S-08- Loss of Profits Insurance Mock Test 20
MLOP insurance is suitable for businesses having multiple machines with similar specifications because the failure of one machine may still allow operations at reduced output. Business Interruption insurance may also include Prevention of Access cover when nearby fire or explosion prevents access to insured premises. Reinsurance strengthens insurers by increasing their capacity to accept larger volumes of risk and providing financial support during exceptional losses. Standing charges include various fixed business expenses. In ALOP/DSU insurance, Actually Attainable Gross Profit is determined after sufficient operating experience. Business environment and competition can significantly affect business performance, investors, pricing, customer loyalty, and market expectations.
1. Why is the MLOP policy particularly well-suited for businesses with multiple machines of the same specifications?
A) Because such businesses have higher premium discounts
B) Because machines with the same specifications always have identical outputs
C) There is a possibility that the insured may have more than one machine of same specifications which function independently. The likelihood of all machines failing in a single event is not very high, so if one is damaged, the insured may still carry out business with reduced output
D) Because the government mandates MLOP for multi-machine facilities
E) Because multi-machine facilities can self-insure the remaining machines
2. What years did Cuthbert Eden Heath live?
A) 1869-1955
B) 1880-1960
C) 1894-1966
D) 1900-1975
E) 1850-1930
3. What is the Prevention of Access extension in CL insurance?
A) Cover for loss when insured staff cannot report to work due to road closures
B) Cover for loss resulting from prevention of access to the insured's premises by reason of a fire or explosion at nearby premises, which does not actually damage the insured's premises
C) Cover when government authorities prevent public access to the business for health reasons
D) Cover when suppliers are unable to deliver goods due to transportation restrictions
E) Cover for loss when customers cannot access the business due to natural calamities
4. How many options are given for Wages (including Employees State Insurance Contributions) in the Standing Charges?
A) 2 options
B) 3 options
C) 4 options
D) 5 options
E) 6 options
5. What is the second benefit of reinsurance in terms of policy underwriting?
A) Reinsurance allows insurers to charge higher premiums
B) Reinsurance allows insurers to reject more applications
C) Reinsurance allows insurers to pay fewer claims
D) Through reinsurance insurers may underwrite policies covering a larger quantity or volume of risk without excessively raising administrative costs to cover their solvency margins - reinsurance also makes substantial liquid assets available to insurers in case of exceptional losses
E) Reinsurance allows insurers to reduce agent commissions
6. Which of the following items is listed as Standing Charge number 14?
A) Motor car expenses
B) Research and development expenses
C) Conveyance Stationery Postage Telephone expenses
D) Dividends on preference shares
E) Pensions
7. What do insurance companies look to achieve from total revenue earned through premiums?
A) Only earn maximum profits
B) Meet their claim liabilities and also meet their operative expenses from the total revenue earned by way of the premium
C) Only cover marketing costs
D) Only pay shareholder dividends
E) Only build financial reserves
8. Under Important Note 2, when can the Actually Attainable Gross Profit be established in ALOP/DSU insurance?
A) Immediately after the project suffers a delay
B) The Actually Attainable Gross Profit can be established only after the project has been in operation for at least 12 months. The final amount payable shall be calculated on completion of 12 months after the actual commencement date of business
C) At the time of the claim submission to the insurer
D) When the construction contract is signed
E) When the project receives regulatory approval for operation
9. Through which agent did AIG launch cyber insurance in 1997?
A) Cuthbert Heath
B) Ludovio MacLellan Mann
C) Dalton
D) Steve Haase
E) John Hay Lloyd
10. What negative effects can competition have if a business is not prepared for a competitive market?
A) It always leads to business growth
B) It reduces the need for innovation
C) The company may be negatively influenced due to scaring investors, market expectations increase, competitive price and customer disloyalty
D) It stabilizes market prices
E) It can only have positive effects
