1. A fire occurs which destroys a factory. While it will take several weeks to repair the factory to the point where operations can begin again, management must still pay its union workers during the period of suspension. In this case, the payroll associated with union workers is an example of a(n):

   		non-continuing expense
   		extra expense
   		continuing expense
   		statutory expense
   		objective expense

1 points

QUESTION 2

1. True or False: Interest expense associated with outstanding debt is usually going to be a continuing expense following a loss which causes a business to suspend its operations.

   		True
   		False

1 points

QUESTION 3

1. A business experiences a covered loss to its building. Because of the damage to the building, the business is unable to operate for one month. Using the terminology used in class, the loss of income over the one month period when the firm cannot operate is an example of a(n):

   		indirect loss
   		subservient loss
   		direct loss
   		injunctive loss
   		subragatory loss

1 points

QUESTION 4

1. A business experienced a covered loss that caused it to suspend its operations for six months. If a loss had not occurred, the business would have expected revenues of $500,000 and expected expenses of $200,000 during that period of time. However, because operations were suspended due to the loss, actual revenues were only $50,000 and expenses were $100,000. Given this information, what is the loss in net income during the six month period?

   		$450,000
   		$350,000
   		$550,000
   		$300,000
   		$50,000

1 points

QUESTION 5

1. A company calculated its coinsurance basis as $750,000 and its estimated maximum loss (EML) as $990,000. Based on this information, what limit should the business select for its business income insurance policy?

   		$750,000
   		$937,500
   		$975,000
   		$1,237,500
   		$990,000

1 points

QUESTION 6

1. True or False: In general, it is easier to identify and manage direct property loss exposures at an insured's own premises than it is to identify and manage direct property loss exposures away from an insured's own premises.

   		True
   		False

1 points

QUESTION 7

1. A company calculated its coinsurance basis as $750,000 and its estimated maximum loss (EML) as $490,000. Based on this information, what coinsurance percentage should the business select for its business income insurance policy?

   		60%
   		50%
   		80%
   		125%
   		70%

1 points

QUESTION 8

1. Expenses which are incurred to mitigate the effects of business interruption are most commonly referred to as:

   		non-continuing expenses
   		redundant expenses
   		continuing expenses
   		extra expenses

1 points

QUESTION 9

1. XYZ Co. relies heavily on a supplier to provide them with all of the lumber necessary to make their furniture. Unfortunately, the key supplier experiences a loss which does not allow them to distribute lumber for several months. Because of this loss to the supplier, XYZ Co. is unable to make their furniture and thus experiences a decline in revenues. From the perspective of XYZ Co. (and using the terminology used in this course), this is an example of a(n) ___________ business income exposure.

   		contingent
   		secondary
   		extraordinary
   		ordinary
   		unobservable

1 points

QUESTION 10

1. A company has a coinsurance basis of $400,000 and a coinsurance percentage of 50%. If the company has a business income insurance policy with a $150,000 limit and they experience a covered loss which results in an $80,000 reduction in net income, how much will the insured's policy pay?

   		$40,000
   		$80,000
   		$60,000
   		Nothing - a business income insurance policy will not pay for a loss if the coinsurance requirement is not met.
   		$75,000