CPCU 551 FULL PRACTICE EXAM
QUESTIONS AND VERIFIED ANSWERS;
100% CORRECT; GRADE A
(MDC) is insured under a Business Income (and Extra Expense)
Coverage Form with a $1 million Business Income limit of
insurance for the 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 MDC's Business
Income (and Extra Expense) Coverage Form. The period began
on July 1. On October 1, , access was denied to MDC for five
weeks by civil authorities because of fire. The loss of business
income that MDC sustained was $70,000, including a $5,000 loss
for the first 72 hours. After the first 72 hours, MDC sustained
$11,000 income loss in week 1, $12,000 income loss in week 2,
$13,000 income loss in week 3, $14,000 income loss in week 4
and $15,000 income loss in week 5. How much business income
loss would be covered?
A. $36,000
B. $50,000
C. $65,000
D. $70,000 - correct answer- b
,(SFS) is insured under a Business Income (and Extra Expense)
Coverage Form with a $1 million Business Income limit of
insurance for the store 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 SFS's Business Income (and
Extra Expense) Coverage Form. The period began on February 1,
20X1. On February 1, 20X1, SFS suffered a partial physical fire
loss and was closed for four months until the building could be
repaired and the personal property replaced. During the four
month interruption, SFS's actual revenue was reduced to nil and
the expenses such as payroll, electricity and overtime labor
totaled $200,000. SFS expected to gain $550,000 in revenue and
have $300,000 in expenses. What is SFS's business income loss?
Select one:
A. $50,000
B. $250,000
C. $350,000
D. $450,000 - correct answer- d
A store, which carries a $20,000 limit, discovered its window was
damaged and the safe door was missing on Monday when an
employee arrived at work. The storeowner immediately
reported this incident to its insurance carrier. The theft
,consisted of precious metal and gemstones that totaled $19,000
in value. How much should the retail store's insurer pay for this
loss?
A. The insurer should pay nothing because precious metals are
excluded from Inside the Premises—Robbery or Safe Burglary of
Other Property coverage.
B. The insurer should pay $5,000, the special limit for this type of
property under Inside the Premises—Robbery or Safe Burglary
of Other Property.
C. The insurer should pay $19,000, since it is falls within the limit
of liability under Inside the Premises—Safe Burglary of Other
Property.
D. The insurer should pay $20,000, the limit of liability under
Inside the Premises—Safe Burglary of Other Proper - correct
answer- b
Cray sells consumer goods. Cray carries a Commercial Package
Policy that includes Insurance Services Office's Commercial
Crime Coverage Form (Loss Sustained) with the following
insuring agreements: Employee Theft; Forgery or Alteration;
Inside the Premises—Theft of Money and Securities; and Inside
the Premises—Robbery or Safe Burglary of Other Property. The
limit of i for each is $100,000 and the deductible per occurrence
, for each one of these insuring agreements is $1,000. The policy
year is 20X1.
During 20X1, Cray performed an inventory calculation and
determined that the actual physical inventory on hand was
$102,000 less than what the company's records indicated.
Cray could not establish that it had sustained a loss without the
inventory calculation. How much of this loss will be covered by
the Employee Theft insuring agreement of the Commercial
Crime Coverage part?
A. $0
B. $99,000
C. $100,000
D. $102,000 - correct answer- a
Question 1
ID# 5856418Points: 1
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Question text
One dimension of analyzing loss exposures is timing of losses.
The timing of losses is significant because
Select one:
QUESTIONS AND VERIFIED ANSWERS;
100% CORRECT; GRADE A
(MDC) is insured under a Business Income (and Extra Expense)
Coverage Form with a $1 million Business Income limit of
insurance for the 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 MDC's Business
Income (and Extra Expense) Coverage Form. The period began
on July 1. On October 1, , access was denied to MDC for five
weeks by civil authorities because of fire. The loss of business
income that MDC sustained was $70,000, including a $5,000 loss
for the first 72 hours. After the first 72 hours, MDC sustained
$11,000 income loss in week 1, $12,000 income loss in week 2,
$13,000 income loss in week 3, $14,000 income loss in week 4
and $15,000 income loss in week 5. How much business income
loss would be covered?
A. $36,000
B. $50,000
C. $65,000
D. $70,000 - correct answer- b
,(SFS) is insured under a Business Income (and Extra Expense)
Coverage Form with a $1 million Business Income limit of
insurance for the store 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 SFS's Business Income (and
Extra Expense) Coverage Form. The period began on February 1,
20X1. On February 1, 20X1, SFS suffered a partial physical fire
loss and was closed for four months until the building could be
repaired and the personal property replaced. During the four
month interruption, SFS's actual revenue was reduced to nil and
the expenses such as payroll, electricity and overtime labor
totaled $200,000. SFS expected to gain $550,000 in revenue and
have $300,000 in expenses. What is SFS's business income loss?
Select one:
A. $50,000
B. $250,000
C. $350,000
D. $450,000 - correct answer- d
A store, which carries a $20,000 limit, discovered its window was
damaged and the safe door was missing on Monday when an
employee arrived at work. The storeowner immediately
reported this incident to its insurance carrier. The theft
,consisted of precious metal and gemstones that totaled $19,000
in value. How much should the retail store's insurer pay for this
loss?
A. The insurer should pay nothing because precious metals are
excluded from Inside the Premises—Robbery or Safe Burglary of
Other Property coverage.
B. The insurer should pay $5,000, the special limit for this type of
property under Inside the Premises—Robbery or Safe Burglary
of Other Property.
C. The insurer should pay $19,000, since it is falls within the limit
of liability under Inside the Premises—Safe Burglary of Other
Property.
D. The insurer should pay $20,000, the limit of liability under
Inside the Premises—Safe Burglary of Other Proper - correct
answer- b
Cray sells consumer goods. Cray carries a Commercial Package
Policy that includes Insurance Services Office's Commercial
Crime Coverage Form (Loss Sustained) with the following
insuring agreements: Employee Theft; Forgery or Alteration;
Inside the Premises—Theft of Money and Securities; and Inside
the Premises—Robbery or Safe Burglary of Other Property. The
limit of i for each is $100,000 and the deductible per occurrence
, for each one of these insuring agreements is $1,000. The policy
year is 20X1.
During 20X1, Cray performed an inventory calculation and
determined that the actual physical inventory on hand was
$102,000 less than what the company's records indicated.
Cray could not establish that it had sustained a loss without the
inventory calculation. How much of this loss will be covered by
the Employee Theft insuring agreement of the Commercial
Crime Coverage part?
A. $0
B. $99,000
C. $100,000
D. $102,000 - correct answer- a
Question 1
ID# 5856418Points: 1
Flag Question
Question text
One dimension of analyzing loss exposures is timing of losses.
The timing of losses is significant because
Select one:
