it and accidentally wipes the data from the laptop he had stored underneath the desk C. Barrels storing some chemicals at the insured's factory get old and beings to allow some of the chemicals inside to leak out causing $5000 worth of damage to his stock D. Water leaks from a sprinkler system causing mold to grow underneath the drywall

Answer 48

D. Water leaks from a sprinkler system causing mold to grow underneath the drywall Fungi & spores are excluded unless they're caused by an insured peril (in this case, leakage from fire protective equipment)

Question 49

Even though the Equipment Breakdown policy provides coverage for these things, some items or losses may have sub-limits applied to them. Which of the following would not have a sub-limit applied to the loss amounts by the insurance company? A. Loss of rent money and additional costs incurred to rent an alternate premises while the original is being rebuilt B. Increased restoration costs due to the release of a toxic chemical caused by a breakdown in some chemical processing equipment C. Fees paid to lawyers, accountants or engineers required to help the insured establish loss values D. Costs incurred to notify victims and manage the situation in the event of a data breach

Answer 49

A. Loss of rent money and additional costs incurred to rent an alternate premises while the original is being rebuilt Rental value coverage will require an add-on but once it is on, there is no sublimit

Question 50

Any additional monies charged by the insurer to insure against additional perils is called…

Answer 50

Loading

Question 51

There is an option with accounts receivables endorsements called the reporting form option. Which of the following statements is not true? A. This option is typically used by large corporations with fluctuations in its accounts receivables B. The insured would choose a limit of insurance equal to his maximum exposure and report any amounts outstanding on a monthly basis. This is used to set his premium. C. For the months that the insured has accounts receivables lower than the limit purchased, he gets to pay a smaller premium D. All of the above are true

Answer 51

D - All of the above are true. A. This option is typically used by large corporations with fluctuations in its accounts receivables B. The insured would choose a limit of insurance equal to his maximum exposure and report any amounts outstanding on a monthly basis. This is used to set his premium. C. For the months that the insured has accounts receivables lower than the limit purchased, he gets to pay a smaller premium

Question 52

Buildings where the walls and structural members are made from non-combustible materials is called…

Answer 52

Non-combustible

Question 53

Your commercial property policy, much like other property policies, come with extensions of coverage. Which of the following statements regarding extensions of coverage is not true? A. The limit of insurance available to property moved to a temporary location for its own protection is the same as the limit for the primary location. B. Coverage for building damage by theft or vandalism cannot be added onto a tenant's Broad Form policy C. Coverage for building damage by theft or vandalism usually has a $2500 limit D. Growing outdoor plants are covered is damaged by named perils (excluding windstorm and theft) for up to $500 per plant and $5000 per occurrence

Answer 53

A - The limit of insurance available to property moved to a temporary location for its own protection is the same as the limit for the primary location. The limit available at the temporary location is "shared" between the new and the old. Meaning the limit available at the new location is the remainder of what's left after the main loss has been paid for.

Question 54

If the insured has purchased the Replacement Cost Insurance, there is no requirement for them to repair or replace the property with due diligence and dispatch. True or False?

Answer 54

False

Question 55

Some commercial property has a special basis of valuations. Which of the following types of property is covered for Actual Cash Value up to Replacement Cost? A. Unsold Stock B. Stock C. Property Given to the Insured to Repair D. Tenant Improvements

Answer 55

A - Unsold Stock

Question 56

The biggest difference between Replacement Cost and Actual Cash Value is that… A. Replacement cost coverage requires an appraisal B. The insured must qualify for replacement cost coverage C. Actual cash value factors in depreciation whereas replacement cost does not D. Replacement cost coverage is more commonly used in commercial property insurance than actual cash value

Answer 56

C - Actual Cash Value factors in depreciation There are other ways to calculate ACV but mainly it's replacement cost minus depreciation

Question 57

Which of the following does not need to appear on the declarations page of a commercial property policy? A. Parties to the contract B. Rates & premiums charged C. The insured's risk rating D. Summary of coverage and limits

Answer 57

C - the Insured's risk rating

Question 58

Your client, Bobby has also purchased commercial property insurance with you on his building for $300,000. The building is valued at $500,000 with an 90% coinsurance clause. 6 months later, his building is damaged by an insured peril causing $100,000 worth of damage. How much in indemnity would he receive from the insurance company for his loss?

Answer 58

The coinsurance calculation applies. $300,000/$500,000 * $100,000 = $60,000

Question 59

The coverage section of the EDP policy that insures costs required to continue the business when the premises is inaccessible or equipment is inoperable is called… A. Hardware B. Media C. Software D. Extra Expenses

Answer 59

D. Extra Expenses

Question 60

This piece of paperwork adds additional coverage to your policy

Answer 60

Rider *Endorsements only change the terms of your policy

Question 61

The sign form (under extensions of coverage) insures damage caused by artificial electricity. True or False?

Answer 61

False

Question 62

When scheduling a specific piece of glass in the glass rider, what sort of information does the broker need to identify? Indicate all that apply. A. Type, number and size of glass B. Location C. Description

Answer 62

A, B, & C (all)

Question 63

The accounts receivable form insures records of debts owed that are damaged by magnetic or electric forces. True or false?

Answer 63

False *Electronic and magnetic injury is excluded

Question 64

Valuable papers coverage extends to cover valuable papers while off premises. True or false?

Answer 64

True

Question 65

Under equipment breakdown insurance, hazardous substances are excluded from coverage. True or false?

Answer 65

False *They will cover clean up costs

Question 66

Who might have insurance interest in an instalment sales contract floater? The buyer or the seller?

Answer 66

Both the buyer and the seller *As long as the buyer has not fully paid off the property, the seller still has some financial interest in the object.

Question 67

Briefly explain the 2 coverage options available for the Installment Sales Contract Floater.

Answer 67

Installment sales basically work like a finance plan. The seller gives the buyer the goods up front and the buyer pays it off according to a payment plan. As the buyer makes more and more payments, he owns more and more of the property (like a mortgage). Coverage can be single interest or dual interest. Single interest only covers the part of the property owned by the insured (the seller) whereas dual interest insures both the part of the property owned by the insured (the seller) and the buyer. Providing dual interest coverage might be a good customer service thing that drives sales.

Question 68

Of the 4 general things that can affect commercial property rates, which of the following would you take into account distance from a fire hall or hydrant? A. Construction B. Occupancy C. Protection D. Exposures/Location

Answer 68

C - Protection

Question 69

Unlike homeowners insurance policies, fire department charges are not covered under commercial property insurance. True or False?

Answer 69

False

Question 70

There are many ways someone can use to value property, valuing property based on its invoice cost minus depreciation is called… A. Actual Cash Value B. Fair Market Value C. Replacement Cost D. Book Value

Answer 70

D. Book Value

Question 71

Premiums for commercial property insurance are largely based on certain characteristics of the building being insured. Which of the following best describes the criteria the insurer looks for? A. Construction, Loss History, Claims Statistics B. Construction, Protection, Location, Occupancy C. Loss Experience Data & Loss History of the Applicant D. Location & Class of Construction

Answer 71

B. Construction, Protection, Location, Occupancy

Question 72

When the insured opts for a Glass Rider, which of the following losses would not be excluded? A. Fire B. Deliberate acts of violence C. Damage to the glass during routine maintenance D. Glass at vacant or unoccupied premises

Answer 72

C - Damage during routine maintenance

Question 73

Under the definition of equipment, which of the following is not an item that is covered? A. An dentist leases a printer for his office B. An insurance office, wanting to ensure their policy documents are as presentable as possible, purchases a large-format commercial printer typically used in magazine printing C. Cups and other cutlery brought from home by employees for their own personal use at the office D. A commercial kitchen installed by a restaurant who just started their lease on a ground floor retail space

Answer 73

B - The magazine printer is not contents "usual" to the business. Most insurance brokerages will not have a printer like that.

