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CPCU 551 EXAM Questions With 100% Correct Answers Verified Latest Updates 2024 GRADE A+, Exams of Nursing

CPCU 551 EXAM Questions With 100% Correct Answers Verified Latest Updates 2024 GRADE A+

Typology: Exams

2023/2024

Available from 09/03/2024

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Download CPCU 551 EXAM Questions With 100% Correct Answers Verified Latest Updates 2024 GRADE A+ and more Exams Nursing in PDF only on Docsity!

CPCU 551 EXAM Questions With 100%

Correct Answers Verified Latest Updates

2024 GRADE A+

A building had been vacant for 60 days, and the insurer didn't know about it, when it sustained 100K, 5K, and 1K losses due to windstorm, theft, and sprinkler leakage, respectively. What amount is covered under CPP? - Correct Answer-85K, 0, and 0. If a building is vacant for 60 or more consecutive days before the loss, they won't pay for any loss caused by vandalism, sprinkler leakage, building glass breakage, water damage, theft, or attempted theft... otherwise you'll only get 85% Various building design features can help prevent the spread of a hostile fire. For example, a solid piece of material that is inserted between wall studs to delay the flow of heat or fire through this open space is a - Correct Answer-Fire stop. Pete insures his motorcycle rental property for $100,000 on an actual cash value (ACV) basis. The ACV of the property is $150,000 and his Commercial Insurance Policy (CIP) has a 90 percent coinsurance clause. A fire caused $50,000 of damage to the building structure. How much will Pete recoup under his insurance policy? - Correct Answer- $37, A manufacturing company has business personal property valued at $1,500,000. The risk manager is considering insuring the business personal property with 80 percent coinsurance at a $0.40 rate per $100 of coverage. The 100 percent rate is $0.35 per $100 of coverage. if the business personal property is insured with an 80 percent coinsurance, how much premium will be saved? - Correct Answer-The savings will be $5,250 − $4,800 = $ When (if) can an insurer examine their insured's books and records? - Correct Answer- Anytime during the policy period and up to 3 years after. The final premium is established after the policy period expires. Premiums are estimated at its formation. Can an insured transfer duties under common policy conditions? - Correct Answer-Only with the insurer's written consent. Can an insurer cancel a policy verbally? How many days notice? To whom is it communicated? - Correct Answer-No, it must be in writing. 10 days notice for nonpayment. 30 days for all other reasons. To the First Named Insured.

Who develops a standard form? Who does a non-standard form typically favor? - Correct Answer-The ISO, ASIS, or other insurance advisory organization. Non-standard forms typically favor insureds. Bridges, piers, wharves, and docks are initially excluded from the Building and Personal Property Coverage Form primarily because - Correct Answer-They require careful underwriting Agreed Value optional coverage is often elected by risk averse firms in order to - Correct Answer-Alleviate the risk of not complying with the Coinsurance condition. An insurance company recently leased a new office location in Dallas, Texas. On September 26, 2010, prior to occupying the building, the company spent $250,000 on building improvements. The useful life of these improvements was 10 years. On September 26, 2011, the improvements were destroyed and replaced by the building owner at a cost of $300,000. Under the company's Building and Personal Property Coverage Form policy the amount reimbursable for this loss is - Correct Answer-Under the company's Building and Personal Property Coverage Form policy the amount reimbursable for this loss is $0. The building owner made the repairs, not the tenant. The maximum amount of coverage provided at each building under the Newly Acquired or Constructed Property extension in the Building and Personal Property Coverage Form is - Correct Answer-(for up to 30 days) $250K of your building coverage and $ of your contents coverage at any acquired location, but we'll charge you for the coverage. How do you calculate the agreed value payment if the limit is less than the agreed value? - Correct Answer-= (limit/agreed value x loss)-deductible. An insured chooses the "Agreed Value" option for its Building and Personal Property Coverage Form (BPP). The agreed value for the property is $100,000 and the limit of insurance is $120,000 with a $5,000 deductible. The building is totally destroyed by a covered cause of loss. At the time of the loss, the value of the building was $130,000. The insurer would pay - Correct Answer-$120k. What is the agreed value payment if the limit of insurance is greater than or equal to the agreed value stated in the declarations? (BPP) - Correct Answer-Losses will be paid in full up to the limit of insurance (each loss subject to deductible). How is the deductible applied in BPP? - Correct Answer-Once per occurrence. When analyzing what deductible amount to choose for its Building and Personal Property Coverage Form (BPP), an insured should consider - Correct Answer-If the items on the BPP will be listed separately or on a blanket basis.

ACV. 100K limit. 1K deductible. 110K loss. What is payment? - Correct Answer-100K, since 110K-1K deductible exceeds the limit of insurance. NOT 99K! If blanket insurance w/ a $100K deductible, what would the payment be if a fire loss caused $800 to building and $400 to business personal property (if these items were scheduled separately). - Correct Answer-Zero. If the improvements and betterments sustained a loss sometime during a business's lease and if the building owner repairs the rental space, but the company (lessee) does not replace the improvements and betterments once the space is repaired, what valuation method is used under the lessee's BPP policy? - Correct Answer-Pro-rata based on the length of the lease, the time expired since the improvements and betterments were installed, and the original cost A building is insured for $200,000 under an agreed value policy. The policy has a $10,000 deductible and the agreed value of the building is $250,000. After suffering a $43,000 loss, the insurer will pay (rounded to the nearest $100) - Correct Answer- 24,40 0 The risk manager for a painting company has purchased an outdoor property extension policy to cover their trees, shrubs and signs not attached to the building. Which of the following would not be considered a covered cause of loss? Civil Commotion, lightning, explosion, windstorm? - Correct Answer-Windstorm. A landlord leases a portion of a strip mall to a dry cleaning business. When the tenant moved into the building, the tenant installed dry cleaning equipment for the business. It also installed new carpeting and tile throughout the building. Under the landlord's BPP - are the improvements considered part of building coverage or personal property of others? - Correct Answer-Building Coverage. The owners' use interest in improvements and betterments are covered as the 'owner's property' What is the payment under BPP if the insured does not meet the coinsurance requirement? - Correct Answer-Did/shouldxloss-deductible (should = value of covered property x coinsurance %) A small business owner purchased an unendorsed Building and Personal Property Coverage Form (BPP). The limit on the policy is $500,000 which meets the coinsurance requirements. The deductible is $1,000. The total value of the insured property is $525,000. The insured suffered a $510,000 covered loss to the property. What will the insurer pay? - Correct Answer-500K. The deductible comes off the loss not the limit of insurance. How much coverage does the Causes of Loss—Special Form provide under its Additional Coverages and Extensions for Property in Transit? - Correct Answer-It provides $5,000 of additional insurance for the insured's property in a motor vehicle.

