CPCU 551 EXAM QUESTIONS WITH 100% CORRECT!!, Exams of Commercial Law

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CPCU 551 EXAM QUESTIONS WITH

100% CORRECT!!

A building and its contents are insured under Building and PP coverage form with the Agreed Value option in effect. The limit of insurance is $1,000,000 with a $5, deductible. The agreed value shown in the policy is $1,500,000. How much will the insurer pay if the insured sustains a $300,000 loss by an insured peril? - ANSWERThe insurer will pay $195,000 = [($1,000,000/$1,500,000) x $300,000] - $5, Adjacent properties can increase the probability of loss to the insured's building and contents. When'd aging commercial property exposures, the term used to refer to the hazard posed by adjacent or surrounding properties is - - ANSWERExternal Exposure Wholesale Merchandiser leases 5 warehouses, each in a different city, to supply retail customers in each city with timely service. The average value of the merch at each warehouse is $750,000. Which blanket insurance limit would bear suit the insured's needs while minimizing the cost of over-insuring? - ANSWERBlanket $3,375,000 is best. (5 x $750,000) x 90% = $3,375, An important feature of the Standard Property Policy (SPP) is - - ANSWERThe flexibility of being able to limit the perils covered. The rate charged for the Legal Liability Coverage Form is - - ANSWERLower than the usual commercial property contents and building rate The Riverview Restaurant insures its buildings and BPP on a CPP with an ISO Flood Endorsement. An insured Flood occurs from the river and the restaurant has the following losses -

1. Silt & Debris on the restaurant floor
2. Boat pier washed away
3. Chairs and tables housed in the fully enclosed carport lost in the river
4. The golf cart used to service the grounds is washed away in the river What best describes the covered losses? - ANSWERThe loss to the boat pier is not covered because it's over the water. All other losses are covered. For shipments between buyers and sellers, most open cargo policies state that the value of the covered property will include several elements, including - - ANSWERThe value of the covered property will contain an advance equal to 10% of the invoice and freight or a higher percentage if so agreed upon. A new business, Neighborhood Cleaners, is opening next week. The business is a dry cleaner for clothing and home items. The major concern is protecting its goodwill with customers by having coverage for all of the goods it will be receiving from them. Which is the best coverage choice for them? - ANSWERA bailees' customer policy because it covers both legal liability and goodwill exposure through one policy The following is true about the Earthquake and Volcanic Eruption Endorsement (sub- limit form) - - ANSWERThe Ensuing Loss provision of the endorsement eliminates

An employee of Argot Architects is taking expensive $20,000 drawings to a client's location 30 miles away. While on the way to the company vehicle, a stranger accosts the employee and takes the drawings. How would the limit of insurance apply to this loss under the Outside the Premises insuring agreement of the ISO Commercial Crime Coverage form? - ANSWERThere is a per occurrence limit of $5,000. The Liability and Medical Expenses Limit in the BOP policy is the equivalent of what limit or limits in the CGL policy? - ANSWERBoth the Each Occurrence limit and the Personal & Advertising Injury Limit A company carries a Businessowners Coverage Form (BCF) with coverage extensions for Newly Acquired or Constructed Property and Outdoor Property. A fire causes $275,000 in damage to a building acquired within the last 30 days but not listed on the Declarations page. The fire also causes $250 in damage to each of 10 trees on the insured's listed premises. Ignoring deductibles and assuming sufficient limits, how much will the company be able to collect under the policy? - ANSWERThe company will be able to collect $252,000. The BCF covers newly acquired buildings up to $250,000 for up to 30 days. The Outdoor Property limit is $2500 with a sub limit of $500 for any one tree. What is an exclusion that applies to the Computer and Funds Transfer Fraud insuring agreement? - ANSWERFraudulent instructions is a specific exclusion in the Computer and Funds Transfer Coverage Form An insured has a BI (EE) Coverage form with a Maximum Period of Indemnity coverage option. Following a covered loss and after the period of restoration begins, it takes 120 days to complete repairs and another 60 days for revenue to return to normal. How would the policy provide coverage for this loss of business income? - ANSWERThe policy would provide coverage for 120 days. Smith Stores has net income of $5,000 per month in the 12 months before a covered business income loss. The store is unable to open for 3 months. During that time, continuing expenses totaled $6,000. What is the amount of Smith Stores' business income loss? - ANSWERThe business was interrupted for 3 months for a business income loss of $15,000, plus continuing expenses of $6,000. The BI loss is $21,000. What is true about Inside the Premises - Robbery or Safe Burglary of Other Property in an ISO Crime Coverage form? - ANSWERMoney and Securities is NOT included in the Other Property coverage that this form provides. What is the usual practice for setting the limit of insurance for an equipment breakdown policy covering two or more locations? - ANSWERThe limit of insurance is usually set higher than the estimate of the maximum loss at the highest valued location, but less than the total insurable value at all locations.

The steam boiler at a hotel explodes due to excessive internal pressure causing damage to the hotel's basement, laundry facility, the first floor rooms, and the parking garage of the mall next door. Which one of those would be excluded from coverage under the Equipment Breakdown Protection Coverage Form? - ANSWERDamage to the parking garage next door would be excluded. A bank obtained a Financial Institution Bond Form 24. What is true about this bond? - ANSWERIf a borrower fails to repay a loan, the bank will only be reimbursed under this bond if employee dishonesty is involved