Question 74

Equipment breakdown policies provide good coverage, but there are some exclusions. Which of the following losses would not be excluded without the use of additional coverages? A. A boiler on the insured's property bursts and causes the unit to flood B. Food in the walk-in freezer went bad after the refrigeration unit broke down C. A computer virus causes some machinery in the insured's factory to overheat and damage themselves irreperably D. Turbines inside a combustion chamber, that haven't been maintained according to the manufacturer's recommendations, crack while in use

Answer 74

A. A boiler on the insured's property bursts and causes the unit to flood

Question 75

The water escape endorsement covers direct damages due to freezing or escape of water from pipes but there are some exclusions. Which of the following would not be excluded? A. Freezing in an unheated part of the building during the heating season B. Back-up of water from a toilet or drain C. Water come out of a trough or downspout D. Water bursting from pipes supplying sprinkler systems

Answer 75

D. Water bursting from pipes supplying sprinkler systems

Question 76

Which of the following statements about package policies is not true? A. The insured cannot add coverage to package policies. If the insured wants something different, he can opt to create a manucript policy with their broker B. Package policies bundle commercial policies together for simplicity sake C. Most packages include: property, business interruption, liability and crime insurance policies D. Package policies can have rate credits or surcharges applied to them

Answer 76

A. The insured cannot add coverage to package policies. If the insured wants something different, he can opt to create a manucript policy with their broker

Question 77

Your client runs a watch boutique but also sells some watches on behalf of clients on a consignment basis. Since he wants to expand his business, he begins to sell handbags. Unfortunately, he forgets to set the alarm one night at the store and he comes back the next day to find the handbags stolen. Which of the following statements most accurately describe your client's coverage? A. The handbags would be covered since it is customer property that he is responsible for B. The handbags would be covered since he is in the business of selling luxury products C. The handbags would be covered if he had notified the insurance company beforehand that he intends to expand his business to selling handbags D. The handbags would be covered because they are similar to the property already insured by his policy, he is liable for it and he is obligated to insure it

Answer 77

C. The handbags would be covered if he had notified the insurance company beforehand that he intends to expand his business to selling handbags If you picked D, you are close. But handbags are not "similar" to watches so the insured would need to notify the insurance company of his new business operations. Generally speaking, anytime an insured changes his business operations, even if it seems trivial, you should notify the insurer.

Question 78

Your client has purchased a Broad Form commercial property policy, which of the following losses would be covered? A. The insured comes into the office one morning to find that the toilets have overflowed and flooded the office B. A power surge one day during work hours causes the computers to be damaged C. The insured runs a watch boutique and some of them were damaged in a fire overnight D. The insured runs a watch boutique and sells watches on a layaway basis from time to time. A customer's watch was lost in a water damage incident that occurred in his home before he's fully paid it off

Answer 78

C - The insured runs a watch boutique and some of them were damaged in a fire overnight

Question 79

When it comes to the Replacement Cost Endorsement, which of the following statements is not true? A. The insured must replace the property on the same site, or if that is not possible, an adjacent site B. It requires the insurer to repair or replace the damaged property with due diligence and dispatch C. The advantage of this over Actual Cash Value is that Replacement Cost has no penalty for depreciation D. The insurer would pay the insured a lump sum of cash to use towards repairing/replacing the property

Answer 79

D. The insurer would pay the insured a lump sum of cash to use towards repairing/replacing the property The insured would pay actual amounts spent after the replacement is made. Usually that means the insurer will pay ACV and the rest as needed afterwards

Question 80

Which of the following situations would not result in denial of coverage? A. An insured installs a fire protection system - a few months later, he notices some issues with the water supply but decides to ignore it. Soon after, his building burns down. B. An insured installs a burglar alarm with monitoring service. A few months later, his restaurant business is not doing too well so he decides to cut costs and cancels his monitoring service. Soon after that, a cook forgets to turn off the stove overnight and the whole building burns down. C. The insured has a locked vehicle warranty on his policy but forgets to lock his doors. As a result, the property was stolen from his vehicle. D. The insured has a locked vehicle warranty on his policy but his property was stolen from his vehicle after keys were lifted from his pocket.

Answer 80

B. An insured installs a burglar alarm with monitoring service. A few months later, his restaurant business is not doing too well so he decides to cut costs and cancels his monitoring service. Soon after that, a cook forgets to turn off the stove overnight and the whole building burns down. **A breach of conditions is OK if it was unrelated to the loss

Question 81

When it comes to the Consequential Loss Assumption Endorsement, which of the following statements is not true? A. It provides coverage against the spoilage of stock whenever refrigeration systems are damaged B. This covers damage to stock due to breakdown of temperature control device C. This covers damage to stock due to breakdown of humidity control device D. All of the above are true

Answer 81

A. It provides coverage against the spoilage of stock whenever refrigeration systems are damaged It only covers consequential loss if an insured peril damages cooling apparatus, supply pipes or connections to the cooling apparatus or devices that provide on-premises power

Question 82

Your client has purchased commercial property insurance for his building. Coming into the office one day, he noticed that the outdoor lights in his office have been smashed - likely by some vandals. This would be covered under which category? A. Building B. Stock C. Equipment D. None of the Above

Answer 82

A - Building **Permanently attached fixtures are part of the building

Question 83

A minimum premium is sometimes used by the insurance company to… A. Make sure they recoup the costs of underwriting and doing paperwork if the insured cancels the policy B. To prevent brokerages from breaking up a risk amongst different insurers unnecessarily C. To ensure the insurer earns a profit D. To ensure that there is enough in commissions for the brokerage

Answer 83

A & B. Make sure they recoup the costs of underwriting and doing paperwork if the insured cancels the policy To prevent brokerages from breaking up a risk amongst different insurers unnecessarily

Question 84

A sign form can be used to expand coverage for a business' signage. Which of the following would not be excluded under the Sign Form? A. A client's sign in damaged by stones thrown by rioters B. Other property damaged by fire when a power surge short circuits a sign and causes it to burst into flames C. Lettering that melted off a sign after an uncharacteristically hot summer day D. The plastic covering is damaged while being cleaned by a 3rd party cleaning company

Answer 84

B. Other property damaged by fire when a power surge short circuits a sign and causes it to burst into flames **Damage by non-lightning electrical currents is not covered but resultant fire/explosion is

Question 85

Your client, Monica, has purchased commercial property insurance with you for her factory. She insures the building and contents for $100,000 and $50,000 respectively. Her building deductible is $10,000 and contents deductible is $5000. One night, her factory catches fire. Unfortunately, the fire department was not able to get there in time and her factory burns to the ground - it's a total loss. How much in indemnity would she receive from the insurance company for her loss? A. $150,000 B. $135,000 C. $140,000 D. $145,000

Answer 85

C. $140,000 **if there are multiple deductibles involved, the highest one applies.

Question 86

Your client has purchased commercial property insurance for his building. He comes into the office one day to see that the cleaning supplies in the janitors closet were stolen. This type of property would be covered by which category? A. Building B. Stock C. Equipment D. None of the Above

Answer 86

A. Building

Question 87

Even though policies have many restrictions, there are some things that the insurer automatically allows. Which of the following is not automatically allowed be the insurer? A. The insured is allowed to carry concurrent insurance B. The insured is allowed to make any alterations, additions or repairs to the building they see fit C. The insured is allowed to do work and store articles usual to the business and in normal quantities D. The insured is allowed to make changes to the policy

Answer 87

D. The insured is allowed to make changes to the policy The insured can request changes, but they cannot make changes. Any changes have to be approved by the insurer and signed off on their end before it becomes binding

Question 88

Your client has purchased a Named Perils commercial property policy, which of the following losses would not be covered? A. The insureds storefront and some of her stock is damaged when a motorist crashes his car into her store. B. The insured has some portable propane tanks stored in a cage behind his restaurant which explodes C. The insured's restaurant has a furnace bolted into the ground. It suddenly starts billowing smoke and damages the wallpaper. D. The hot water tank in the insured's restaurant explodes due to overpressure

Answer 88

D. The hot water tank in the insured's restaurant explodes due to overpressure

Question 89

The insured purchased ACV coverage on a set of 5 matching chairs he's selling in his furniture store. Factoring in depreciation and considering it's fair market value, they are worth $1000. One chair was destroyed in a fire. How much is the set considered to be worth now that the set is no longer complete? A. $0 B. $1,000 C. $800 D. $200

Answer 89

C - $800 The value of the damaged chair is $200, the remaining chairs are still considered to be worth $800. This is due to the application of the pair and set or parts rule.