A disgruntled employee of the insured returned to his employer's store late at night and broke into the locked registers, taking the minimal morning cash set up. The employee also damaged the lock boxes and took some store merchandise. Which types of property in this scenario would be covered under the Causes of Loss—Special Form? - Correct Answer-The damaged registers and lock boxes would be covered as items stolen by employees are not covered. What condition must be met in order for the 6 BPP coverage extensions to apply? - Correct Answer-80% or higher coinsurance or value reporting applies as additional insurance, no coinsurance. Whatever the **** that means. Name the 10 special form exclusions - Correct Answer-maintenance, employee dishonesty, voluntary parting, unauthorized instructions, inventory shortage, unexplained disappearance, concurrent causation (weather, acts/decisions, faulty planning), pollutants, production errors. Whats the difference between basic/broad form vs. special form? - Correct Answer- Basic/Broad forms are "named peril" forms whereas Special form provides "all risk" coverage. What are the main things that special form covers that broad form does not cover? - Correct Answer-theft, friendly fire, vehicle damage, and water damage caused by ice dams What are the four basic things covered under board form? - Correct Answer-falling objects, weight of snow, ice, or sleet, water damage (w/ exclusions) additional coverage-collapse what is the coinsurance requirement for blanket insurance? - Correct Answer-90% When does the coverage period begin for the bPP limited international coverage endorsement? - Correct Answer-When the property LEAVES the insured's premises. Ordinance or Law Coverage Endorsement... a? b? c? - Correct Answer-a - covers loss to undamaged portion that is not permitted to be used. b - covers cost to demolish undamaged portion/debris. c - covers increased cost to repair up to standards (within 2 yrs) SCF Company manufactures candy and has been in business for over 80 years in the same building. Because of the change in building materials and building codes, an endorsement the owner should consider for replacing the building in the event of a loss is - Correct Answer-Functional Valuation method, which also includes ordinance and law coverage True or False:

Blanket Insurance covers additional debris removal if the loss only occurs at one location. - Correct Answer-True True or False: Under the Ordinance or Law Coverage Endorsement, a replacement building may be on the same premises or elsewhere, but it must be intended for occupancy similar to the damaged premises. - Correct Answer-True The Brands and Labels endorsement - Correct Answer-Cover the additional costs to the insured when they are preparing salvage items for sale. Delta is a manufacturer that makes seasonal products and insures its business personal property with a Building and Personal Property Coverage Form (BPP) with a Value Reporting Form. The limit of insurance is $10,000,000 with a $10,000 deductible. Reports are due monthly. Delta suffered a business personal property loss of $500, caused by an insured peril but the prior month's report made was $400,000. The actual value of business personal property at the time of this last report was $500,000. What amount would Delta's insurer pay for the described loss? - Correct Answer-Delta's insurer would pay $390,000. ($400,000 / $500,000) X $500,000 − $10,000 = $390, Computers XYZ Inc. that is sending a sales representative to Mexico to unveil a new product prototype at a trade show. The event will be held in the town square in the capital of Mexico. The representative will be in the country with the new product for an indeterminate amount of time in the event that more publicity opportunities arise. Computers XYZ has a Business Personal Property—Limited International Coverage endorsement attached to its Building and Personal Property Coverage Form (BPP). Will the endorsement indemnify Computers XYZ if the product prototype is destroyed by a covered peril? - Correct Answer-No, because there is no return date indicated for the representative or the prototype. Which condominium association agreement concept includes improvements made by the unit owner as property owned by the association? - Correct Answer-The all-in concept In which condominium association agreement concept does the unit owner own everything inside load baring walls, including non-load baring walls and plumbing. - Correct Answer-The Bare-wall concept Which condominium association agreement concept is also called original specifications coverage, where the association owns all property originally sold to the unit owner? - Correct Answer-The single-entity concept What's the difference between the condo commercial unit owner's coverage form and a BPP coverage form? - Correct Answer-The former covers fixtures, improvements, and alterations owned by the unit owner while the BPP covers the insured's use interest in the same.

