Chapter 11 Property and Business Income Insurance Flashcards Preview

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Flashcards in Chapter 11 Property and Business Income Insurance Deck (23)
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1

What kind of insurance policy covers several buildings under the same policy?

Blanket insurance

2

What is the preferred valuation method in most instances?

a. actual cash value
b. market value
c. utility value
d. replacement cost value

d. replacement cost value

3

Your company uses a small tractor to cut grass at several property sites. In transit, the landscape worker stops for lunch. When he returns to the truck, the tractor has been stolen. You will be fully covered if you have:

a. comprehensive coverage on the tractor
b. a transportation floater
c. an equipment floater
d. professional liability insurance

c. an equipment floater

4

There are many reasons for insurers not to cover certain properties. Which of the following is NOT a reason?

a. property is already covered through a different policy
b. property can only be leased by other companies
c. property is not subject to loss
d. property cannot legally be owned

b. property can only be leased by other companies

5

What provision do most property forms and loss-of-income forms have that ensures that buildings are insured to their proper value?

Coinsurance provisions. They penalize the policyholder after a loss if it has not purchased adequate insurance coverage for the true value of its property or loss of income

6

What is the replacement cost value of a building?

Replacement Cost Value-the actual cost necessary to replace a building after uninsured loss with a new property of like kind and quality

Actual Cash Value-replacement cost of the building minus a deduction for depreciation

7

What ten types of losses are typically excluded from the special form?

-enforcement of laws relating to building construction, demolition, repair, use or debris removal
-utility failure
-earth movement other than sinkhole collapse
-most pollutants
-water such as floods, overflow, backup of sewers or drains, mudslides, and water under the ground
-nuclear reaction, radiation, or contamination
-government action, such as a property seizure
-war or military action
-equipment breakdown, including steam boilers, pipes, engines, or turbine explosions, and mechanical breakdown
-losses due to employee dishonesty

8

Randy is searching to identify all causes of loss that are covered in his insurance policy, so he is looking to locate a specific form referred to as:

a. Causes of Loss-Basic Form
b. Causes of Loss-Special Form
c. Causes of Loss-Broad Form
d. Causes of Loss-General Form

b. Causes of Loss-Special Form

9

__________ covers situations where a computer is used to cause loss through transfers from inside the business premises.

a. Computer and fraud insurance
b. Funds transfer fraud insurance
c. Fund loss insurance
d. Hacking insurance

a. Computer and fraud insurance

10

What is generally true of equipment breakdown insurance?

Provides property insurance for the damage that results from the breakdown of covered equipment

11

What type of insurance protects a building owner from vandalism during construction?

vacant building insurance

also covers:
-sprinkler leakage
-building glass breakage
-water damage
-theft
-attempted theft

12

What are the two types of coverage provided by computer fraud and funds transfer fraud insurance?

computer fraud insurance-covers situations in which a computer is used to cause loss or damage to money, securities, or other property by fraudulently causing the transfer of that property from inside the business premises to a person or place outside the premises

funds transfer insurance-pays for the loss of money or securities from a fraudulent instruction directing a financial institution to transfer or pay funds from a transfer account.

13

To cover damage or theft loss of construction equipment that is often moved from one location to another, Mr. O'Malley added ________ insurance to his insurance policy.

a. computer
b. equipment
c. vacant building
d. sign

b. equipment

14

The Cause of Loss form that covers all causes of loss in a property policy except those specifically excluded is called the:

a. specified peril form
b. special form
c. basic form
d. broad form

b. special form.

15

what type of insurance protects against loss to buildings under construction?

a. builder's risk insurance
b. equipment breakdown insurance
c. building and personal property insurance
d. ordinance insurance

a. builder's risk insurance

16

What is business income insurance?

coverage for the loss of income a business suffers following covered damage to insured property. Also called "business interruption insurance" or "loss of income insurance"

17

What insurance covers damage to furniture, machinery, stock, equipment, and movable fixtures?

Equipment breakdown insurance

18

Which of the following type of equipment is NOT typically covered by equipment break-down insurance?

a. security systems
b. electrical equipment.
c. worn-out equipment
d. production equipment

c. worn-out equipment

19

For insurance, the loss-of-income coverage form combines both:

a. business interruption and loss-of-rents insurance
b. business interruption and personal property insurance
c. extra-expense and business personal property insurance
d. business personal property and loss-of-rents insurance

a. business interruption and loss-of-rents insurance

20

Business income insurance covers:

a. the loss of revenue from poor employee productivity
b. the loss of income from the loss of major accounts
c. the loss of income from direct physical damage to insured properties.
d. the loss of revenue from a declining reputation

c. the loss of income from direct physical damage to insured properties.

21

For blanket coverage to be written, an insurance company wants to know that the amount of coverage is accurate. To do this, an insured submits a(n):

a. replacement cost analysis
b. business property inventory
c. statement of value
d. affidavit of insurability

c. statement of value

22

Which property insurance form covers all causes of loss except those specifically excluded?

Causes of Loss-Special Form

23

What are the two types of coverage provided by computer fraud and funds transfer fraud insurance?

computer fraud insurance-covers situations in which a computer is used to cause loss or damage to money, securities, or other property by fraudulently causing the transfer of that property from inside the business premises to a person or place outside the premises