Question 90

You client Robert took out a 10 year lease to start his hair salon business. Business was going well so 2 years into the lease, Robert decided to spend $100,000 renovating the space to try to attract higher-end clientelle. Unfortunately, 3 years after, his salon was damaged by fire which caused $50,000 in damage to his renovations. Robert has been working so hard, he decided that this would be a good time to take a 2 week vacation before repairing the store and working again. How much would Robert receive in indemnity from the insurer? A. $50,000 B. $40,000 C. $80,000 D. $25,000

Answer 90

D - $25,000 Since Robert did not repair/replace the property with due diligence and dispatch (he went on vacation), he get penalized. He would only get the loss amount x the % of lease remaining (the accident happened 5 years in so he has 50% remaining on a 10 year lease).

Question 91

Which of the following statements are not true if an insured has property protection systems installed? A. The insured is eligible for a discount B. The insured must notify the insurer if he finds out that police services have been suspended C. The insured will be held responsible for losses if the insurer discovers a problem with the alarm wiring after a loss has occurred D. The insured must notify the insurer if monitoring or maintenance contracts have been cancelled

Answer 91

C. The insured will be held responsible for losses if the insurer discovers a problem with the alarm wiring after a loss has occurred **The insured is only required to notify the insurer of any flaws or interruptions he knew about. If he didn't know, or if he couldn't reasonably know, he is excused.

Question 92

Your commercial property policy, much like other property policies, comes with extensions of coverage. Which of the following statements regarding extensions of coverage is not true? A. The limit of insurance available to property moved to a temporary location for its own protection is the same as the limit for the primary location. B. Coverage for building damage by theft or vandalism cannot be added onto a tenant's Broad Form policy C. Coverage for building damage by theft or vandalism usually has a $2500 limit D. Growing outdoor plants are covered is damaged by named perils (excluding windstorm and theft) for up to $500 per plant and $5000 per occurrence

Answer 92

A. The limit of insurance available to property moved to a temporary location for its own protection is the same as the limit for the primary location.

Question 93

Equipment breakdown policies insure all types of equipment. Including equipment that is in storage. True or False?

Answer 93

False It only insures objects that are in use or connected & ready for use

Question 94

Even though the Equipment Breakdown policy provides coverage for these things, some items or losses may have sub-limits applied to them. Which of the following would not have a sub-limit applied to the loss amounts by the insurance company? A. Loss of rent money and additional costs incurred to rent an alternate premises while the original is being rebuilt B. Increased restoration costs due to the release of a toxic chemical caused by a breakdown in some chemical processing equipment C. Fees paid to lawyers, accountants or engineers required to help the insured establish loss values D. Costs incurred to notify victims and manage the situation in the event of a data breach

Answer 94

A. Loss of rent money and additional costs incurred to rent an alternate premises while the original is being rebuilt

Question 95

When it comes to valuable papers & records insurance, which of the following statements is not true? A. Valuable papers and records does not include electronic records B. This coverage insures the cost required to reproduce these documents C. Coverage is available off-premises, but it's limited D. Coverage is available on premises and also while in transit

Answer 95

A. Valuable papers and records does not include electronic records

Question 96

If during an equipment inspection, the insurer identifies a dangerous condition with some equipment, they can suspend coverage until that equipment is repaired and certified as per regulations. True or False?

Answer 96

True

Question 97

A bailee for hire includes someone who has custody of you property for sale purposes. True or false? (Chapter 5)

Answer 97

False A bailee for hire is someone who has custody of property for purposes other than sale.

Question 98

Which of the following is NOT a bill of lading. A. Standard Bill B. Negotiated Bill C. Valued Bill D. Released Bill (Chapter 5)

Answer 98

B. Negotiated Bill

Question 99

With transportation floater - broad form, the value of property includes the invoice price, unearned freight and shipments costs. True or false?

Answer 99

True

Question 100

Which policy should you get when you wish to transport goods using your own vehicles? (Chapter 5)

Answer 100

Motor Cargo Rider

Question 101

Your client Susanne runs a shipping company that transports goods for their clients. What insurance would you recommend that she buy? (Chapter 5)

Answer 101

Truckman's Liability Cargo Rider 1. Different amount of insurance available for different trucks 2. Coverage is restricted to losses while in vehicle only (can endorse for temporary stop at insured's terminal or loading station. 3. Has Catastrophe limit (a sum of all amounts of insurance)

Question 102

Mysterious disappearance is excluded under the tool floater rider. True or false?

Answer 102

True Exclusions - Loss by artificial electricity (resultant fire/explosions are covered) - Mysterious disappearance (no justified reason)

Question 103

The contractor's equipment floater has which co-insurance limit?

Answer 103

90%

Question 104

Under which situation(s) would coverage under builders risk insurance cease? A. Building has been used for office purposes B. When building is being used for habitational purposes C. When the building has been unattended for 30 days D. When the building is being used for testing purposes.

Answer 104

C - when the building has been unattended for 30 days

Question 105

How a bailee can expand their liability for customers' items in their custody, which is the "best" and why they might want to do that.

Answer 105

A bailee might want to expand their liability to/for customers' goods because it is good customer service. Customers want to know that the property they leave with you is protected and insured. There are 3 ways a bailee can expand their liability: - Increase your stock limit: property that you hold for customers in storage, repairs, etc. are considered stock. You might want to increase your stock limit to encompass your customers' property as well. - Bailee liability policy: this covers the property of your customers if you are found liable for their loss/damage. This is not preferable because it requires you to be found legally liable (aka. your customers may need to sue you before getting payment). - Specialized Bailee Policy: this removes the liability requirement which ensures you maintain a good relationship with your customers even when their property is lost or damaged through no fault of your own. This is the "best" policy form to use.

Question 106

Which coverage form requires impersonal due diligence and dispatch?

Answer 106

Gross Earnings Form **impersonal - due diligence and dispatch from others and is required to avoid a penalty on coverage

Question 107

A contributing property is one that...

Answer 107

Belongs to a major supplier **contributes to your business operations

Question 108

With the extra expenses endorsement, the insurance company will pay for extra expenses you need to get your business up and running faster without needing to prove that it would result in an overall cheaper claim for the insurance company. True or false?

Answer 108

True Without this endorsement, the insurer will still pay for extra expenses, but you will need to show that it results in an overall cheaper claim for them in the long run.

Question 109

The extended form for business interruption insurance excludes losses caused by bylaws, strikes and loss of lease. True or false?

Answer 109

False

Question 110

What are 3 ways a business can get back into business after a large loss that disrupts the business?

Answer 110

There are 4 ways for you to choose from: - Own money: insureds can use their own money to restart their business - Bank loan: insured can take out a loan to acquire the funds required to restart their business - Raise prices: insureds can raise the funds required by raising their prices. - Buy insurance: they can buy insurance which will provide the funds required to restart their business as well as compensate them for lost income.

Question 111

Discuss the difference in indemnity period between gross earnings form & the profit form

Answer 111

The gross earnings form only provides coverage until the property has been reinstated whereas the profits form will continue to insure you for up to 12 months (if 12 months indemnity was purchased) or until you reach the same level of income as before the loss (whichever is sooner).

Question 112

What are the 8 sources of crime losses?

Answer 112

1. Forced Entry into buildings 2. Forced entry into protected enclosure 3. Unforced entry (stolen key) 4. Forced opening (by threat) 5. Vandalism 6. Shoplifting 7. Espionage 8. Employee theft

Question 113

What two types of property that are susceptible to loss?

Answer 113

Real Property (buildings, fixed structures) Personal Property (stock, equipment, contents)

Question 114

What items are most susceptible to loss? (three)

Answer 114

1. Convertibility 2. Value 3. Portability

Question 115

What is an example of physical protection systems

Answer 115

Doors, safes, showcases, window bars Creates a physical barrier to restrict access

Question 116

What are examples of electronic protection systems?

Answer 116

CCTV, sensors, alarms Electronic barriers to restrict access

Question 117

What are the three components of security?