What is an HO-6? - Correct Answer-a coverage form for a residential condo. What is one challenge a unit owner could face under the all-in concept? - Correct Answer-Since unit owners own improvements and upgrades, they could become under insured if they make too many improvements or upgrades. What does BPP stand for? - Correct Answer-Building and Personal Property (coverage form) What does CGL stand for? - Correct Answer-Comprehensive General Liability Who has a "fee simple" title to their unit? - Correct Answer-Planned Unit Development Homeowners. What do the unit owners (tenants) own in a cooperative corporation? - Correct Answer- Stock. Whereas it is the Cooperative Corporations own the real property. Condominium unit owners may wish to limit the insurance coverage on their units... - Correct Answer-To avoid duplicating coverage maintained by the association. What is the distinguishing characteristic of a Standard Property Policy (SPP)? - Correct Answer-it is self contained Who owns the common elements of a condominium? - Correct Answer-They're owned jointly by all condo owners. Loss assessment coverage can be added by endorsement to the ISO Condominium Commercial Unit-Owners Coverage. With this endorsement attached the insurer will pay... - Correct Answer-The unit owner's share of an assessed loss charged to all unit owners by the association. Name a situation where an SPP would be used - Correct Answer-When a building would be too risky to insure in the standard market, so they have to resort to a FAIR plan. How do rates from legal liability coverage forms compare to typical rates for direct property insurance? - Correct Answer-Legal Liability Coverage rates are typically lower. 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 - Correct Answer-0 as collapse is not a covered peril under the basic form.

Which of the following, if any, are covered under the NFIP's General Property Policy? Pollution damage, debris removal, loss avoidance measures, or earthquake/volcanic eruption? - Correct Answer-the first 3 are covered How is the deductible applied to building and contents under NFIP? - Correct Answer- separately How many ad's off-premise coverage are provided under NFIP? - Correct Answer- 45 Can NFIP do LOU, blanket, coinsurance, or replacement cost? - Correct Answer-No, no, no, and no. What does the ensuing loss provision do? - Correct Answer-Prevents insured from stacking regular policy limit What are coverage parts A, B, C, and D under NFIP? To which do deductibles apply? - Correct Answer-A - building, B - personal property, C - debris/loss avoidance measures/pollution, D - increased cost of compliance. Deductibles apply separately to A and B only. Are limits higher under emergency NFIP program or regular NFIP program? - Correct Answer-regular Is NFIP available from FEMA or private insurers? - Correct Answer-Both Does a residential condo billing association policy pay on an ACV or a replacement cost basis, or both? - Correct Answer-Replacement cost What's the difference between a DIC and a DIC endorsement? Why would someone choose one over the other? - Correct Answer-the DIC endorsement usually doesn't provide open peril coverage, carry a lower limit than other covered property, and usually have higher deductibles, but they avoid minimum premiums and are part of one policy. Name a disadvantage of Difference in Conditions (DIC)-type endorsements compared to separate DIC policies. - Correct Answer-The coverage is often not as broad as that of a separate DIC policy. A national telecommunications company is in the midst of constant change. They frequently are opening new locations in various cities. Once they establish themselves in a sector, they will close some of their locations initially intended for the acquisition and set-up of new accounts. The type of policy that would best suit this type of business is... - Correct Answer-An output policy because it provides "all-risks" coverage for property at fixed locations AND property away from insured's premises T/F An output policy can carry automobile coverage. - Correct Answer-True.

A business purchased an Earthquake and Volcanic Eruption Endorsement (Sub-Limit Form) to attach to a Building and Personal Property Coverage Form (BPP). The insured building has an insurable value of $3,000,000. The endorsement is subject to a 10 percent deductible and a sublimit of $2,000,000. In the event of a covered $450, loss, the amount payable is - Correct Answer-$150,000. $450,000 − ($3,000,000 X .10) = $150, the 10% deductible applies to the insurable value, NOT the loss. Furthermore, in this coverage, the deductible is always applied as a percentage. Which coverage is primary and which is excess: ISO endorsement vs. NFIP - Correct Answer-ISO: excess. NFIP: primary Which flood coverage offers business income, extra expense, and ordinance and law coverage and can be written on a replacement cost or functional value basis? - Correct Answer-ISO Flood Coverage Endorsement Which coverage can have property valued at an amount that is mutually agreeable to the insurer and insured? - Correct Answer-DIC T/F The limits of insurance in the ISO Flood Coverage Endorsement is the most an insurer will pay for any number of occurrences in a period. - Correct Answer-false. single occurrence in a period On what basis does RCBAP pay losses? - Correct Answer-replacement cost. HPR insurance is generally used for what kind of property - Correct Answer-Large property accounts T/F Business income reimburses for non-continuing expenses. - Correct Answer-False. T/F Business Income bases coinsurance on continuing AND non continuing expenses. - Correct Answer-True Business Income = - Correct Answer-net income plus continuing normal operating expenses, including payroll Amount of insurance to buy (BIC) = - Correct Answer-coinsurance basis x coinsurance % Is the cost to replace electronic data covered by extra expense coverage? - Correct Answer-No, only to replace lost information other than electronic data.

How long is EBI (extended buiness income coverage) coverage extended up to? - Correct Answer-30 days to 'win back' customers, 730 days for extended period of indemnity what period is covered by Acts of Civil Authority (BIC) additional coverage? - Correct Answer-up to 4 weeks after 72 hr deductible When does the period of restoration begin and end? - Correct Answer-starts 72 hrs after direct damage, ends on the earlier of the date on which the property should , with reasonable speed and quality, be repaired or replaces or the insured resumes its business at a new, permanent location. How long are newly acquired locations covered under the coverage extension for BIC - Correct Answer-30 days. What is the difference between the BIC (w/extra expense) and the separate extra expense coverage? - Correct Answer-The separate extra expense coverage form limits the amount of extra expenses covered per month. When should blanket BIC coverage be used? - Correct Answer-for interdependent (or independent) operations in multiple locations. What is the maximum payable loss under the Newly Acquired Location (BIC) coverage?

