CPCU 551, Chapter 5 Exam: Insurance Questions and Answers, Exams of Commercial Law

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CPCU 551, CHAPTER 5 EXAM

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Condominium - ANSWERA real estate development consisting of a group of units in which the air space within the boundaries of each unit is owned by the unit owner and all remaining real and personal property is owned jointly by all unit owners Condominium unit - ANSWERThe portion of a condominium owned solely by a unit owner Condominium association - ANSWERAn entity composed of the unit owners in a condominium to manage the condominium and to own the common elements Common elements - ANSWERAreas of a condominium that are jointly owned by all unit owners, including the land on which the buildings are located Condominium association agreement - ANSWERA document that describes what each condominium unit owner has purchased and clarifies the rights and responsibilities of the unit owners and the association Bare walls concept - ANSWERA concept of condominium ownership in which the association has no ownership interest within the bare walls of each unit Single entity concept (original specification coverage) - ANSWERA concept of condominium ownership in which the association is considered to be the owner of all property contained in the unit as sold to the original purchaser or replacements of such property if the replacements are of like kind and quality All in concept (additional installation coverage) - ANSWERA concept of condominium ownership that is similar to the single entity concept except that the all in concept includes improvements made by the unit owner, not just the original installations or replacement of like kind and quality Comparative cooperation - ANSWERA form of real estate ownership in which the real property is owned by a corporation whose shareholders are the tenants of the property Planned unit development (homeowners association) - ANSWERA real estate development in which each occupant has exclusive ownership of its own unit and the land that the structure occupies and a homeowner's association composed of all the unit owners jointly that owns the surrounding land and structures Condominium Commercial Unit Owners Coverage Form - ANSWERForm that covers business personal property and building property exposures of commercial (non- residential) condominium units.

Leasehold interest Coverage Form - ANSWERA commercial property coverage form for insuring a tenant;s financial losses resulting from the cancellation of the tenant's lease because of damage to the premise by a covered cause of loss Sarah owns an ice cream shop that operates in a very old building. The structure is so decrepit that it has been deemed a "distressed risk" and is considered unacceptable in the standard insurance market. What kind of coverage should Sarah seek out to insure her ice cream shop? - ANSWERSarah should try to obtain a Standard Property Policy for her ice cream shop. The Condominium Additional Provisions endorsement includes provisions for special needs, including which of these? - ANSWERThe Condominium Additional Provisions endorsement includes provisions for special needs, including that rights of recovery are allowed against members of unit owners' households and boards of directors when acting within the scope of their duties One way in which the Condominium Association Coverage Form conditions are different from the Business and Personal Property Coverage Form conditions is which of these?

• ANSWEROne way in which the Condominium Association Coverage Form conditions are different from the Business and Personal Property Coverage Form conditions is that the Loss Payment condition states that if the association has designated an insurance trustee, then the insurer may pay claims to the trustee. 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? - ANSWERThe rate for the form will be lower than the typical rates for direct property insurance. For improvements and betterments to be covered by the Leasehold Interest Coverage Form, the improvements and betterments need - ANSWERFor improvements and betterments to be covered by the Leasehold Interest Coverage Form, the improvements and betterments need not be damaged at all What two additional coverages are in the Building and Personal Property Coverage Form but not the Builders Risk Coverage Form? - ANSWERIncreased cost of construction and electronic data are two additional coverages that are in the Building and Personal Property Coverage Form but not the Builders Risk Coverage Form The rate for the Legal Liability Coverage Form is lower than the rate for direct property insurance because the insurer is obligated to pay only when the insured is liable for the

damage. The legal liability rate that an insurer charges for real property is generally what percent of the 80 percent coinsurance building rate that would otherwise apply? - ANSWERThe legal liability rate that an insurer charges for real property is generally 25% of the 80% coinsurance building rate that would otherwise apply In which of these ways do the Standard Property Policy (SPP) and the Business and Personal Property Coverage Form, also referred to as the BPP, have similar coverages? - ANSWERThe SPP and the BPP have similar coverages when adding optional coverage for the perils of windstorm, hail, vandalism, and sprinkler leakage When comparing coverage of the Commercial General Liability Coverage Form with the Legal Liability Coverage Form, what difference becomes apparent? - ANSWERWhen comparing coverage of the Commercial General Liability Coverage Form with the Legal Liability Coverage Form, a difference that became apparent is that the minimum limit for fire legal liability coverage of $100,000 applies to the Commercial General Liability Coverage Form onl Unless the insurer agrees otherwise, coverage under the Builders Risk Coverage Form ceases how many days after an insured building is occupied? - ANSWER 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? - ANSWERThere is no vandalism coverage for buildings vacant after 30 days for the SPP and after 60 days for the BPP. A building is under construction and covered by a Builders Risks Broad Perils Coverage Form without any endorsements. Which one of the following losses would be covered under this form? - ANSWERA temporary structure on the site of the building being constructed catches fire The loss assessment coverage in the Condominium Commercial Unit-Owners Optional Coverages endorsement provides coverage from the policy that is in force - ANSWERThe loss assessment coverage in the Condominium Commercial Unit-Owners Optional Coverages endorsement provides coverage from the policy that is in force when the assessment is made, not when the loss occurred Your Business Personal Property includes coverage for improvements and alterations as an owner in what coverage form? - ANSWERCondominium Commercial Unit- Owners Coverage Form only 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? - ANSWERThe SPP underwriter has more flexibility than the BPP underwriter