Answer 117

Perimeter protection (access) **partial (openings only) or complete Area protection (guards the interior) Point protection (protects individual items)

Question 118

What three things give rate credits in crime policies?

Answer 118

1. protection devices 2. alarms 3. watchmen

Question 119

What does ULC Approved mean?

Answer 119

Meets minimum ULC standards **Underwriters Laboratories of Canada

Question 120

Alarm can be local or central, what do those terms mean?

Answer 120

Alarm control refers to who has the ability to arm/disarm Locally - disadvantage is people forget to turn on Central - central station turns the alarm on and off at specified times.

Question 121

What is Central Station Service?

Answer 121

Best form of protection They monitor, screen users, and activate the alarm automatically at closing and notifies and dispatches a company rep to the scene.

Question 122

What is Line Security?

Answer 122

ability of a phone line to resist tampering

Question 123

What is Monitoring Station Service?

Answer 123

Same as Central Station but without a representative

Question 124

What is Digital Communicator Service?

Answer 124

Signaled by phone line to call the police **disadvantage is phone lines are easy to tamper with

Question 125

What is a Local Alarm?

Answer 125

Not terminating at monitoring station - rings only on premises and it is easily tampered with.

Question 126

What crime coverage is available on the standard commercial property form?

Answer 126

Riot and vandalism only

Question 127

What crime is included on Broad Commercial property form?

Answer 127

All Risk BUT there are limits on money, furs, and items in custody of the sales rep.

Question 128

What are the three parts of a crime policy?

Answer 128

1. Declarations 2. General Conditions 3. General Definitions

Question 129

What are the 4 key areas of crime riders?

Answer 129

1. Persons causing the loss (insiders are always excluded) 2. Property covered (jewellery, money, security, more specific stock & equipment) 3. Perils insured (crimes that are insured) 4. Location of property covered (on or off premises and location specific)

Question 130

What's the difference between burglary, robbery, and theft?

Answer 130

Burglary - requires forced entry marks - wrongful taking when closed - no force = no coverage (thief involved) Robbery - using force to take including from a dead or incapacitated custodian or a commission of unlawful acts witnessed by a custodian (thief + person involved) Theft - most general and refers to all means of taking with out the owner's consent

Question 131

Difference between Inside / Outside robbery policies

Answer 131

Inside is for inside the specified location - this includes kidnapping, and smash and grabs while the store is open Outside provides coverage while a custodian is off premises (making a bank deposit) or theft from a custodian's home. **excludes glass

Question 132

Common Crime Policy Conditions (12)

Answer 132

1. Duties in the event of a loss (notify ASAP & proof of loss in 120 days) 2. Canadian currency clause (paid in CAD) 3. Cancellation - 30 days / non-payment - 15 days 4. Changes only effective after endorsement 5. Change of interest is not automatic to new owner (needs insurer's consent unless it is a court mandated transfer) 6. Discovery period (up to 1 year after expiry to make claim) 7. Loss sustained during prior insurance (before under similar insurance but old policy doesn't cover due to late reporting - the new policy will cover) 8. Legal action - cannot sue insurer after 2 years from loss discovery date 9. Inspection - insurer can inspect premises at any reasonable time 10. Records - need to substantiate claim before payment is made. 11. Valuation is ACV (securities is ACV the day before) 12. Policy Period / Territory

Question 133

What are the general features of the Comprehensive Dishonest, Disappearance & Destruction policy (3D)

Answer 133

1. Can pick any one coverage or all 5 insuring agreements) 2. If something's not covered, you can almost always endorse 3. Continuous until cancelled

Question 134

What are the 3Ds in the 3D Crime Policy?

Answer 134

Dishonest Disappearance Destruction

Question 135

What are the 5 Insuring Agreements in the 3D policy?

Answer 135

1. Employee Dishonesty = Employee Theft **form A: 1 limit for all **form B: limit for individual employees w/ different limits for each 2. Loss Inside the Premises 3. Loss Outside the Premises 4. Money Orders & Counterfeits = receiving fakes 5. Depositors Forgery= being faked (fraudulent cheques)

Question 136

What is Employee Dishonesty?

Answer 136

Fraudulent or dishonest act by employee intending to: - Cause loss to insured - Obtain financial gain

Question 137

Who is covered as an employee?

Answer 137

1. Natural persons (hired) 2. Employment Agency 3. Employee through merger *30 days 4. Directors or trustees if actively involved in the business

Question 138

Who is not an employee?

Answer 138

Commission based or marginal workers Contractors Basically - anyone the insured has little control over.

Question 139

What are the General Agreements in the 3D policy?

Answer 139

1. Loss caused by unidentifiable employee = still paid 2. Loss under prior policy - form A (all employee limit - 1 year after expiry to claim) form B (individual employee - 2 years after expiry to claim) 3. Prior Fraud - coverage ends for an employee once insured finds out they have committed fraud - they won't insure a dishonest guy.

Question 140

What are Pre-Employment Risk Management Strategies for Employee Dishonesty?

Answer 140

1. Verify References 2. Interview 3. Application

Question 141

What are Post-Employment Risk Management Strategies for Employee Dishonesty?

Answer 141

1. Off premises backups 2. 2 Signature cheques 3. Vacation days 4. External team hiring (red team testing) to assess internal controls 5. Audit (by surprise) 6. Audit Committee 7. Rotate Bank Accounts 8. Rotate Jobs

Question 142

What does Loss Inside Premises cover?

Answer 142

1. Money/Securities/Bullion/Cheques/Money Orders 2. Other Properties 3. Damage to premises by burglary if the insured is liable

Question 143

What does Loss Inside Premises exclude?

Answer 143

Vending Machine Money Fire Damage to Other Property Money/Securities and other property by electronic transfer (hacking)

Question 144

What does Loss Outside Premises cover?

Answer 144

1. Money/Securities while conveyed by a messenger, armored truck, or in living quarters of the messenger **armored carrier crime is limited to amount in excess that the armored carrier's insurance provides 2. Counterfeits - rejected by the bank (usually small) 3. Depositor's forgery

Question 145

Which alarm control method is the most secure?

Answer 145

Centrally supervised

Question 146

Wrongful taking of property from a closed premises that leaves marks going in or out is the definition for...

Answer 146

Burglary Robbery means using force to take something including from a dead/incapacitated custodian or if the unlawful act was witnessed by a custodian. Theft is all means of taking without the owner's consent.

Question 147

On your advice, your client Denise purchased crime insurance (Stock & Equipment Burglary and Damage to Building) for her bar. During a robbery, her window was smashed and some liquor bottles stolen. When they could not get into the cash register, the thieves got mad and vandalized the premises. What would be covered? A. The window, the liquor bottles and the vandalism damage B. The liquor bottles only C. The liquor bottles and the vandalism damage only

Answer 147

A. The window, the liquor bottles and the vandalism damage

Question 148

If a loss was sustained under a prior insurance policy and was un-claimable due to the passing of the discovery period, the current insurance policy would not provide coverage. True or false?

Answer 148

False The current policy would cover it as long as the policies were similar and the only reason it was not covered by the prior policy is due to the passing of the discovery period.

Question 149

Under your 3D crime coverage, covering all employees under 1 limit corresponds to which form?

Answer 149

Form A Form B is individual limits for employees

Question 150

Your client, Jonathan, believes that most employees would act alone when committing a crime that would cause loss to the business. Which coverage form would you recommend them buy?

Answer 150

Form A Form B is best used when employees would collude to commit a crime.

Question 151

For Crime Coverage which form has a discovery period of 2 years?

Answer 151

Form B

Question 152

Under your 3D policy, property is covered even if the loss occurred at the home of the messenger. True or false?

Answer 152

True

Question 153

What property is susceptible to crime losses and what are some characteristics of items most likely to be targeted by criminals?

Answer 153

Real & Personal property can be susceptible to crime losses Target items: Convertible Valuable Portable

Question 154

Explain the Canadian Currency Clause in the context of crime insurance.

Answer 154

Losses are paid in Canadian dollars.

Question 155

Go over the 2 coverage forms for the Comprehensive Dishonesty, Disappearance & Destruction policy and their main difference.