  • Correct Answer-$100, True or False.. There does not have to be damage to the property for Acts of Civil Authority (BIC) coverage to apply. - Correct Answer-False. there has to be damage for the coverage to apply. Where's the starting point in determining an organization's EML? - Correct Answer-The coinsurance basis Why would an insured choose the No Coinsurance option (BIC)? - Correct Answer-If their EML is a small percent of the amount of needed to satisfy the coinsurance requirement. How to calculate the limit of insurance to buy - Correct Answer-First calculate the coinsurance percentage (estimated MPL/Coinsurance Basis), round to nearest tenth. Then multiply the coinsurance percentage by the coinsurance basis. If a business is covered by a BI/EEC written on a no coinsurance basis, can it be covered by a Newly Acquired Location coverage extension? - Correct Answer-Nope. Newly Acquired Locations have a condition where 50% coinsurance or higher must be shown (on BIC)

Would payroll taxes continue if employees were laid off due to a loss? - Correct Answer- Nope. When would a business add the ordinary payroll limitation or exclusion endorsement and why? - Correct Answer-when employees represent a high proportion of total expenses and can be easily replaced and the shutdown can last over 6th months. This decreases the amount of insurance needed to comply with the coinsurance requirement by excluding some or all of the ordinary payroll from gross earnings. Basically, the company will fire these employees if shit hits the fan. When does the Extended Business Income Coverage NOT apply. (it usually applies for 30 days beyond the time the damaged property is repaired and normal operations resume) - Correct Answer-If the loss of income is a result of consequences of the covered loss in the area where the described premises are located. For example, if power was out in many areas surrounding the building damaged in the loss. To whom is the 'invoice value' valuation alternative appropriate? (Inland Marine Coverage) - Correct Answer-Buyers and Sellers Is a consignee a seller, a buyer, or a transporter? - Correct Answer-buyer What's the main difference between a contract carrier and a common carrier? - Correct Answer-Common carriers offer themselves to public for hire but contact carriers do NOT. So the latter's liability is stipulated in the written bill of lading and is not absolute like, like the former's. What's the liability limit per package under COGSA? - Correct Answer-$ What determines liability for common carriers for water shipments and is there a package limit? - Correct Answer-The Harter Act, no What determines liability for contract carriers for water shipments? - Correct Answer- The charter what determines liability for air carriers? - Correct Answer-warsaw convention if a loss was caused by pilot error, is the carrier liable? - Correct Answer-No! If your plane crashes, blame it on the pilot whats the average carrier liability rate? - Correct Answer-$9/lb What are the 3 factors that affect transportation exposures? - Correct Answer-number of parties involved, ownership of goods, carrier liability What is jettison? - Correct Answer-throwing cargo overboard to lighten ship

What's another name for a warranty (open cargo policy, all-risk coverage) and what are the 3 warranties? - Correct Answer-exclusion. Strikes, riots, civil commotion; free of capture/seizure; the delay clause. What's the inchmaree clause? - Correct Answer-a clause of open cargo-named perils coverage which adds coverage for damage from propulsion machinery, boilers, latent defect of vessel, and negligence of master and mariners. What is covered under named perils coverage that isn't covered under all risk coverage (open cargo policy) - Correct Answer-jettison, pirates What are the differences between CP Builders Risk Coverage and IM Builders Risk Coverage - Correct Answer-CP is named perils, IM is all risk and covers property in transit and away from the job site, includes property of others. CP covers collapse, boiler explosion, theft, flood and earthquake, and sets value at RC... IM doesn't. Which prevents an insured from waiving rights of recovery against contractors and subcontractors, IM or CP Builders Risk Insurance? - Correct Answer-CP prevents an insured from waiving rights of recovery against contractors or subcontractors. From what do soft costs derive? - Correct Answer-covered physical losses causing delay in completion necessitating rewritten contracts, additional interest, readvertising, and additional brokerage commissions. What is a necessary characteristic of a sign to be covered under a sign coverage form?

  • Correct Answer-either a neon tube or mechanical feature Which one of the following describes the difference between a filed and a nonfiled policy form? - Correct Answer-Nonfiled policies do not file forms or rates with state insurance departments but for filed polices both are filed. Luke is a commercial underwriter assessing the accounts receivable coverage for a prospective customer. He wishes to make changes to various policy provisions before accepting the risk. What is true regarding these changes? - Correct Answer-It is a filed class of inland marine coverage, and insurers are allowed to substitute provision in the standard policies. A shipping company contracted with Cruise Ship Art Galleries for delivery of artwork to be sold on the ship. The shipping company delivered the artwork directly to each port of call. Coverage for the artwork was under an inland marine policy. The valuation provision that would best be applied to a loss to the artwork prior to delivery would be the - Correct Answer-Agreed value is appropriate for items that are difficult to value such as works of art. what are the 8 ISO commercial crime coverage forms? - Correct Answer-employee theft, forgery/alteration, inside the premises-theft of money/securities, inside the

premises-safe/other property, outside the premises, computer fraud, fund transfer, counterfeit/money orders. is employee theft covered in mexico? - Correct Answer-No, the coverage territory is limited to the US/territories, Puerto Rico, and Canada. if an employee has was terminated 30 days ago and stole something, is the loss covered under employee theft insuring agreement? - Correct Answer-Yes - employees terminated in the last 30 days still count as employees if we were to take the title of this coverage literally if an independent contractor steals something from an employer, is the loss covered under employee theft insuring agreement? - Correct Answer-No If an employee steals something, but they are not convicted of theft, is the loss covered under employee theft insuring agreement? - Correct Answer-yes What are the coverage limits of employee theft insuring agreement? (not a number, instead on what basis is it covered and how is the limit measured) - Correct Answer- coverage is blanket and limited to a stated amount per occurrence what is the courage territory for forgery and alteration insuring agreement? - Correct Answer-worldwide If an employee, director, or trustee causes a loss by forgery or alteration, is the loss covered under forgery or alteration insuring agreement? - Correct Answer-Nope, loses caused by these folks are excluded Who has the burden of proof under inside the premises-theft of money or securities insuring agreement? - Correct Answer-the insured must prove destruction What are the two coverage extensions for both inside the premises-theft of money or securities coverage form and inside the premises-robbery or safe burglary insuring agreement? - Correct Answer-damage to premises, containers Define robbery - Correct Answer-the unlawful taking of property from a custodian by one who has threatened bodily harm to the custodian or committed an unlawful act seen by the custodian (robbery requires the presence of another person) is a watchman or janitor considered a custodian with respect to robbery? - Correct Answer-NO are losses to money and securities caused by theft, disappearance, or destruction covered under the outside the premises insuring agreement? - Correct Answer-Yes, and so is other property caused by actual or attempted robbery IF the property is

