Client Advisory Services Flashcards
7 cards from real CIA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Client Advisory Services flashcards as text
When advising a commercial client on business interruption coverage, the MOST important factor to establish is:
Answer: The projected net income and continuing fixed expenses that would be lost during a restoration period
Business interruption coverage is designed to replace lost net income and pay continuing fixed expenses during the period of restoration, so accurate income projections are critical.
A client owns several high-value watches collectively worth $40,000. Their homeowners policy has a $2,500 sublimit for jewelry and watches. The BEST advisory action is to recommend:
Answer: Schedule the items on a personal articles floater or inland marine policy for their full appraised value
A scheduled personal articles floater provides agreed value coverage for each item with no deductible and no sublimit, eliminating the gap left by standard homeowners sublimits.
Ordinance or law coverage is MOST critical to recommend when a building:
Answer: Is older and would require code-mandated upgrades to the undamaged portion if partially destroyed
Older buildings often must be brought up to current code during repair, and ordinance or law coverage pays for the increased construction costs that standard property policies exclude.
Functional replacement cost valuation is MOST appropriate for advising clients who own:
Answer: Older or historic structures where modern materials can replicate function at a lower cost than original methods
Functional replacement cost accounts for replacing an older structure with modern, functionally equivalent materials that cost less than replicating the original construction methods exactly.
Extra expense coverage under a commercial property policy is designed to pay for costs that:
Answer: Allow a business to continue or expedite resumption of operations following a covered loss
Extra expense coverage pays costs beyond normal operating expenses that help the business continue functioning or speed its return to normal after a covered loss.
A client with a fine art collection wants coverage that guarantees payment of a predetermined amount per piece without depreciation disputes. The MOST appropriate coverage is:
Answer: A scheduled fine arts floater with agreed value per item
A scheduled fine arts floater with agreed value establishes the settlement amount in advance, eliminating disputes over depreciation or condition at the time of loss.
When advising a client about building code upgrade coverage limits, an appraiser should base the recommended limit on:
Answer: An analysis of the building's age, code deficiencies, and estimated cost to bring the entire structure into compliance
The appropriate ordinance or law limit depends on the specific age, construction type, and code gaps of the building rather than a generic percentage.