150 questions · 180 min · 70% to pass
Question 1
Who has insurable interest in a building under construction?
Answer: Owner, contractor, and lender
Question 2
What is the key feature of inland marine insurance?
Answer: Covers mobile or in-transit property
Question 3
How does EDP coverage address the cost of recreating or restoring lost data?
Answer: EDP policies typically include coverage for the cost of reconstructing or restoring data that is lost or corrupted due to a covered peril, including the labor costs to re-enter information or recreate programs. However, coverage is generally limited to the cost of reproduction from backup sources, not the inherent business value of the data.
Question 4
What is a 'reporting form' in the context of an inland marine policy, and what penalty applies for under-reporting?
Answer: A reporting form inland marine policy requires the insured to periodically report property values to the insurer, and premium is adjusted based on those reports. If the insured under-reports values and a loss occurs, the insurer will reduce the claim payment proportionally, paying only the fraction of the loss that the reported value bears to the actual value.
Question 5
What is the 'reporting form' method of insuring under a builders risk policy?
Answer: Under a reporting form builders risk policy, the insured periodically reports the current value of property under construction to the insurer and pays premium based on those reported values. This method is useful for contractors with multiple simultaneous projects or projects where values change rapidly during construction.
Question 6
What are the four broad categories of risks typically classified under the Nation-wide Marine Definition?
Answer: The four broad categories are: imports, exports, domestic shipments, and instrumentalities of transportation and communication (such as bridges, tunnels, and pipelines). Personal property floaters and commercial property floaters are also recognized as qualifying inland marine risks.
Question 7
What does builders risk insurance cover?
Answer: Buildings under construction
Question 8
What does accounts receivable coverage pay for?
Answer: Uncollectable customer debts
Question 9
How does a 'floater' policy function within the inland marine insurance framework?
Answer: A floater policy provides coverage that follows the insured property wherever it goes, rather than covering property at a single fixed location. This makes floaters ideal for mobile equipment, personal property, and goods that regularly move between multiple locations.
Question 10
Why is carrier's liability often insufficient to fully compensate a shipper for a cargo loss?
Answer: Common carriers' liability is typically limited by tariff provisions, federal regulations, or bill of lading terms that cap recovery at a fraction of the cargo's actual value, often based on weight rather than worth. A shipper who relies solely on the carrier's liability may recover far less than the actual replacement cost of damaged or lost goods.