outside the premises AND in the care and custody of a messenger or an armored vehicle company. is computer fraud covered when the property is transferred from outside the premises? - Correct Answer-No, it has to be from inside the premises. is computer fraud covered if the culprit isa partner, employee, director, trustee, or authorized representative? - Correct Answer-No if there is overlapping coverage for a computer-related cause of loss, which insuring agreement takes precedent, computer fraud or funds transfer fraud? - Correct Answer- computer fraud is money orders and counterfeit money insuring agreement covered in canada? - Correct Answer-Yes, along w/ US and Puerto Rico, like w/ employee theft Which crime policy insuring agreements have a $5000 per occurrence limit - Correct Answer-inside the premises - robbery/other property, outside the premises, and computer fraud Let's say a company learned about an employee theft prior to the policy period, is this covered? - Correct Answer-nope is fire covered under inside and outside the premises crime insurance? - Correct Answer-ONLY for money and securities are scams involving exchanges or purchases covered under crime insurance inside/outside premises? - Correct Answer-no, excluded are credit card transactions covered under computer fraud? - Correct Answer-no, excluded whats the difference between loss sustained and discovery crime forms? - Correct Answer-loss sustained form losses must have occurred during and were discovered during the policy period, but discovery form losses only need to be discovered during the policy period, but could have occurred before the policy period. If an employer learns that an employee commits a dishonest act, but does not terminate them, and then the employee steals something, is the loss covered under employee theft? - Correct Answer-Nope because of the Termination as to any employee condition must the insured notify the police for theft and/or forgery or alteration losses? - Correct Answer-No, theft and forgery/alteration are the only exceptions to the insured's duty to notify the police

does crime insurance apply as primary or excess of other insurance that covers the same loss, up to the policy limits? - Correct Answer-excess what are boilers made of and what do they do? - Correct Answer-cast iron or steel, they heat water by combustion to form hot water or steam what heats fired pressure vessels and what could happen to them if shit hit the fan? - Correct Answer-heated by burning fuel, they're prone to explosion are telephone system's covered under equipment breakdown? - Correct Answer-Yes, office equipment is a covered loss exposure Name the 5 equipment breakdown loss exposures - Correct Answer-boilers/pressure vessels, electrical, mechanical, cooling, office when is the only time commercial property (CPP) forms cover electrical breakdown of motors? - Correct Answer-when the loss is caused by lighting, otherwise you need an equipment breakdown policy combustion explosion is covered by commercial property (CPP) forms but do not cover boiler explosion, electrical breakdown, mechanical breakdown, and rupture or bursting due to centrifugal force (so you'll need an EBP for these) - Correct Answer-true What common perils affecting equipment are covered by CPP but not EBP (equipment breakdown)? - Correct Answer-explosion of unfired pressure vessels, furnace explosion, fire. Name the three acceptable definitions of breakdown. - Correct Answer-direct physical loss caused by failure of pressure or vacuum equipment, mechanical failure including rupture or bursting caused by centrifugal force, or electrical failure including arcing (electricity jumps gaps) is the property covered under ISO Equipment breakdown broader than that for covered equipment? - Correct Answer-yes, it includes all property that the named insured owns and property in the named insured's care, custody, or control for which the insured is legally liable are stress tests covered by equipment breakdown policies? - Correct Answer-nope, they're excluded. How are mass-produced computer data and media valued under EBP? - Correct Answer-replacement cost What is the coverage territory for EBP? - Correct Answer-US, Puerto Rico, Canada

To comply with regulations, equipment must sometimes be inspected. Who inspects it?

  • Correct Answer-the insurer! What happens if the CPP insurer and the EBP insurer dispute coverage? - Correct Answer-each insurer will pay the entire amount of loss covered under its own policy plus half of the amount in dispute. Does a BOP include liability coverage? - Correct Answer-Yes, in addition to property coverage, and common conditions What does BOP cover? (4) - Correct Answer-buildings, personal property, business income and extra expense What are the parameters for a business to be eligible for BOP? - Correct Answer-no more than 25k sq feet or $6 mil in annual gross sales at each location! What types of businesses are ineligible for BOP? - Correct Answer-auto, bars, manufacturing, finance, general contractors. do ISO BOPs provide named perils (basic form) or special-form coverage? - Correct Answer-both - primarily special form, but there's a named perils endorsement how can small businesses eliminate the waiting period caused by a usual 72 hr wait prior to start of period of restoration under BOP? - Correct Answer-this can be eliminated by endorsement. this condition doesn't bode well for small businesses. what is BCF? - Correct Answer-Business-owners coverage form (BOP) What is included under building coverage under BOP that is not included under BPP? - Correct Answer-property in common areas and the landlord insured's personal property in apartments and rooms furnished by the insured as landlord. How does personal property of others coverage differ between BPP and and BOP? - Correct Answer-BPP only covers property of others that the insured has leased and is contactually obligated to insure, the BOP covered others' property under the SAME LIMIT! What's the difference in business income limits between BCF and Business income coverage? - Correct Answer-BOP has a one-year limit, not a dollar limit (ordinary payroll is only covered for 60 days, however Which has a higher limit for both electronic data and interruption of computer operations, BPP or BOP? - Correct Answer-BOP ($10K for both) compared to $2.5K for BPP

