CPCU 552 CP AND L FINAL EXAM 2026
INSURANCE LAW AND LIABILITY TEST PAPER
QUESTIONS AND SOLUTIONS GRADED A+
◉ Which one of the following statements about the general
aggregate limit under a Commercial General Liability (CGL)
Coverage Form is true? Answer: It is reduced by an claims paid for
medical payments under Coverage C.
◉ Tom often runs errands for his boss at XYZ Company, using the
boss' car. On one of these errands, Tom is involved in a serious auto
accident. He spends a couple of weeks in the hospital; misses four
weeks of work; and must undergo physical therapy. Does XYZ's
Workers Compensation and Employers Liability Insurance (WC&EL)
Policy cover Tom's injuries, lost income, and rehabilitation
expenses? Answer: Yes, the workers compensation policy would pay
all of Tom's expenses, because his injuries arose out of his
employment at XYZ Company.
◉ Aircraft have a significant exposure to catastrophe losses. Of the
many reasons for the catastrophic loss potential of aircraft, the most
significant is Answer: The physical properties of aircraft.
◉ A security guard is employed at a pier where shipping containers
are loaded and unloaded from barges. There is also a small marina
,for pleasure craft at the pier. The security guard trips over
equipment left on a dock alongside a pleasure craft and is injured.
The pier only has insurance coverage that provides benefits under
the Longshore and Harbor Workers Compensation Act (LHWCA). Is
the guard's injury covered under LHWCA? Answer: The injury is
covered by LHWCA because the guard is not covered under a state's
workers compensation law.
◉ ABC Plumbing entered into a contract with Bill to install a
commercial grade septic system on his property. The installation of
the septic septic was time sensitive because the rest of Bill's
construction project could not go forward until the septic system
was in place. The contract required that the work be done within 30
days of contract signing, or ABC would have to pay a penalty of
$1,000 per day. Which one of the following categories of damages
does the $1,000 per day penalty specified in the contract fall into?
Answer: Liquidated damages
◉ Many states have funds from which employers may purchase
workers compensation insurance. Such funds may be either Answer:
Competitive or monopolistic
◉ Section II—Who Is an Insured identifies the persons and
organizations that qualify as insureds under the Commercial General
Liability (CGL) Coverage Form. Which one of the following
statements regarding who is considered an insured is most
accurate? Answer: When a CGL policy covers one or more
,individuals as named insureds, any person or organization having
proper temporary custody of the named insured's property
following the named insured's death is an insured.
◉ What is the name given to a claim by an employee who says that
he or she was fired because of the filing of a workers compensation
claim? Answer: Retaliation claim
◉ Javier's business auto policy contains a personal injury protection
(PIP) endorsement. He is involved in an auto accident in the covered
auto, resulting in $30,000 in property damage, $5,000 in third-party
bodily injury, and $10,000 in personal medical expenses. If Javier's
business auto policy has a general aggregate limit of $100,000 and a
PIP limit of $15,000 and he is at fault for the accident, how much will
his insurer pay under the PIP coverage Answer: PIP provides first-
party benefits for medical expenses, loss of income, loss of services,
and funeral expenses resulting from bodily injury to occupants of a
covered auto because of an auto accident. It pays regardless of which
party was at fault in the accident. Therefore, Javier's insurer will pay
him $10,000 in medical expenses from the PIP coverage. The other
damages will be payable under different coverages available on his
policy.
◉ Which one of the following statements about coverage triggers in
cyber risk insurance policies is most accurate? Answer: Both claims-
made coverage triggers and occurrence coverage triggers are
, available, but occurrence coverage triggers are more appropriate for
some insuring agreements than for others
◉ According to the Terrorism Risk Insurance Act (TRIA), one of the
two required conditions that an insurer must meet at the time of an
initial offer, purchase, and renewal of insurance is the disclosure of
the premium for terrorism coverage. What is the other condition
Answer: A make-available provision
◉ Acme Insurance cannot agree with insured Jill Jenkins on the
amount of a covered physical damage loss under Jill's Business Auto
Coverage Form. Jill requested an appraisal. Acme and Jill each
appoint an appraiser, and the appraisers appoint an umpire. An
award in writing signed by any two of the three binds both Acme
and Jill. One appraiser and the umpire ruled for Jill and against
Acme. Which one of the following statements is true regarding this
scenario? Answer: Jill and Acme will share the cost of the umpire.
◉ Matthew Jones, the named insured under an unendorsed Business
Auto Coverage Form (BACF), requires his employees to use their
own cars for business purposes. One of Matthew's employees, Paul,
causes an accident while driving his own truck for the business.
Matthew's BACF shows symbol 1 for liability coverage. Which one of
the following correctly indicates whether Paul is an insured under
the policy for the accident? Answer: Paul is not covered because
employees are not insured while using their own autos in the named
insured's business.
