Condominium Insurance Coverage, Exams of Economics

Download Condominium Insurance Coverage and more Exams Economics in PDF only on Docsity! CPCU 551 Chapter 5 Exam2 Questions with Answers- Guaranteed Success 1. A condominium association agreement - Correct Answer C. Clarifies the rights and responsibilities of unit owners and the association. 2. Which one of the following describes an aspect of a planned unit development? - Correct Answer B. The occupant has exclusive ownership of his unit. 3. Condominium unit owners may wish to limit the insurance coverage on their units - Correct Answer D. To avoid duplicating coverage maintained by the association. 4. The Business Park Condominium Association is insured under the Condominium Association Coverage Form and follows the single entity concept. Which one of the following losses would be covered under this form? - Correct Answer D. The club house of the condominium association is vandalized, resulting in extensive damage to its furniture. 5. One way in which the Condominium Association Coverage Form conditions are different from the Building and Personal Property Coverage Form conditions is which of these? - Correct Answer B. The Loss Payment condition states that if the association has designated an insurance trustee, then the insurer may pay claims to the trustee. 6. The Condominium Association Coverage Form is designed for insuring - Correct Answer C. Appliances, such as dishwashers, under the building coverage. 7. Which one of the following statements is true regarding the Condominium Additional Provisions Endorsement (CP 01 07)? - Correct Answer D. The endorsement requires the insurer to give at least thirty days' written notice of policy nonrenewal to the first named insured 8. Cromely and Company is purchasing a commercial condominium unit that it will occupy. Cromely wants to insure its business personal property along with any improvements that it makes to the unit. Which one of the following forms would meet its needs? - Correct Answer C. Condominium Commercial Unit-Owners Coverage Form 9. A situation that suggests a need for optional miscellaneous real property coverage is - Correct Answer D. A patio with a grill, table, and benches that was built by a unit owner and is only used to entertain the unit owner's business clients. 10.One purpose of the miscellaneous real property coverage which can be added to the Condominium Commercial Unit-Owners Coverage Form is to insure - Correct Answer D. Condominium property that the named insured has a duty to insure, such as a storage building. 11.What two additional coverages are in the Building and Personal Property Coverage Form but not the Builders Risk Coverage Form? - Correct Answer D. Increased cost of construction and electronic data 12.A warehouse under construction is insured by its owner under an unendorsed ISO Builders Risk Coverage Form with the Causes of Loss—Special Form. Which one of the following losses would be covered under this policy? - Correct Answer C. Over the weekend, the contents and several walls of the warehouse building were spray painted by vandals. 13.The Builders Risk Coverage Form is designed to - Correct Answer D. Be issued at policy inception in an amount of insurance equal to the building's completed value. 14.The Property Not Covered section of the Builders Risk Coverage Form applies to what? - Correct Answer A. Signs not attached to the building 15.Both the Standard Property Policy (SPP) and the Building and Personal Property Coverage Form (BPP) with a Basic Form - Correct Answer C. Can exclude the perils of windstorm and hail. 16.A retail store is insured for building and business personal property under the Standard Property Policy (SPP). Only the basic mandatory causes of loss are included in the policy. Which one of the following losses would be covered under this form? - Correct Answer D. Lightning struck the building causing severe damage to the building and the inventory inside the building. 17.Comparing vandalism coverage of the Standard Property Policy (SPP) with the Building and Personal Property Coverage Form, also referred to as the BPP, there is no vandalism coverage for buildings vacant after how many days for each policy? - Correct Answer B. 30 days for SPP and 60 days for BPP 18.The Standard Property Policy (SPP) could potentially provide coverage that would be denied by the Building and Personal Property Coverage Form, also referred to as the BPP, if a building's occupancy is what percent? - Correct Answer A. Under 31% 19.When using the Legal Liability Coverage Form, what should be considered when determining the appropriate limit of insurance? - Correct Answer D. The 35.The Condominium Association Coverage Form does not cover which of the following? - Correct Answer D. Business personal property that is individually owned by a unit owner 36.The ISO Condominium Commercial Unit-Owners Coverage Form - Correct Answer D. Contains an exclusion that coordinates the unit owner's coverage with the condominium association's coverage. 