Which has higher limits for outdoor property, BPP or BOP? - Correct Answer-BOP ($2.5K/$500 per item) compared to $1K/250 per item for BPP What's the BOP deductible? - Correct Answer-$ Does the BOP use replacement cost or ACV? - Correct Answer-replacement cost by default, but with ACV option. however, the following are ACV: art, property of others, household contents, used merchandise, manuscripts What does the insured collect if less than 80% coinsurance? (BOP) - Correct Answer- the GREATER of ACV or [(cost to repair or replace - 500 deductible) x policy limit/(.8 x replacement cost)]..... if it was above 80% then it would just be replacement cost What is the aggregate limit for products-completed operations liability? - Correct Answer-twice the per-occurence limit or 3-times the per-occurence limit by endorsement. Is a loss caused by a computer virus excluded under computer fraud? - Correct Answer- see 17, don't think so On January 21, the manager at a large banking operation informs the risk manager that there has been an employee theft of $1,500,000 at the bank. The theft occurred in October 2, the previous year when the bank was insured with the same carrier under an ISO loss sustained commercial crime policy. There was no gap between the two policies. Considering the time lapse, the bank manager asks the risk manager if they are covered by insurance. Which one of the following is the correct answer from the risk manager? - Correct Answer-Yes. The Loss Sustained During Prior Insurance issued by Us or Any Affiliate condition provides coverage Which endorsement to an ISO Commercial Crime Coverage Form that would cover a hotel owner for its legal liability for property of persons to whom it rents rooms? - Correct Answer-Guests' Property endorsement (21) If an insurer wishes to cancel employee theft coverage because of a certain employee of the insured's, are they able to do so? - Correct Answer-YEs, but they have to give 30 days notice. What is the most common exclusion for commercial crime policies aside from the employee theft coverage form? - Correct Answer-loss caused by an employeee The Accounting or Arithmetical Errors or Omissions exclusion applies to which one of the following ISO Commercial Crime Coverage Form insuring agreements? - Correct Answer-Outside the premise Which coverage form excludes fraudulent warehouse receipts? - Correct Answer- Employee theft

What is the difference of employee theft limits between ISO Commercial Crime Policies and ISO Government Crime Policies? - Correct Answer-ISO Government crime policies allow a per employee limit or per occurrence limit whereas the ISO Commercial Crime Policies are limited to a stated amount per occurrence, regardless of the numbers of employees. Company A's business was booming and they hired six additional employees during the first three months of the current policy period of its ISO Commercial Crime Coverage Form. They also had an opportunity to purchase company B and acquire the organization's assets and liabilities but not any of its employees. Company A did not inform their insurance agent of either of these activities. Six months after the acquisition of Company B, Company A submits a commercial crime claim when they discover an employee theft by one of the six new employees they had hired. Which one of the following statements describes whether their insurer will cover this loss? - Correct Answer-There is coverage because of the policy condition that applies to additional employees. An employee at an accounting firm uses a third-party vendor's accounting software on a daily basis. During the course of employment at the firm, it is discovered that the employee published a copy of the accounting software on an open-source software site. As a result, the accounting firm must pay damages of $150,000 for the unauthorized reproduction of the software. The accounting firm has an ISO Commercial Crime Coverage Form that contains no endorsements. Does coverage apply? - Correct Answer-The loss is not covered by the firm's ISO Commercial Crime Form. True or False: A condition related to claims is that the insured must give the insurer a detailed and sworn proof of loss within 120 days of the loss. - Correct Answer-True The treasurer of a contracting company wrote several checks to a friend's company and forged the president's signature on the contracting company's checks. Which ISO Commercial Crime Coverage Form insuring agreements would cover this loss? - Correct Answer-Employee Theft Must an insured under a Crime Policy notify the police after an employee theft? - Correct Answer-No. They must notify the police if a covered loss violates the law EXCEPT in the case of theft and forgery/alteration. On January 21, the manager at a large banking operation informs the risk manager that there has been an employee theft of $1,500,000 at the bank. The theft occurred in October 2, the previous year when the bank was insured with the same carrier under an ISO loss sustained commercial crime policy. There was no gap between the two policies. Considering the time lapse, are they covered for the loss? why or why not? - Correct Answer-Yes. The Loss Sustained During Prior Insurance issued by Us or Any Affiliate condition provides coverage.

the Loss Sustained During Prior Insurance Not Issued by Us or Any Affiliate condition of a commercial crime policy does what? - Correct Answer-Eliminates the"penalty" for changing insurers, provided the limits of insurance have not changed. If an insured inadvertently fails to notify the insurer of newly acquired property and there is a loss that would otherwise be covered by EBP, is this property covered? - Correct Answer-Yes, under 'errors and omissions' Is damaged to others' property which is not is the care, custody, or control of the insured covered under EBP? - Correct Answer-no, it has to be in the care custody or control What deductible most often used for spoilage coverage in the Equipment Breakdown Protection Coverage Form? - Correct Answer-A. Percentage of loss deductible Which one of the following policies would respond to a furnace explosion? A. Businessowners policy B. Commercial property policy C. Equipment breakdown policy - Correct Answer-CPP! not EBP Is bulging is an example of a breakdown loss to a fire pressured vessel? - Correct Answer-Yes In equipment breakdown insurance, air conditioning and refrigeration equipment includes components such as Coils? - Correct Answer-True In an equipment breakdown policy, explosion caused by excessive internal pressure of steam is a breakdown loss that can occur to a _____? - Correct Answer-Boiler Ignoring business income what should determine the equipment breakdown limit when a policy covers a single location? A. Coinsurance requirements B. Catastrophic exposure C. Covered property value D. Jurisdictional inspections - Correct Answer-Covered Property Value An insured should set the limit for equipment breakdown business income coverage on the basis of which one of the following? - Correct Answer-The estimated maximum loss of business income or the amount needed to comply with the Coinsurance condition, whichever is greater. What does the utility interruption insurance agreement (part of EBP) cover? - Correct Answer-It extends business income coverage provided by the policy to include loss resulting from the breakdown of equipment owned by a local utility. Under equipment breakdown coverage, which one of the following meets the definition of a "breakdown?"