INSURANCE LAW AND LIABILITY TEST PAPER
QUESTIONS AND SOLUTIONS GRADED A+
◉ Which one of the following statements about the general
aggregate limit under a Commercial General Liability (CGL)
Coverage Form is true? Answer: It is reduced by an claims paid for
medical payments under Coverage C.
◉ Tom often runs errands for his boss at XYZ Company, using the
boss' car. On one of these errands, Tom is involved in a serious auto
accident. He spends a couple of weeks in the hospital; misses four
weeks of work; and must undergo physical therapy. Does XYZ's
Workers Compensation and Employers Liability Insurance (WC&EL)
Policy cover Tom's injuries, lost income, and rehabilitation
expenses? Answer: Yes, the workers compensation policy would pay
all of Tom's expenses, because his injuries arose out of his
employment at XYZ Company.
◉ Aircraft have a significant exposure to catastrophe losses. Of the
many reasons for the catastrophic loss potential of aircraft, the most
significant is Answer: The physical properties of aircraft.
◉ A security guard is employed at a pier where shipping containers
are loaded and unloaded from barges. There is also a small marina
,for pleasure craft at the pier. The security guard trips over
equipment left on a dock alongside a pleasure craft and is injured.
The pier only has insurance coverage that provides benefits under
the Longshore and Harbor Workers Compensation Act (LHWCA). Is
the guard's injury covered under LHWCA? Answer: The injury is
covered by LHWCA because the guard is not covered under a state's
workers compensation law.
◉ ABC Plumbing entered into a contract with Bill to install a
commercial grade septic system on his property. The installation of
the septic septic was time sensitive because the rest of Bill's
construction project could not go forward until the septic system
was in place. The contract required that the work be done within 30
days of contract signing, or ABC would have to pay a penalty of
$1,000 per day. Which one of the following categories of damages
does the $1,000 per day penalty specified in the contract fall into?
Answer: Liquidated damages
◉ Many states have funds from which employers may purchase
workers compensation insurance. Such funds may be either Answer:
Competitive or monopolistic
◉ Section II—Who Is an Insured identifies the persons and
organizations that qualify as insureds under the Commercial General
Liability (CGL) Coverage Form. Which one of the following
statements regarding who is considered an insured is most
accurate? Answer: When a CGL policy covers one or more
,individuals as named insureds, any person or organization having
proper temporary custody of the named insured's property
following the named insured's death is an insured.
◉ What is the name given to a claim by an employee who says that
he or she was fired because of the filing of a workers compensation
claim? Answer: Retaliation claim
◉ Javier's business auto policy contains a personal injury protection
(PIP) endorsement. He is involved in an auto accident in the covered
auto, resulting in $30,000 in property damage, $5,000 in third-party
bodily injury, and $10,000 in personal medical expenses. If Javier's
business auto policy has a general aggregate limit of $100,000 and a
PIP limit of $15,000 and he is at fault for the accident, how much will
his insurer pay under the PIP coverage Answer: PIP provides first-
party benefits for medical expenses, loss of income, loss of services,
and funeral expenses resulting from bodily injury to occupants of a
covered auto because of an auto accident. It pays regardless of which
party was at fault in the accident. Therefore, Javier's insurer will pay
him $10,000 in medical expenses from the PIP coverage. The other
damages will be payable under different coverages available on his
policy.
◉ Which one of the following statements about coverage triggers in
cyber risk insurance policies is most accurate? Answer: Both claims-
made coverage triggers and occurrence coverage triggers are
, available, but occurrence coverage triggers are more appropriate for
some insuring agreements than for others
◉ According to the Terrorism Risk Insurance Act (TRIA), one of the
two required conditions that an insurer must meet at the time of an
initial offer, purchase, and renewal of insurance is the disclosure of
the premium for terrorism coverage. What is the other condition
Answer: A make-available provision
◉ Acme Insurance cannot agree with insured Jill Jenkins on the
amount of a covered physical damage loss under Jill's Business Auto
Coverage Form. Jill requested an appraisal. Acme and Jill each
appoint an appraiser, and the appraisers appoint an umpire. An
award in writing signed by any two of the three binds both Acme
and Jill. One appraiser and the umpire ruled for Jill and against
Acme. Which one of the following statements is true regarding this
scenario? Answer: Jill and Acme will share the cost of the umpire.
◉ Matthew Jones, the named insured under an unendorsed Business
Auto Coverage Form (BACF), requires his employees to use their
own cars for business purposes. One of Matthew's employees, Paul,
causes an accident while driving his own truck for the business.
Matthew's BACF shows symbol 1 for liability coverage. Which one of
the following correctly indicates whether Paul is an insured under
the policy for the accident? Answer: Paul is not covered because
employees are not insured while using their own autos in the named
insured's business.