37.Unless the insurer agrees otherwise, coverage under the Builders Risk Coverage Form ceases how many days after an insured building is occupied? - Correct Answer C. 60 38.Buildings under construction present unique exposures, such as the increased likelihood that what two perils will occur? - Correct Answer A. Theft and fire 39.Buildings under construction have different exposures than completed buildings. One example of a difference is - Correct Answer C. Increased susceptibility to fire hazards, as fire protection is not fully installed. 40.Property covered under the unendorsed ISO Builders Risk Coverage Form includes - Correct Answer C. Building materials and supplies intended to become a permanent part of the building. 41.A small retail chain needs building and personal property coverage for a warehouse it recently acquired. It has long term plans to rebuild the structure due to its distressed construction and lack of public water supply. In the interim, the chain's best option is to purchase a - Correct Answer A. Standard Property Policy (SPP) to cover the warehouse. 42.An important feature of the Standard Property Policy (SPP) is - Correct Answer B. The flexibility of being able to limit the perils covered. 43.Comparing the Standard Property Policy (SPP) with the Building and Personal Property Coverage Form, also referred to as the BPP, which coverage form permits unlimited unoccupancy? - Correct Answer B. The SPP does not, and the BPP does. 44.How does the Standard Property Policy (SPP) compare with the Building and Personal Property Coverage Form, also referred to as the BPP, in terms of flexibility in limiting coverage? - Correct Answer C. The SPP underwriter has more flexibility than the BPP underwriter. 45.The Commercial General Liability (CGL) Coverage Form provides "fire legal liability" or "damage to premises rented to you". The "fire legal liability" coverage - Correct Answer D. Provides limited coverage for liability arising out of part of the building rented to the insured. 46.When comparing coverage of the Commercial General Liability Coverage Form with the Legal Liability Coverage Form, what difference becomes apparent? - Correct Answer A. The minimum limit for fire legal liability coverage of $100,000 applies to the Commercial General Liability Coverage Form only. 47.Which one of the following statements is true regarding the Legal Liability Coverage Form? - Correct Answer A. Compared to commercial general liability coverage, this form can provide a broader range of coverage when a property is rented for longer than seven consecutive days. 48.The rate charged for the Legal Liability Coverage Form is what when compared to the usual commercial property contents or building rate? - Correct Answer A. Lower 49.Leasehold interest insurance is seldom purchased since - Correct Answer A. Tenants may choose to self insure or retain the risk since it is a small exposure. 50.Which of the following is the amount of leasehold interest coverage each month during the life of the lease? - Correct Answer C. Automatically reduced 51.Kurt is having a farm built by a privately hired contractor. If Kurt wants to be sure that his farmhouse is insured for covered perils while it is being constructed, Kurt should purchase a - Correct Answer A. Builders Risk Coverage Form. 52.Sunny Day Condominiums is a housing complex that offers residents luxuries such as a pool, sauna, and tennis courts. These amenities are not owned by any one resident, but by Sunny Day Condominiums as a whole. If Sunny Day wanted to be sure that a loss to the sauna was covered by an insurance policy, Sunny Day Condominiums should purchase a - Correct Answer A. Condominium Association Coverage Form. 53.A sewing and alterations company rented a new building unit to expand its business to a second location. The company is using the second location to specialize in bridal gown alterations. The company has hired a general contractor to construct the interior design to mirror the layout of the original unit. New flooring, lighting, and wall fixtures are being installed in the unit. The company is able to remain open and operational during the unit upgrade. Upon returning to the unit one morning, the insured discovered that the unit has been vandalized overnight. Several wedding gowns awaiting alterations have been destroyed and the new fixtures had been broken or dismantled. Commercial property coverage forms that would best provide coverage for this loss include the - Correct Answer A. Legal Liability Coverage Form and the Builders Risk Coverage Form. 54. Coolstone Tires suffers a fire at its warehouse. One of Coolstone's managers asks a manager at Sierra Autos if Coolstone can store some of their inventory in Sierra's warehouse until their own warehouse is rebuilt. Because the two companies have had a good working relationship in the past, the manager at Sierra's warehouse agrees. Before this happens, however, the manager at Sierra wishes to purchase a Legal Liability Coverage Form. Which one of the following statements is true with regards to the Legal Liability Coverage Form Sierra is seeking to buy? - Correct Answer C. The rate for the form will be lower than the typical rates for direct property insurance.