Answer 155

The 2 coverage forms are: Form A & Form B Form A: you have 1 limit for all employees which is the maximum payable regardless of number of employees involved. Every employee is insured and there is no need to find the culprit before insurance is payable. It will also cover losses under a prior policy for up to 1 year after expiry. Form B: you can have a separate limit for each employee and you also do not need to insure all employees. A key feature here is that limits can stack if multiple employees are implicated. This form will cover losses that occurred under a prior policy for up to 2 years after expiry. You should recommend clients get Form A if employees are expected to act alone.

Question 156

When property is in transit, which of the following groups can have insurable interest in the property being transported?

Answer 156

Owners & Carriers

Question 157

When it comes to policies for cargo, which of the following is meant for carriers? A. Transportation floater - broad form B. Motor truck cargo rider C. Trip transit policy D. Truckman's liability cargo rider

Answer 157

D. Truckman's liability cargo rider The Trucker's Liability Cargo rider insures a carrier's liability for damage to goods

Question 158

Which of the following cargo policies will only insure property in transit using your own vehicles only? A. Transportation floater - limited form B. Motor truck cargo rider C. Trip transit policy D. Transportation floater - broad form

Answer 158

B. Motor Truck Cargo rider

Question 159

Which of the following cargo policies is typically used to insure single shipments? A. Transportation floater - limited form B. Motor truck cargo rider C. Trip transit policy D. Truckman's liability cargo rider

Answer 159

C. Trip transit policy

Question 160

Owners shipping their goods through an insured carrier won't need to purchase a Transportation Floater. True or False?

Answer 160

False You should still carry your own insurance policy for the goods in transit since the carrier could have inadequate limits or their policies could be lapsed/invalidated without you knowing (among other reasons)

Question 161

Companies who haul goods for the general public are called… A. Private Carriers B. Contract Carriers C. Common Carriers D. Postal Carriers

Answer 161

C. Common Carriers

Question 162

Companies who haul goods for people they have a contract with are called… A. Private Carriers B. Contract Carriers C. Public Carriers D. Couriers

Answer 162

B. Contract Carriers

Question 163

Companies who haul their own goods using vehicles they lease are called… A. Private Carriers B. Contract Carriers C. Public Carriers D. Commercial Carriers

Answer 163

A. Private Carriers Vehicles used by private carriers can be leased, owned, borrowed, etc. The basic idea is that they're hauling their own stuff.

Question 164

Your client purchased a Transportation Floater (Broad Form), which of the following situations would not be insured? A. The insured delivers his own goods to local restaurant customers B. The insured ships goods that are taken by Canada Post for a portion of the journey C. A new piece of heavy machinery being shipped to the insured by another company D. All of the situations would be insured

Answer 164

D. All of the situations would be insured

Question 165

Your client purchased a Transportation Floater (Broad Form) and is wondering what types of conveyance are covered. Which of the following are not covered? A. Trains B. Planes C. Ocean-going vessels D. All of the above are covered

Answer 165

C - Ocean going vessels Ocean marine transport is not covered here. Ocean marine means those big container ships.

Question 166

With the Transportation Floater (Broad Form), which of the following losses would not be excluded? A. Furs destroyed in a fire while being transported by train B. Jewellery stolen while in transit C. Livestock damaged or killed while being transported by truck on the way to the slaughterhouse D. All of the above would be excluded

Answer 166

D. All of the above would be excluded The other excluded items not mentioned here are manuscripts and paintings. All of the property mentioned here can be covered if an endorsement is purchased.

Question 167

Your client purchased a Transportation Floater (Broad Form), which of the following losses would not be excluded? A. The insured is shipping some christmas baubles. The employees don't know this and handle the package roughly causing some of them to break. B. The insured is shipping a package of color-changing chemical strips meant to detect whether water has entered an electronic device. While the truck was stopped overnight, it was broken into and packages were opened by the thieves. Because the seals were now broken, humidity got onto the chemical strips and damaged them. C. The insured is delivering 50 pounds of beef to a distributor in Vancouver. On the way there, the beef loses some moisture and now only weighs 45 pounds. Since the customer ordered 50 pounds, they refuse to pay for the 5 missing pounds of beef. D. The insured is shipping a delivery of frozen fish across the country. When it arrives, its discovered that half of the fish has deteriorated in quality and is no longer sellable at the original price.

Answer 167

B - The insured is shipping a package of color-changing chemical strips meant to detect whether water has entered an electronic device. While the truck was stopped overnight, it was broken into and packages were opened by the thieves. Because the seals were now broken, humidity got onto the chemical strips and damaged them. ***Losses caused by dampness/dryness are covered if it's caused by a named peril or theft. In this case, it was caused by theft so will be covered.

Question 168

Your client purchased a Transportation Floater (Broad Form), which of the following losses would not be excluded? A. The insureds employees accidentally break a box full of test tubes during a routine delivery run because they weren't packed properly B. Due to a bunch of different boxes being mixed together, leakage from a box of frozen fish dripped onto and contaminated a box of fresh salad greens C. Due to a fire that started near the delivery truck, the ice cream that the insured was delivering melts and is no longer sellable D. The insured is shipping a load of cast iron pans across the country. Due to the long trip, the pans arrive at their destination rusty and unusable.

Answer 168

C. Due to a fire that started near the delivery truck, the ice cream that the insured was delivering melts and is no longer sellable Improper preparation, contamination/contamination (a trade loss) and rust (a trade loss) is not covered. Change in temperature losses (a trade loss) aren't covered but this was caused by a Named Peril so it is.

Question 169

Your client purchased the Transportation Floater (limited form) and is wondering what the difference is between this and the broad form. You tell him that the limited form only covers you for named perils, but on top of that, which of the following are excluded by the limited form? A. Damage due to the hitching or unhitching of trailers B. Damage due to loading or unloading C. Damage caused by contact or collision with a stationary object while the train company is trying to connect 2 rail cars. One of which contains the insured's goods. D. All of the following are excluded by the limited form

Answer 169

D. All of the following are excluded by the limited form ***Coupling, loading and unloaded loses are excluded in the limited form

Question 170

When it comes to the Motor Cargo Rider, which of the following statements is not true? A. This coverage is for people who are transporting their own goods B. The goods do not have to be in the insured's custody at the time of loss to be insured C. The broad form option covers all risks and only for scheduled vehicles D. The named perils option is called the Owners Form

Answer 170

B. The goods do not have to be in the insured's custody at the time of loss to be insured ***The goods must be in the insured's custody and in transit at the time of loss for there to be coverage

Question 171

When the insured has equipment that he frequently takes to job sites, what would you recommend to them? A. Contractor's equipment floater B. Off-premises equipment endorsement to commercial property C. Mobile equipment insurance D. Add onto your commercial property equipment coverage

Answer 171

A. Contractor's equipment floater

Question 172

When it comes to Contractor's Equipment Floater, which of the following statements is not true? A. This insurance only insures movable property owned by the insured (i.e. property he has purchased and takes to a job site as part of his work) B. Coverage is available on a scheduled or blanket basis C. These policies usually have a 90% coinsurance requirement, a deductible and a catastrophe limit D. Newly acquired equipment is covered for up to 30 days if it is similar to the equipment you already have scheduled

Answer 172

A. This insurance only insures movable property owned by the insured (i.e. property he has purchased and takes to a job site as part of his work) ***It insures property that is owned, leased or even borrowed by the insured. Not just stuff he literally owns.

Question 173

When it comes to Contractor's Equipment Floater, which of the following losses would not be excluded? A. A crane rated for 500kg breaks down while carrying a 600kg load B. A digger is damaged when a minor cave-in drops rocks onto the crew cab C. Extreme cold during the winter damages a compressor during a job D. Equipment is stolen out of the trunk of a contractor's car

Answer 173

D. Equipment is stolen out of the trunk of a contractor's car ***Overload, work underground and change in temperature are excluded but there's no exclusion for theft.

