RIMS Insurance Policies & Coverage Analysis 3

Question 1

A business interruption policy's 'period of restoration' typically ends when:

Accepted Answer

The damaged property is repaired or replaced with reasonable speed

Answer

The period of restoration concludes when the property could reasonably be repaired or rebuilt, using due diligence, regardless of actual resumption of operations.

Question 2

Under directors and officers (D&O) liability insurance, 'Side A' coverage is designed to protect:

Accepted Answer

Directors and officers directly when the company cannot or will not indemnify them

Answer

Side A coverage fills the gap by protecting individual directors and officers when corporate indemnification is unavailable, such as during insolvency.

Question 3

A 'blanket' property insurance policy differs from a 'specific' policy because it:

Accepted Answer

Applies a single limit across multiple locations or property types

Answer

A blanket policy provides one combined limit that can apply to any or all covered locations or property items, offering greater flexibility.

Question 4

In workers' compensation insurance, the 'experience modification factor' (EMR) reflects:

Accepted Answer

The insured's past loss experience relative to its industry peers

Answer

The EMR compares the insured's actual losses to expected losses for similar businesses, adjusting the premium up or down accordingly.

Question 5

Which provision in a property policy allows the insurer to take possession of damaged property and attempt to restore it rather than paying a total loss settlement?

Accepted Answer

Abandonment clause

Answer

The abandonment clause prevents the insured from simply abandoning damaged property to the insurer; the insurer may choose whether to accept or refuse abandoned property.

(RIMS) Risk and Insurance Management Society Certification Practice Test

(RIMS) Risk and Insurance Management Society Certification Practice Test

RIMS Insurance Policies & Coverage Analysis 3