A. Failure of vacuum equipment B. Failure of a safety device C. Damage to a vacuum tube D. Malfunction because of improper calibration - Correct Answer-Failure of vacuum equipment What is the main advantage for the insured under a BOP? - Correct Answer-it encompasses most property and liability needs of the insured. Is property in furnished rooms covered by an unendorsed or endorsed businessowners Coverage Form? - Correct Answer-Unendorsed The Completed Operations Aggregate Limit of the BOP may be increased by endorsement to ______ times the liability and medical expense limit. - Correct Answer- three Which one of the following exposures is not included in a standard BOP, but can be purchased as an optional coverage? A. Forgery B. Electronic data C. Employee dishonesty D. Interruption of computer operations - Correct Answer-Employee dishonesty Cindy owns an unendorsed Businessowners policy (BOP) on her cafe. Recently, a minor earthquake caused the cafe to suffer several damages. The glass windows in the front of the store were shattered and the outdoor seating was destroyed. Additionally, the cafe's fire extinguisher was depleted and must be re-filled. Which of those losses would be covered? - Correct Answer-None, because the BOP does not cover an earthquake as a cause of loss What are two coverages that are unique to the BOP and not included in BPP? - Correct Answer-Glass Expenses and Fire Extinguisher Recharge Expense. The Liability and Medical Expenses Limit in the Businessowners Policy is the equivalent of what limit or limits in the Commercial General Liability Policy? - Correct Answer-C. Both the Each Occurrence Limit and the Personal and Advertising Injury Limit Damage to excavations, foundations, underground pipes and flues are covered under which one of the following policies? A. Business Income Coverage Form B. Businessowners Coverage Form C. Business Contingent Coverage Form D. Business and Personal Property Coverage Form - Correct Answer-B. BCF 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? - Correct Answer-There will be no coverage because there isn't a Hired and NonOwned Auto endorsement on the policy. The businessowners policy (BOP) can be endorsed to provide professional liability for which one of the following types of professionals? A. Physicians B. Beauticians C. Lawyers D. Politicians - Correct Answer-Beauticians What are the 4 coverages (A, B, C, D) of the Farm Dwellings form? - Correct Answer-A

  • dwellings, B-other private striations appurtenant to dwellings, C-household personal property, D-loss of use What does the Farm Dwellings form exclude? - Correct Answer-farm structures (barns, silos), farm personal property (feed, livestock, machinery) What are coverages E and F under a Farmowners policy? - Correct Answer-E- scheduled farm personal property F-unscheduled farm personal property What is the difference between scheduled classes and scheduled items under Scheduled Farm Personal Property Coverage (E) in terms of their limits when they are off the premises? - Correct Answer-Scheduled items are covered off the premises for their full limits, but if they aren't specifically scheduled yet are still part of a scheduled class (i.e. farm machinery) then they're only covered for up to 10% of their limits. What what basis are unscheduled farm personal property covered? - Correct Answer-a blanked basis, subject to 80% coinsurance What what basis are barns, outbuildings and other farm structures covered, aside from improvements and betterments? - Correct Answer-replacement cost of ACV Under which Farm Policy Coverage Form are improvements and betterments covered?
  • Correct Answer-Barns, outbuildings, and other Farm Structures Lets say an the insureds dog attacks his livestock, is this loss covered under Broad Form-Farm Property? - Correct Answer-No because the insured owns the dog. How does the Basic Form - Farm Property perils differ from Basic Form Commercial Property Perils? - Correct Answer-Basic Form Farm Property includes everything that Basic Form Commercial Property covers (fire, lightning, windstorm, hail, explosion, riot,

civil commotion, aircraft, vehicles, smoke, vandalism, sinkhole collapse, volcanic action) PLUS theft, collision, earthquake (livestock), and flood (livestock) Let's say an earthquake causes damage to a Barn and kills a cow, does the Basic Form Farm Property cover this? - Correct Answer-It covers the loss to the livestock but not to the barn. If an wolf attacks a sheep, is the loss covered under broad form farm property? - Correct Answer-No, sheep aren't covered. Are livestock eligible for Special Form Farm Property Coverage? - Correct Answer-No, they aren't. Can crop hail insurance be extended to cover fire, windstorm, or damage caused by livestock or vehicles? - Correct Answer-yes What is the FCIC and the MPCI - Correct Answer-The FCIC is the Federal Crop Insurance Corporation who provides MPCI, Multiple Peril Crop Insurance, which insures against unexpected production losses from natural causes, including drought, excessive moisture, hail, wind, frost, insects, and diseases. How would a farmer insure against production losses from natural causes? - Correct Answer-Get an MPCI plan from the FCIC How would a farmer cover animal death from injury, sickness, or disease? - Correct Answer-Animal Mortality Insurance What's the purpose of the financial institution bond? - Correct Answer-to provide crime insurance coverage for financial institutions Describe the limits of the financial institution bond. - Correct Answer-an aggregate limit PLUS single-loss limit for each of its seven insuring agreements (fidelity, on premise, in transit, forgery/alteration, securities, counterfeit, fraudulent mortgages, Are financial institution bonds cover losses on a loss-sustained basis or on a discovery basis - Correct Answer-discovery what is fidelity coverage (part of the financial institution bond) - Correct Answer- employee dishonesty coverage tangible property is covered while within offices or premises located anywhere as part of the ON premises insuring agreement of the Financial Institution Bond if the loss is caused by robbery/burglary, or mysterious disappearance. Is money considered tangible property in this case? - Correct Answer-Yes