Question 174

A Tool Floater is very similar to the Contractor's Equipment Floater except it insures tools instead of equipment. When it comes to this policy, which of the following statements is not true? A. The specified perils version of this floater includes coverage for theft and property while in transit B. Power tools damaged by power surges are covered C. Tools that disappear with no apparent reason are excluded D. Tools are usually insured on an Actual Cash Value basis

Answer 174

B. Power Tools damaged by power surges are covered **Tools damaged by power surges have coverage under the Tool Floater

Question 175

Your client Mary has some very expensive tools that she frequently takes to job sites. Which of the following statements is not true? A. You should recommend that she schedule those items specifially onto the policy B. When scheduling property, you should note the make, model, serial # & value of the property C. Inexpensive items are usually OK to be covered on a blanket basis D. Scheduled tools are covered in full regardless of the coinsurance requirement

Answer 175

D - Scheduled tools are covered in full regardless of the coinsurance requirement ***All property insured by the policy are subject to the coinsurance requirement

Question 176

When it comes to builders risk insurance, which of the following is not an accurate statement? A. Both the general contractor or the project owner can purchase it B. The insured would purchase a limit of insurance equal to the contract price C. Builders who run multiple projects should purchase blanket coverage whereas general contractors who run 1 project at a time should get Builder's Risk insurance as needed D. There are named perils and all-risk (broad form) options

Answer 176

B. The insured would purchase a limit of insurance equal to the contract price ***The insures the contract price and other additional values OR simply the completed value (aka replacement cost) of the building. These 2 numbers should be basically equal.

Question 177

With the Builder's Risk policy, which of the following type of property is not covered? A. Property owned by the insured or others in the course of construction, repair or installation B. Equipment, tools and materials used in the project C. Landscaping D. Temporary structures

Answer 177

B. Equipment, tools and materials used in the project ***Equipment and tools are not covered by Builder's Risk. Owners of those tools should get their own contractor's equipment/tool floaters

Question 178

Your client purchased Builder's Risk insurance, which of the following losses would be covered? A. The insured completed the construction of the building using steel they later discovered was part of a product recall. The insured had no idea until after the building was completed and ready for occupancy. B. Losses to the building caused by flood or earthquake C. The building is partially damaged in a fire caused by a new restaurant that just opened up shop in one of the ground floor commercial units in a mixed-use residential building D. Right when the building was about to be completed and ready for commercial occupancy, it is burnt down in an act of arson

Answer 178

D. Right when the building was about to be completed and ready for commercial occupancy, it is burnt down in an act of arson ****The cost of making good improper materials, workmanship or design is excluded. Flood & earthquake is excluded. Coverage under the Builder's Risk also ends when the building is being used for purpose other than testing or office/habitational use so C isn't covered either. D is covered because it's still part of builders risk (nobody has actually moved in yet) and fire is not an excluded peril.

Question 179

The Builder's Risk policy has many extensions, which of the following is not one such extension? A. Building materials in transit B. Property of the insured at other locations C. Equipment and tools D. Debris removal

Answer 179

C - Equipment and Tools **Debris removal is covered because it’s a standard part of all of the commercial property coverages we've been discussing

Question 180

Which of the following situations would cause the Builders Risk policy to terminate? A. When the building is undergoing testing B. A residential condo development still under construction but tenants are beginning to move in C. An office tower development still under construction but tenants are beginning to move in D. A single-story development being occupied by a light-industrial tenant

Answer 180

D. A single-story development being occupied by a light-industrial tenant ***Habitation, office use and testing is still covered by builder's risk

Question 181

With builder's risk insurance, the insured should purchase a limit of insurance equal to… A. The amount of money expended to build the building B. The value of the completed building in terms of materials and labour costs C. The fair market value of the property if it were to be sold on the day of completion D. The costs that went into construction + 10% to factor in the developers profit margin

Answer 181

A. The amount of money expended to build the building ***The insured should pick a limit equal to the completed value of the building (including incidentals). Basically, what it would cost, all in, to rebuild the building if it were to be completely destroyed.

Question 182

Who should purchase an Installation Floater? A. Plumbers B. Electricians C. HVAC Installers D. All subtrades should get this

Answer 182

D. All subtrades should get this ***The installation floater is for anyone who… well… installs anything

Question 183

Thinking about the Installation Floater, which of the following statements is false? A. This insurance covers the property of the insured as well as property of others if the insured is legally liable for it and it's used incidental or used in the installation project B. This insurance will also cover materials used in the installation stored temporarily at the insured's warehouse C. This insurance covers property while in transit, while awaiting installation at the job site and even during installation until the insured's interest ends D. Fire that results from the insured's use of faulty materials, workmanship or design is covered

Answer 183

B. This insurance will also cover materials used in the installation stored temporarily at the insured's warehouse ***Property on the insured's premises is excluded here, but covered under your regular commercial property policy

Question 184

When it comes to Business Interruption insurance, which of the following most accurately describes the broker's duties? A. Advise on risk factors B. Have a basic understanding of financial terms in the insurance context to help the insured determine their coverage needs C. Both A & B D. Help them analyze and calculate their losses in the event of a claim

Answer 184

C. Both A & B

Question 185

When it comes to Business Interruption insurance, which of the following most accurately describes the duties of the insured's accountant? A. Help determine coverage needs B. Calculate the financial information required & analyze and determine loss amounts in the event of a claim C. Advise on risk factors and values D. All of the above

Answer 185

B. Calculate the financial information required & analyze and determine loss amounts in the event of a claim **The accountant's job is to help prepare claims information. Their fees are covered if the insured has purchased coverage for professional fees as part of their business interruption coverage.

Question 186

When advising clients on Business Interruption insurance, which of the following statements is not true? A. Indirect losses such as a loss to a major supplier that causes them to not be able to supply you with a critical component or the loss to a major customer who purchases your products cannot be insured against B. The insured should choose an indemnity period long enough to allow their operations to recover from a loss C. An interruption of public utilities could also trigger an insurable business interruption claim D. Physical damage to the insured's neighbour could result in a business interruption loss

Answer 186

A. Indirect losses such as a loss to a major supplier that causes them to not be able to supply you with a critical component or the loss to a major customer who purchases your products cannot be insured against **You can insure it by purchasing Contingent Business Interruption for contributing properties

Question 187

Business interruption policies insure… A. Actual losses sustained B. Additional operating expenses and lost net profits C. Neither A nor B D. Both A & B

Answer 187

D. Both A & B

Question 188

Which of the following is not an example of a business interruption coverage? A. Gross Earnings Form B. Lost Income Form C. Rental Value Endorsement D. Extra Expenses Endorsement

Answer 188

B. Lost Income Form **The other business interruption form not mentioned here is the Profits Form (one of the primary business interruption policies)

Question 189

Which of the following business interruption coverages will offer coverage for extra expenses required to maintain normal business? A. Gross Earnings Form B. Profits Form C. Extra Expenses Endorsement D. All of the above

Answer 189

D. All of the above All of them will if it saves the insurer money overall. But only the Extra Expenses Endorsement will pay regardless of whether it reduces the overall cost of the claim for the insurer.

Question 190

Which Business interruption forms will offer coverage until the insured's income is restored to pre-loss levels

Answer 190

Profits Form.

Question 191

Which of the following Business interruption coverages will not offer full coverage unless the insured repairs the property with due diligence & dispatch? A. Gross Earnings Form B. Profits Form C. Extra Expense Endorsement D. Rental Income Endorsement

Answer 191

A. Gross Earnings Form

Question 192

The Rental Income Endorsement will only pay the fair rental value of rented units. True or False?

Answer 192

B - False The endorsement will also pay for owner-occupied portions and unoccupied portions

Question 193

The business interruption insurance policy only covers perils also insured by the underlying commercial property policy. True or False?

Answer 193

True

Question 194

When it comes to Business Interruption policies, which of the following statements is not true? A. The indemnity period of the business interruption policy follows the commercial property policy B. On top of the lost income, it would also pay for any expenses like overtime pay, the rental of alternate equipment or premises if it reduces the overall cost of the claim C. Business interruptions while access to the insured's premises is denied is covered D. Business interruption policies require the property be repaired with due diligence and dispatch

Answer 194

A. Indemnity period for biz int is separate from the commercial property policy. It can extend beyond policy expiry (i.e. ends when property or income has been restored).

