BCP Property & Casualty Insurance 2

Question 1

What is 'business interruption' insurance designed to compensate?

Accepted Answer

Loss of gross profit and additional expenses following insured physical damage

Answer

Business interruption insurance compensates for loss of gross profit (revenue less variable costs) and increased cost of working following an insured physical damage event that interrupts the business.

Question 2

In marine cargo insurance, what does 'Institute Cargo Clauses (A)' provide?

Accepted Answer

All risks coverage subject to exclusions

Answer

Institute Cargo Clauses (A) provide the broadest 'all risks' coverage for marine cargo, covering all risks of loss or damage except those specifically excluded, such as inherent vice and delay.

Question 3

What is 'product liability insurance' designed to protect against?

Accepted Answer

Legal liability for injury or damage caused by defective products sold or supplied

Answer

Product liability insurance protects manufacturers, distributors, and retailers against legal liability for bodily injury or property damage caused by defective products they have sold or supplied.

Question 4

What does 'subrogation waiver' mean in an insurance policy context?

Accepted Answer

The insurer agrees not to pursue recovery against a specified third party after paying a claim

Answer

A subrogation waiver means the insurer agrees to waive its right of subrogation against a specified third party, often used in construction contracts to prevent one contractor's insurer from suing another.

Question 5

What is 'consequential loss' in property insurance?

Accepted Answer

Financial losses that are a consequence of physical damage, such as lost profits

Answer

Consequential loss refers to indirect financial losses that follow from physical damage — such as lost profits, ongoing expenses during repair, or loss of rental income — as distinct from the direct physical damage itself.

BCP Insurance Practice Test

BCP Insurance Practice Test

BCP Property & Casualty Insurance 2