Download CPCU 551 Chapter 5 Exam: Insurance Questions and Answers and more Exams Commercial Law in PDF only on Docsity!
CPCU 551 CHAPTER 5 EXAM
QUESTIONS WITH DETAILED QUESTION
& ANSWERS
A condominium association agreement - ANSWERC. Clarifies the rights and responsibilities of unit owners and the association. Which one of the following describes an aspect of a planned unit development? - ANSWERB. The occupant has exclusive ownership of his unit. Condominium unit owners may wish to limit the insurance coverage on their units - ANSWERD. To avoid duplicating coverage maintained by the association. 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? - ANSWERD. The club house of the condominium association is vandalized, resulting in extensive damage to its furniture. 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? -
ANSWERB. The Loss Payment condition states that if the association has designated an insurance trustee, then the insurer may pay claims to the trustee. The Condominium Association Coverage Form is designed for insuring - ANSWERC. Appliances, such as dishwashers, under the building coverage. Which one of the following statements is true regarding the Condominium Additional Provisions Endorsement (CP 01 07)? - ANSWERD. The endorsement requires the insurer to give at least thirty days' written notice of policy nonrenewal to the first named insured 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? - ANSWERC. Condominium Commercial Unit-Owners Coverage Form A situation that suggests a need for optional miscellaneous real property coverage is - ANSWERD. 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. One purpose of the miscellaneous real property coverage which can be added to the Condominium Commercial Unit-Owners Coverage Form is to insure - ANSWERD. Condominium property that the named insured has a duty to insure, such as a storage building. What two additional coverages are in the Building and Personal Property Coverage Form but not the Builders Risk Coverage Form? - ANSWERD. Increased cost of construction and electronic data 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? - ANSWERC. Over the weekend, the contents and several walls of the warehouse building were spray painted by vandals. The Builders Risk Coverage Form is designed to - ANSWERD. Be issued at policy inception in an amount of insurance equal to the building's completed value. The Property Not Covered section of the Builders Risk Coverage Form applies to what?
- ANSWERA. Signs not attached to the building Both the Standard Property Policy (SPP) and the Building and Personal Property Coverage Form (BPP) with a Basic Form - ANSWERC. Can exclude the perils of windstorm and hail.
Which of the following is an example of the cancellation of a lease causing a lessee (tenant) to suffer a financial loss? - ANSWERD. The lessee paid a bonus to acquire the lease. The loss is the unamortized value of the bonus. A building under construction is insured on an unendorsed Builders Risk Basic Form policy for $100,000. During the course of construction, defective materials caused the main floor to collapse, resulting in a $10,000 loss. The actual cash value of the building at the time of loss was determined to be $110,000. Assuming a $1,000 deductible, the amount payable to the insured is - ANSWERA. $0. A company owns a unit in a commercial condominium where they operate their architectural business. They have installed interior walls and doors in the unit in order to have private offices for each of the staff architects. In addition, the unit is furnished with desks, chairs, computers, drafting tables and a large meeting room with table and chairs. The building they are housed in is owned by a condominium association. The association has a Bare-Walls Concept with regard to ownership in the unit based on statutes and the association agreement. A tornado caused the roof to be blown off the unit that the architectural firm occupies. There is extensive damage to both the exterior and interior walls, floors, and most of the furnishings within the unit. Which one of the following is true regarding coverage for the damage? - ANSWERD. The architectural firm's Condominium Commercial Unit Owners Coverage Form will provide coverage for the flooring as well as interior walls and doors they have constructed Baker Contractors was in the process of building two houses in a subdivision. They were not yet under contract for sale and each of the houses was insured under a separate, but identical, ISO Builders Risk Coverage Form with a Causes of Loss— Broad Form. Baker completed construction on the first house on June 1. Completion of the second house was scheduled for the end of August, but Baker ran out of money on August 1 and planned to temporarily halt construction activities for two weeks until they received the necessary funds to continue. On August 6, both of the houses were destroyed by a covered cause of loss. Which one of the following statements concerning insurance recovery on these losses is most accurate? - ANSWERB. Both houses would be covered under Baker's existing insurance policies. 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? - ANSWERA. Standard Property Policy The dividing line between unit owners' property interests and the association's interests is important when assessing condominium loss exposures. Under the bare walls concept, the condominium association - ANSWERB. Has no interest in property within the unit's walls.
In regard to condominium insurance requirements, the coverage - ANSWERA. Needs of a condominium association are similar to the building insurance needs of a building owner or landlord. Condominiums, cooperative corporations, and planned unit developments may each require specialized policies - ANSWERD. Due to their combined ownership nature. Which one of these statements is correct? - ANSWERB. Besides the Loss Payment, Unit-Owner's Insurance, and Waiver of Rights of Recovery conditions, most of the conditions of the Condominium Association Coverage Form are the same as those of the BPP. The Condominium Association Coverage Form does not cover which of the following? - ANSWERD. Business personal property that is individually owned by a unit owner The ISO Condominium Commercial Unit-Owners Coverage Form - ANSWERD. Contains an exclusion that coordinates the unit owner's coverage with the condominium association's coverage. Unless the insurer agrees otherwise, coverage under the Builders Risk Coverage Form ceases how many days after an insured building is occupied? - ANSWERC. 60 Buildings under construction present unique exposures, such as the increased likelihood that what two perils will occur? - ANSWERA. Theft and fire Buildings under construction have different exposures than completed buildings. One example of a difference is - ANSWERC. Increased susceptibility to fire hazards, as fire protection is not fully installed. Property covered under the unendorsed ISO Builders Risk Coverage Form includes - ANSWERC. Building materials and supplies intended to become a permanent part of the building. The Commercial General Liability (CGL) Coverage Form provides "fire legal liability" or "damage to premises rented to you". The "fire legal liability" coverage - ANSWERD. Provides limited coverage for liability arising out of part of the building rented to the insured. When comparing coverage of the Commercial General Liability Coverage Form with the Legal Liability Coverage Form, what difference becomes apparent? - ANSWERA. The minimum limit for fire legal liability coverage of $100,000 applies to the Commercial General Liability Coverage Form only. Which one of the following statements is true regarding the Legal Liability Coverage Form? - ANSWERA. 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.
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 - ANSWERA. Legal Liability Coverage Form and the Builders Risk Coverage Form.
