CPCU 551 Exam: Property & Business Income Coverage, Exams of Commercial Law

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CPCU 551 - EXAM QUESTIONS 100%

ANSWERED GRADED A+.

Take 2 - 6. Which one of the following statements is correct with respect to the Building and Personal Property (BPP) Coverage Form? - ANSWERThe BPP lists several types of classes of property that do not qualify as covered property. (The BPP provides coverage against direct physical loss only.) Under Property Not covered section it states that there is a number of classes of property not covered. For this reason, you need to have a list of property covered and not covered read together when trying to determine coverage. Take 2 - 7 Which one of the following statements is correct with respect to the Preservation of Property additional coverage of the Building and Personal Property Coverage Form (BPP)? - ANSWERIt protects against "any direct physical loss or damage" and is not limited to either the covered causes of loss or locations stipulated in the coverage form. (It is subject to the limits of insurance specified in the declarations.) Under Preservation of Property I found that coverage is provided while it being moved and up to 30 days at a new location. It protects against " any physical loss or damage" and is not limited to causes of loss on BPP or locations stipulated on the BPP coverage form. This would be considered broader coverage for this particular coverage " Preservation of Property Additional Coverage". Take 2 - 13 Which one of the following is correct with respect to the Transfer of Rights of Recovery Against Others to Us condition of the Commercial Property Conditions Form? - ANSWERWaiver of recovery against any other party may be given by the insured, provided the waiver is made in writing before the loss occurs. (Waiver of recovery against any other party may be given by the insured, provided the waiver is made in writing before the loss occurs.) This condition specifically permits the insured to waive the right of recovery against any other party, provided the waiver is made in writing and before the loss occurs. Take 2 - 14 Peter has a Commercial Package Policy (CPP) that has a Building and Personal Property Coverage Form (BPP) with a Causes of Loss - Broad Form covering his building with a $750,000 limit. - ANSWERThe loss is not covered. (Peter's insurer will pay $10,000. The BPP's definition of Building includes outdoor fixtures and windstorm is a covered cause of loss in the Broad Form. Outdoor fixtures do not fall under the Outdoor Property coverage extension, which excludes coverage for windstorm damage.)

( The Ordinance or Law Coverage endorsement to commercial property causes of loss forms provides Coverage C only if the replacement cost optional coverage is activated, and the property must be repaired or replaced as soon as is reasonably possible after the loss.) Take 2 - 21 Concerning the Discharge from Sewer, Drain, or Sump (Not Flood-Related) endorsement, - ANSWERThe insurer will not pay when the discharge results from the insured's failure to perform routine maintenance or needed repairs. (Concerning the Discharge from Sewer, Drain, or Sump (Not Flood-Related) endorsement, the insurer will not pay when the discharge results from the insured's failure to perform routine maintenance or needed repairs.) Take 2 - 52 Sam's Dry Cleaners (SDC) is insured under a Business Income (and Extra Expense) Coverage Form with a $1 million Business Income limit of insurance for the dry cleaners location, subject to option (2) Business Income Other Than "Rental Value". None of the optional coverages of the Business Income (and Extra Expense) are in effect and no endorsements apply to SDC's Business Income (and Extra Expense) Coverage Form. The one year policy period shown in the declarations began on July 1, 20X1. On October 1, 20X1, SDC suffered a direct physical loss to its building and contents due to a fire. The resulting loss of business income that SDC sustained was $800,000, including a $5,000 loss for the first 72 hours following the physical loss. After the period of restoration ended and SDC resumed operations at the insured premises, the dry cleaners continued to sustain loss of business income loss for 90 days due to c - ANSWER$820, (SDC's business income loss would be covered under the Business Income (and Extra Expense) Coverage Form. $795,000 is covered after 72 hour deductible. An additional $25,000 (60 days) is covered due to Extended Business Income Additional ) Take 2 - 56 A procedure to control transportation loss from human error is to - ANSWERHave accounting systems for shipments in and out. (A procedure to control transportation loss is to have accounting systems for shipments in and out.) Take 2 - 57 A builder's risk policy covers a building in the course of construction. Which one of the following would be a coverage enhancement on the inland marine builders risk policy? - ANSWERCollapse during the course of construction resulting from faulty materials (It would be collapse during the course of construction resulting from faulty materials is covered under the builder's risk policy.)

Take 2 - 65 Which one of the following is true regarding endorsements in the Commercial Crime Coverage Form? - ANSWERThe Inside the Premises-Robbery of a Watchperson or Burglary of Other Property endorsement requires signs of forcible entry or exit for coverage for burglary. ( Take 2 - 76 The Liability and Medical Expenses Limit in the Businessowners Policy is the equivalent of what limit or limits in the Commercial General Liability Policy? - ANSWERBoth the Each Occurrence Limit and the Personal and Advertising Injury Limit (Both the Each Occurrence Limit and the Personal and Advertising Injury Limit) Take 2 - 77 An A&E Accounting Company (A&E) operates a bookkeeping business insured with an unendorsed Businessowners Policy (BOP). On rare occasions an A&E assistant will use a personal auto to drop off completed tax returns at the local post office on the way home from work. Recently, the assistant was involved in an at-fault accident en route to the post office. Which one of the following best describes how the BOP will handle this loss? - ANSWERThere will be no coverage because there isn't a Hired and NonOwned Auto endorsement on the policy. The Inside the Premises-Robbery of a Watchperson or Burglary of Other Property endorsement requires signs of forcible entry or exit for coverage for burglary.) Take 2 - 66 Two tax collectors, who are employees in a local town, embezzled $520,000 from the town's treasury by altering checks and forging signatures. The town has an unendorsed ISO government crime policy with a $100,000 limit for forgery and alteration that was in force prior to the embezzlement. Which one of the following statements describes whether the town has coverage for this loss? - ANSWERThere is no coverage because there is an exclusion for losses caused by any tax collector. (There is no coverage because there is an exclusion for losses caused by any tax collector.) Take 2 - 69 A major department store advertised a storewide shoe sale beginning on Saturday. On the previous Wednesday, the shoemaker's heating system exploded and a fire destroyed all the stock which was to be delivered on the Friday before the sale. Which one of the following time element coverages of the Equipment Breakdown Protection Coverage Form would apply to this situation? - ANSWERContingent Business Income and Extra Expense (There will be no coverage because there isn't a Hired and NonOwned Auto endorsement on the policy.) take 2 - 80 Under the Financial Institution Bond Form 24, Insuring Agreement B—On Premises Coverage, would jewelry on deposit at a U.S. bank's Europe office be covered for burglary? - ANSWERYes, burglary is covered on premises located anywhere worldwide.