Question 195

When it comes to insuring payroll in Business Interruption policies, which of the following statements is not true? A. Ordinary Payroll means wages for non-key employees B. The calculation for Gross Earnings Form and Profits Form limits both include the same amount for Ordinary Payroll. C. The gross earnings form comes with the option to insure ordinary payroll for 90 days D. An insured might want to keep key staff or skilled workers on the payroll during an interruption because it might be difficult to hire them back

Answer 195

B. The calculation for Gross Earnings Form and Profits Form limits both include the same amount for Ordinary Payroll. ***Under the definition of Gross Earnings (Gross Earnings = net sales + other earnings – costs of goods sold – supplies consumed in sales – outside services purchased for resale), you can see that Gross Earnings still includes Ordinary Payroll - it hasn't been subtracted. BUT... the definition of Gross Profits is = net profits + insured standing charges (aka charges that continue during interruption). Ordinary Payroll, by definition, would not continue during a business interruption and would therefore not be factored into the Profits Form calculation. In reality though, insurers only pay for continuing expenses so even though the Gross Earnings form limit calculation includes Ordinary Payroll, it wouldn't be paid by the insured so there is not practical difference between the amounts provided by the Profits and Earnings Forms in this sense.

Question 196

Your client Debbie has purchased business interruption insurance for her nightclub. Because of a fire at the club, Debbie gets her liquor license suspended causing her to lose additional income pending reapplication. Is this loss covered?

Answer 196

Not Covered Loss of license is not covered without an endorsement

Question 197

Your client Michelle has purchased business interruption coverage for her business manufacturing small rubber gaskets. As a result of a fire damaging her factory, she can no longer fill customer orders. One large customer cancels a $50,000 order as a result. Is this loss covered?

Answer 197

Not Covered Loss of order is not covered without an endorsement

Question 198

Your client Giles has purchased business interruption coverage for his business building prefab homes for people. As a result of an insured peril damaging his factory, he can no longer fulfill his contractual obligation to a customer and receives a penalty under said contract. Is this loss covered?

Answer 198

Covered Penalties for meeting to meet contractual obligations due to an insured business interruption is covered

Question 199

Business interruptions made longer due to strikers creating a longer rebuild time can be insured. True or False?

Answer 199

False By-law coverage for delays extended due to by-laws can be added via endorsement. Strikes however, cannot be insured - there is no endorsement for it.

Question 200

Of the following losses, contingent Business Interruption policies do not insure… A. Interruptions caused by damage to other people's property B. When access is prohibited by a civil authority C. Interruptions caused by direct physical damage to a utility D. All of the above can be insured by contingent business interruption policy(s)

Answer 200

D. All of the above can be insured by contingent business interruption policy(s)

Question 201

Which of the following characteristics are appealing to would-be theives? A. Convertibility B. Valuable C. Portability D. All of the above

Answer 201

D - All of the above

Question 202

Different methods of protection can be used to reduce the frequency or severity of crime losses. Which of the following best describes the method of using bars, vaults and locked doors? A. Physical Protection B. Electronic Protection C. Monitoring D. Tangible Protection

Answer 202

A - Physical Protection

Question 203

Considering the common conditions of crime insurance policies, which of the following statements is not true? A. Cancellations by the insurer must be accompanied by 7 days notice for non-payment and 30 days notice if cancelling for other reasons B. The Change of Interest clause prevents the insurance from transferring to a new owner without the insurers consent. But transfers to legal representatives due to death of bankruptcy are allowed C. The Canadian Currency Clause requires that all losses be paid in Canadian Dollars D. Any changes made to the policy are only valid with an endorsement

Answer 203

A. Cancellations by the insurer must be accompanied by 7 days notice for non-payment and 30 days notice if cancelling for other reasons ***It's 15 days for non-payment, 30 otherwise

Question 204

Considering the common conditions of crime insurance policies, which of the following statements is not true? A. The insured has up to 2 years after policy expiry to make a claim under that policy for a loss that occurred during that policy period. B. If the insured's previous insurance policy was similar to the current one, the current policy will pay for losses denied by his previous policy simply due to being over the allowed discovery period C. The insurer can inspect the insured's premises at any reasonable time D. In the event of a loss, insureds are required to notify the insurer upon discovery and provide a Proof of Loss within 120 days

Answer 204

A. The insured has up to 2 years after policy expiry to make a claim under that policy for a loss that occurred during that policy period. ***The discovery period is 1 year

Question 205

Considering the common conditions of crime insurance policies, which of the following statements is not true? A. Coverage is only available in Canada or the US B. Records are needed to prove claims C. Losses to property insured under crime policies are settled on a Replacement Cost basis D. Stolen securities are insured for the value they held on the close of business of the day prior to loss. The insured can purchase a Securities Bond for replacement cost coverage

Answer 205

C. Losses to property insured under crime policies are settled on a Replacement Cost basis ***Valuations for property are done on an ACV basis

Question 206

A custodian is anyone authorized to have custody of the insured property. Including the insured themselves, partners, employees, security guards, janitors or porters. True or False?

Answer 206

False - Security guards, janitors or porters don't count

Question 207

Which of the following types of property are not fully covered by your base crime policies? A. Jewellery, money & securities B. Property on the insured premises is covered C. Property off premises D. Losses not caused by employees, the insured or partners

Answer 207

C. Property off premises ***Coverage for property off premises is very strictly controlled

Question 208

The unlawful taking of property with evidence of forced entry or exit is best described as… A. A Burglary B. A Robbery C. A Theft D. Kidnapping

Answer 208

A. A burglary

Question 209

The wrongful taking of property using force or fear is called…

Answer 209

A Robbery

Question 210

All means of taking without the owners consent is best described as…

Answer 210

Theft

Question 211

Violently compelling a custodian to help you gain access into a closed premises is called…

Answer 211

Kidnapping

Question 212

Some crime insurance policies are really just a collection of different crime insurance riders. Which of the following is not an example of one such rider? A. Stock & Equipment Burglary B. Safe Burglary C. Inside Robbery D. Kidnapping

Answer 212

D. Kidnapping

Question 213

Some crime insurance policies are really just a collection of different crime insurance riders. Which of the following is not an example of one such rider? A. Damage to building due to burglary or robbery B. Outside Robbery C. Employee ransom insurance D. 3D policy

Answer 213

C. Employee ransom insurance

Question 214

When it comes to Stock and Equipment Burglary insurance, which of the following losses is not covered? A. Damaged caused by actual or attempted burglary B. Stock or equipment stolen while the insured's shop is open for business C. Robbery of a security guard D. Vandalism occurring during a burglary

Answer 214

B. Stock or equipment stolen while the insured's shop is open for business This coverage only kicks in when the premises is closed or at all times if your property is in a display window that opens outwards. And robbery of a watchman is covered here unless it's done by an insured or his/her partner

Question 215

Even though Stock & Equipment burglary only provides coverage while the premises is closed, damage to property burgled from a window display not opening inwards is covered at all times. True or False?

Answer 215

True

Question 216

Your client Sandra has purchased a safe burglary policy for her jewelry business. Which of the following statements is not true? A. This policy covers the taking of property from any safe described on the policy (including theft of the safe altogether) B. For coverage to kick in, there must be evidence of forced entry C. Coverage is restricted to the safe described on the policy D. The insured has 3 options on what to insure: money, securities & property, securities only or stock only

Answer 216

A. This policy covers the taking of property from any safe described on the policy (including theft of the safe altogether) ***This policy covers the taking of property from any safe described on the policy (including theft of the safe altogether)

Question 217

Safe Burglary coverage also insured the theft of the entire safe. In that case, the insurer won't provide coverage until they have recovered the safe and were able to verify that signs of force were used to enter the safe and that the taking of the safe was done with the intention of entering it to steal what's inside.

Answer 217

False - The insurer will look at other evidence to determine whether the removal was part of an access attempt.