Which takes precedent in financial institution bonds, D (forgery or alteration) or E/F (securities and counterfeit currency)? - Correct Answer-E and F Which has a broader definition of employee, commercial crime form OR the financial institution bond? - Correct Answer-Financial Institution Bonds What's the minimum deductible of a financial institution bond and how soon must the loss be reported? - Correct Answer-1000 and 30 days Is there any coverage for loans not repaid by the borrower under the financial institution bond? - Correct Answer-No What does Mortgage Impairment Insurance cover? - Correct Answer-it protects financial institutions from losses caused by the insured's failure to maintain insurance on mortgaged property. who is a lessee and who is a mortgagee? - Correct Answer-a lessee is the person to whom a lease is granted by the lessor, and a mortgagee is the lender who loans money to the mortgagor to buy real property (they're kind of opposite, ya know?) The lessee is the little guy and the mortgagor is also the little guy whom does the ISO Market Segment program help to meet their needs of insurance? - Correct Answer-small and midsize businesses A local savings and loan association purchased Financial Institution Bond Form 24. Mandatory insuring agreements on their Form 24 include which one of the following? - Correct Answer-Fidelity, On Premises, In Transit, and Counterfeit Money What does the Farm Umbrella Liability Policy of the ISO farm program do? - Correct Answer-It provides limits of liability in excess of all underlying liability policies. Name the 4 (A, B, C, and D) insuring agreements of the ISO Mortgage Impairment Insurance - Correct Answer-A-Mortgagholders' interest, B-Property Owned or Held in Trust, C-Mortgageholders' Liability, D-Real Estate Tax Liability A Combination Safe Depository Policy contains which insuring agreements? - Correct Answer-Loss of Customers' Property; Premises Damage A self-storage facility purchases an ISO Commercial Package policy with the Market Segments Customers' Property Legal Liability endorsement with its standard limit and deductible. While the policy is in force, a fire occurs at the storage facility. The facility is liable for $135,000 worth of damage to customer property. Based on the information provided, the amount of money the storage facility will pay out of pocket is - Correct Answer-After subtracting the $250 deductible, the covered loss is $134,750. Because this exceeds the $100,000 policy limit, the full $100,000 would be paid. The remaining $35,000 is the responsibility of the self-storage facility.

The ISO Market Segments Program provides endorsements for some coverages not found in any other ISO forms, including which one of the following? A. Employee Dishonesty Coverage B. Fire Department Service Charge C. Pollutant Clean Up D. Ordinance or Law—Equipment - Correct Answer-D. Ordinance or Law—Equipment Does the Financial Institution Bond protect insureds against acts from dishonest or fraudulent acts of employees? - Correct Answer-Yes Several of the broad causes of loss in the Causes of Loss Form—Farm Property relate only to livestock. Which one of the following is such a cause of loss A. Loading/unloading B. Sinkhole collapse C. Falling objects D. Fire/lightning - Correct Answer-Loading/unloading. Sinkhole collapse, falling objects, and fire/lightning apply to all covered property When a mortgage company discovered that the money collected under several escrow agreements was not used to pay the mortgagors' real estate taxes, on which insurance policy could they rely? - Correct Answer-Mortgage impairment insurance T/F Feedlot insurance policies are a form of bailees' liability coverage. - Correct Answer- T T/F the Farm Liability Coverage Form of the ISO farm program covers both personal and farm liability exposures. - Correct Answer-T A financial institution purchased both a SFAA Computer Crime Policy and a Financial Institution Bond. An employee of the institution managed to hack into and modify a computer program in the insured's computer system. The insuring agreement that addresses this type of loss is the - Correct Answer-Financial Institution Bond's Fidelity insuring agreement. Under a forfeiture bond, what percentage of the bond penalty must the surety pay if the principal fails to complete the obligation? - Correct Answer-100% Under compliance-only bonds, to what is the principal guaranteed to comply? - Correct Answer-applicable laws What must the principal avoid under merchandising and dealer bonds - Correct Answer- fraudulent and unfair business practices Who must be bonded in a public official bond? - Correct Answer-handlers of public property or funds, administrators, and those who deal directly with the public.

What are the two types of court bonds? - Correct Answer-Judicial bonds and fiduciary bonds Who is the principal in a plaintiff bond, the defendant or the plaintiff? - Correct Answer- the plaintiff what does it mean to have died intestate? - Correct Answer-without a will T/F: Estate executor - no will. Estate Administrator-is a will - Correct Answer-F - estate executor - is a will. administrator - no will What action a surety can take if it fears a principle will be unable to perform the obligation that is the subject of a surety bond? - Correct Answer-If a surety fears a principle will be unable to perform the obligation that is the subject of a surety bond, the surety can require the principle post collateral. The county fairgrounds committee is seeking contractors to build a new stable for the annual farm show. Contractors are required to guarantee that they will enter into a contract upon acceptance of the bid. In addition, the contractor must guarantee that the project, once completed, will be free of liens. To satisfy the committee's requirements, contractors who want to participate in the project will need to provide which pair of bonds? - Correct Answer-Bid bond and a payment bond When Sam's nephew was made a ward of the court, Sam was named his nephew's guardian. In order to safeguard the rights of the minor nephew, Sam may be required by the court to obtain which type of bond? - Correct Answer-A fiduciary bond