CPCU 552 CP AND L FINAL EXAM 2026
PRACTICE TEST PAPER POLICY
INTERPRETATION REVIEW SHEET FULL
SOLUTIONS
◉ The Broad Form Products Coverage endorsement can be used
Answer: To delete the Auto Dealers Coverage Form (ADCF) exclusion
for defective products.
◉ Cox Corporation recently had a covered personal liability
judgment against it for $5 million. It has an underlying commercial
general liability policy with a $1 million limit, which is the amount
required by the umbrella insurer. The umbrella policy has a $10
million limit with a $10,000 SIR. How much is the ultimate net loss
to the umbrella insurer? Answer: The ultimate net loss to the
umbrella insurer is $4,000,000.
◉ The Supplementary Payments section of the Commercial General
Liability (CGL) Coverage Form contains provisions concerning the
insurer's duty to defend indemnitees of the insured, but only if
specific conditions are met. Which one of the following is one of
these conditions? Answer: The indemnitee and the insured must ask
the insurer to conduct and control the defense.
,◉ Which one of the following statements about the Liquor Liability
Coverage Form is true? Answer: It contains an each common cause
limit as well as an aggregate limit.
◉ Under the Business Auto Coverage Form (BACF), collision is
generally understood to mean Answer: A striking together with
violent impact.
◉ A common endorsement to the Business Auto Coverage Form
(BACF) is the Employee Hired Auto endorsement. This endorsement
states that an employee of the named insured is an insured Answer:
The employee is an insured while operating an auto rented in the
employee's name with the named insured's permission.
◉ The legislated liability imposed by the Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA
or Superfund) altered traditional common law concerning
responsibilities for environmental pollution by Answer: Superfund
imposes strict liability without regard to fault, even on a retroactive
basis.
◉ Before the enactment of Workers Compensation statutes,
employers were protected against employee suits by common-law
defenses. Under which one of the following common-law defenses
were employees unsuccessful in recovering damages from
occupational injuries resulting in part from the employee's own
negligence? Answer: Contributory negligence
, ◉ An organization may incur losses from legal liabilities in a number
of different ways. Which one of the following actions would best be
described as an intentional tort? Answer: A newspaper mistakenly
identifies the driver in an alcohol-related hit and run accident as
John Doe, a prominent local attorney.
◉ An employee, while working for the Brown Corporation, was
negligent when lighting a cigarette and started a small fire that
caused a fellow employee's clothes to catch fire. The injured
employee suffered burns as well as the loss of clothes. To what
extent, if any, does the corporation's Commercial General Liability
Coverage Form provide coverage for the negligent employee if he is
sued by the injured employee? Answer: There is no coverage for the
negligent employee because he is not an insured under the policy for
bodily injury to a co-employee or damage to such an employee's
property
◉ Adam is an executive at Blithe Manufacturing (Blithe). He drives a
car that is owned by Blithe and insured under the company's
Business Auto Coverage Form (BACF). Adam is permitted to drive
the vehicle for both business and personal use. One Sunday morning,
Adam is driving the car on a highway when he is struck by another
vehicle and pushed into the guardrail. The car that struck Adam did
not stop, but several other people who witnessed the accident did
stop. They all confirmed that Adam was struck by another reckless
driver who never stopped. Adam was seriously injured and car was
totaled. Which one of the following endorsements to Blithe's BACF
PRACTICE TEST PAPER POLICY
INTERPRETATION REVIEW SHEET FULL
SOLUTIONS
◉ The Broad Form Products Coverage endorsement can be used
Answer: To delete the Auto Dealers Coverage Form (ADCF) exclusion
for defective products.
◉ Cox Corporation recently had a covered personal liability
judgment against it for $5 million. It has an underlying commercial
general liability policy with a $1 million limit, which is the amount
required by the umbrella insurer. The umbrella policy has a $10
million limit with a $10,000 SIR. How much is the ultimate net loss
to the umbrella insurer? Answer: The ultimate net loss to the
umbrella insurer is $4,000,000.
◉ The Supplementary Payments section of the Commercial General
Liability (CGL) Coverage Form contains provisions concerning the
insurer's duty to defend indemnitees of the insured, but only if
specific conditions are met. Which one of the following is one of
these conditions? Answer: The indemnitee and the insured must ask
the insurer to conduct and control the defense.
,◉ Which one of the following statements about the Liquor Liability
Coverage Form is true? Answer: It contains an each common cause
limit as well as an aggregate limit.
◉ Under the Business Auto Coverage Form (BACF), collision is
generally understood to mean Answer: A striking together with
violent impact.
◉ A common endorsement to the Business Auto Coverage Form
(BACF) is the Employee Hired Auto endorsement. This endorsement
states that an employee of the named insured is an insured Answer:
The employee is an insured while operating an auto rented in the
employee's name with the named insured's permission.
◉ The legislated liability imposed by the Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA
or Superfund) altered traditional common law concerning
responsibilities for environmental pollution by Answer: Superfund
imposes strict liability without regard to fault, even on a retroactive
basis.
◉ Before the enactment of Workers Compensation statutes,
employers were protected against employee suits by common-law
defenses. Under which one of the following common-law defenses
were employees unsuccessful in recovering damages from
occupational injuries resulting in part from the employee's own
negligence? Answer: Contributory negligence
, ◉ An organization may incur losses from legal liabilities in a number
of different ways. Which one of the following actions would best be
described as an intentional tort? Answer: A newspaper mistakenly
identifies the driver in an alcohol-related hit and run accident as
John Doe, a prominent local attorney.
◉ An employee, while working for the Brown Corporation, was
negligent when lighting a cigarette and started a small fire that
caused a fellow employee's clothes to catch fire. The injured
employee suffered burns as well as the loss of clothes. To what
extent, if any, does the corporation's Commercial General Liability
Coverage Form provide coverage for the negligent employee if he is
sued by the injured employee? Answer: There is no coverage for the
negligent employee because he is not an insured under the policy for
bodily injury to a co-employee or damage to such an employee's
property
◉ Adam is an executive at Blithe Manufacturing (Blithe). He drives a
car that is owned by Blithe and insured under the company's
Business Auto Coverage Form (BACF). Adam is permitted to drive
the vehicle for both business and personal use. One Sunday morning,
Adam is driving the car on a highway when he is struck by another
vehicle and pushed into the guardrail. The car that struck Adam did
not stop, but several other people who witnessed the accident did
stop. They all confirmed that Adam was struck by another reckless
driver who never stopped. Adam was seriously injured and car was
totaled. Which one of the following endorsements to Blithe's BACF