Question 218

Under the Safe Burglary coverage, which of the following safes would lead to the cheapest insurance? All things being equal. A. Class 5 B. Class 3 C. Class 2 D. Class 1

Answer 218

D. Class 1 Safes are rated 1-5 (best to worst) based on thickness and resistance

Question 219

Your client Bobby purchased an inside/outside robbery policy. Robbery insured by this policy means… A. Threatened or actual harm to a custodian B. Unlawful acts witnessed by a custodian C. Taking of property from a dead or unconscious custodian D. All of the above

Answer 219

D. All of the above

Question 220

Your client Bobby purchased an inside/outside robbery policy. Which of the following statements is not true? A. The insured can choose between the same 3 coverage options as Safe Burglary B. The limits are the same for both inside and outside robbery C. The inside robbery coverage insures robbery of a custodian while on premises D. The inside robbery coverage insures "kidnapping" as defined using the insurance terminology

Answer 220

B. The limits are the same for both inside and outside robbery **The limits are different. The insured can even choose different limits for different days of the week!

Question 221

Your client Bobby purchased an inside/outside robbery policy. Which of the following statements is not true? A. The outside robbery coverage insures robbery of insured property while the custodian is away from the premises on business B. Theft from a custodian's home is insured for the lesser of the limit or $500 C. Theft from a night safe is excluded as it's covered under safe burglary coverage D. Damage to glass during a robbery is excluded

Answer 221

C. Theft from a night safe is excluded as it's covered under safe burglary coverage

Question 222

Your client Jonathan purchased Damage to Building Burglary or Robbery coverage. In that case, which of the following statements is not true? A. This coverage is necessary for building owners to insure against damage to their building due to crime losses B. This coverage insures building damage caused by burglary or robbery C. This coverage insures against building damage caused by mischief D. On top of your regular commercial property exclusions, damage to glass and its decorations are excluded

Answer 222

A. This coverage is necessary for building owners to insure against damage to their building due to crime losses. ***Your commercial property building coverage already covers this. This is really meant for tenants that might be liable for building damage (i.e. due to the terms of their lease agreement)

Question 223

The 3D policy stands for comprehensive dishonesty, disappearance and destruction. It's the most complete crime insurance policy available. There are many coverage options to choose from. Which of the following is not one of those options A. Employee dishonesty B. Loss inside/outside C. Counterfeit money order/papers or depositor's forgery D. All of the above are valid options

Answer 223

D. All of the above are valid options

Question 224

Which 3D policy employee dishonesty form covers all employees? A. Form A B. Form B C. Form A - Broad Form D. Form B - Broad Form

Answer 224

Form A A for all

Question 225

Which 3D policy form only covers employees listed by the insured and can cover employees for different limits? A. Form A B. Form B C. Form A Scheduled D. Form B Scheduled

Answer 225

B. Form B

Question 226

An employee is someone who's working for, paid & governed by the insured. This includes directors and trustees of the company. True or False?

Answer 226

False - Contractors, directors & trustees are excluded since they're not truly "governed" by the insured (the company).

Question 227

When it comes to the 3D policy, which of the following statements is not true? A. Coverage is cancelled for an employee who has committed a prior fraud B. The definition of money in the 3D policy includes currency, bullion, travellers cheques, registered cheques, and money orders C. Securities are instruments representing money or other property D. Securities include stocks and bonds but do not include stamps or tokens

Answer 227

D. Securities include stocks and bonds but do not include stamps or tokens ***If you think of securities as something that represents something else, you can see that stamps and tokens represent a right to do something. For example, an arcade game token represents the right to play that game for X amount of time.

Question 228

Thinking about the Employee Dishonesty section of the 3D policy, if your client purchased the Form A - Commercial Blanket Bond, which of the following statements is false? A. The Form A - Commercial blanket bond insures all employees B. You have up to 2 years after policy expiry to discover and claim a loss under this policy C. The limit purchased is the maximum amount payable regardless of the number of employees involved so you should buy a limit equal to the maximum threat you face D. New employees joining the company through merger are automatically covered for 30 days

Answer 228

B. 2 years With Form A, you only have 1 year

Question 229

Thinking about the Employee Dishonesty section of the 3D policy, if your client purchased the Form B - Blanket Position Bond, which of the following statements is false? A. Form B is more flexible because you can choose which positions you want to insure and for how much B. Employees with more access to money should have a higher limit C. The advantage of Form B is that limits can stack in a multi-employee fraud D. The Discovery Period for Form B losses is 1 yr

Answer 229

D. The Discovery Period for Form B losses is 1 yr Form B discovery period is 2 years

Question 230

Your client Rob purchased a Form B - Blanket Position Bond. He has 6 employees insured at $5000 each. This week, he found out that they had gotten together and stolen $25,000 worth of property. One employee was responsible for stealing $10,000 worth of property with the rest stealing an equal amount. How much would Rob get in indemnity from the insurer? A. $20,000 B. $25,000 C. $30,000 D. $35,000

Answer 230

A - $20,000 One employee stole $10,000 but he's only insured for $5000. The rest of the loss ($15,000) is evenly attributed to the remaining 5 employees (since they were determined to have contributed equally to the loss) so $3,000 each. The insurer will pay $5,000 + $3,000 x 5 = $20,000

Question 231

Loss inside the premises can be purchased either as part of the 3D policy or as a commercial crime rider. All of the following losses are covered except one. A. Loss of money and securities by destruction, disappearance or wrongful abstraction while at a bank B. Theft related damage to the building the tenant is renting C. Safe burglary or robbery of other property D. All of the above are covered

Answer 231

B. Theft related damage to the building the tenant is renting ***It would only be covered if the tenant is liable (i.e. according to their lease agreement)

Question 232

If the insured purchases the Loss Outside the Premises option of the 3D policy, which of the following statements is not true? A. Coverage for Losses Outside the premises insures property while it's in the custody of the insured or a custodian B. Loss of money and securities is covered while being transported by a messenger C. This insurance pays in excess of any other compensation provided by the messenger D. There is no coverage for property left at a custodian's home

Answer 232

D. There is no coverage for property left at a custodian's home ***FALSE - The living quarters of a messenger is insured.

Question 233

The Counterfeit Money Orders & Currency coverage insures any counterfeit currency or money orders not honoured upon presentation to a financial institution. True or False?

Answer 233

FALSE - It only covers Canadian or US dollars, not ANY currency

Question 234

The Counterfeit Currency coverage will not cover Canadian currency that you've accepted with the suspicion that it was counterfeit. True or False?

Answer 234

True - It only covers Canadian or US dollars accepted in good faith. Obviously you can't knowingly accept counterfeit money and then claim that as a loss with your insurance company.

Question 235

When it comes to Depositor's Forgery coverage, which of the following statements is not true? A. This gives you coverage when someone forges your cheques or purports to be you in signing cheques B. The limit of insurance you should purchase should be similar to your counterfeit money orders & money coverage C. This insurance covers forgery of cheques, drafts, or written promises D. This insurance would cover payroll cheques that have been endorsed to someone else without authorization

Answer 235

B. The limit of insurance you should purchase should be similar to your counterfeit money orders & money coverage **FALSE: You should purchase the same limit as your Employee Dishonesty coverage

Question 236

Of the various miscellaneous forms available, which Fees pay for a qualified person to produce certifying particulars for the insured?

Answer 236

Auditor's Fees

Question 237

Of the various miscellaneous forms available, which Fees pay for someone to prepare claims information after a business interruption loss?

Answer 237

Professional Fees

Question 238

Subscription policies are ones where the one risk is split up between different insurance brokers. True or False?

Answer 238

False - It's one where a group of insurers provide insurance together - they each "subscribe" to a % of the risk. It's an alternative to reinsurance.

Question 239

A subscription policy is a complicated affair where the broker must negotiate insurance separately with each insurer - even though they will all follow the lead insurer's wordings and rates (since they provide all the policy service). Given the complexity, when would a broker choose to use a subscription policy? A. When the insurer doesn't want to expose his reinsurers to a risk B. This is specialized business not covered by a reinsurance treaty C. The aggregate claim size is too big for one insurer to handle D. All of the above

Answer 239

D. All of the above

Question 240

Manuscript policies are policies a broker custom makes to tailor insurance for the insured's non-standard risks. True or False?

Answer 240

True