CPCU 552 / FINAL EXAM
1. A written law passed by a legislative body at the state or federal level is a _________. 1.7
a. Codicil
b. Statute
c. Tort
d. Contract
2. If you want to insure owned and hired /non-owned autos for liability and only scheduled autos
for physical damage, you would select these coverage symbols: 4.9-4.10
a. Symbol 1 for liability, Symbols 8 and 9 for physical damage
b. Symbol 1 for liability, Symbol 7 for physical damage
c. Symbols 2, 8, 9 for liability and physical damage
3. This is one of the four elements of negligence: 1.4
a. A tangential causal connection between the negligent act and the resulting harm.
b. Violation of a hold-harmless agreement.
c. A close causal connection between the negligent act and the resulting harm.
d. A breach of strict liability.
4. Adam is a salesperson with a company car and a non-driving spouse. Adam wants to use his
company car to drive his children to school and to run errands, rather than buying another car
for his personal use, but he’s concerned about insurance coverage. What endorsement can
Adam’s employer include on the business auto policy to cover Adam’s personal use of the
company car? 4.35
a. Individual Named Insured Endorsement
b. Drive Other Car – Broadened Coverage for Named Insured
c. Employees as Insureds
d. None, there is no such endorsement; Adam will need to purchase a personal /
family auto policy.
5. Sue Smith was asked by her manager to bring a package to the FedEx office during the workday.
On the way back to the office, Sue rear-ended another vehicle, which resulted in a neck injury to
its driver. Sue and her employer were both sued by the injured party. Under what legal doctrine
might Sue’s employer be held partially or entirely liable for this accident? 1.9 & classroom
discussion
a. Employers liability
1
, b. Vicarious liability
c. Strict liability
d. Absolute liability
6. A Las Vegas casino houses three tigers in a glassed-in enclosure, where patrons can come to
look at them. At 2 am, when almost no one is around, an animal handler takes one of the tigers
out and guides him through the casino to a parking area, where the animal is to be transported
to a vet. The tiger is on a leash and has been tranquilized. Despite these precautions, the tiger
lunges at a man leaving the casino and bites his arm. The patron sues the casino for pain and
suffering. Will the casino be liable and if so, under what doctrine? 1.5
a. Yes, under strict or absolute liability
b. Yes, under premises liability
c. No, because the casino took all reasonable precautions
d. Yes, under intentional tort
7. The declarations page of a commercial automobile liability policy lists Symbol 4. The policy has
this symbol because: 4.10
a. The policyholder’s fleet has only private passenger autos.
b. The policyholders’ fleet has private passenger autos and trucks.
c. The policyholders’ fleet has only trucks.
d. The policyholder operates a bus service.
8. Joan Smith decides to hold her daughter’s wedding at the Whitehouse Station Country Club.
Joan is concerned that if a guest slips and falls at the wedding reception, she will be sued. What
risk transfer measure can Joan do to reduce her liability exposure? 1.5
a. Ask the club to provide a certificate of insurance adding her as an additional insured for
workers’ compensation coverage
b. Ask the club to take measures to address hazards such as the slippery dance floor
c. Ask the club to sign a hold-harmless agreement
d. Ask the club to provide an evidence of insurance certificate
9. Joe gave his car keys to his thirteen-year old son and asked him to drive one-half mile from their
home to pick up milk at a convenience store. On the way to the store, Joe’s son hit a fence,
causing $4000 damage. In most states, will Joe be liable for this damage? 1.9
a. No, Joe was not the driver
b. Yes, Joe was negligent in giving his car keys to an underage driver
c. Yes, Joe is liable under the absolute, or strict, liability doctrine
d. No, Joe knew that his son has been driving without a license and was a cautious,
experienced driver, so there isn’t any negligence.
2
, 10. A clothing store in a mall employs a security guard. The guard detains two teenagers as they are
exiting the store, and accuses one of them of putting merchandise in her purse without paying
for the goods. The teenager screams at the guard, telling him that she did pay for the item and
has a receipt for it. The guard pulls her by the arm into a back room and questions her in front of
several people. The teenager later hires an attorney and sues the guard and the clothing store
for false arrest or detention, mental anguish, and humiliation. What coverage might respond to
these allegations? 1.26
a. Bodily injury
b. Third-party over liability
c. Personal and advertising injury
d. None
11. Don has a small business and employs several sales representatives, who are provided with
company cars to be used on the job. Don’s business has these autos insured under a
commercial auto policy. Don wants to be able to rent a replacement vehicle if one of the autos
is damaged due to an insured peril and have the rental costs covered under the policy. What
coverage should be purchased? 4.31
a. Comprehensive and collision damage
b. Comprehensive and collision damage including transportation expenses
c. Comprehensive and collision damage including rental reimbursement coverage
d. Nothing, this is not available under the business auto policy
12. Sam recently became a machine shop employee. He was unfamiliar with one of the machines
and did not utilize the guard correctly, which was intended to prevent hand injuries. While using
this machine, Sam seriously injured three fingers, which required surgery. Will Sam’s
contributory negligence reduce or bar payment of his medical expenses and lost time wages?
1.24
a. Yes, if Sam was injured in a state that permits reduction of payment for contributory
negligence on the part of the plaintiff
b. No, because workers’ compensation benefits are not reduced even if the employee is
negligent
c. Yes, benefits will be reduced by 30% since Sam was contributorily negligent
d. No, because of the doctrine of strict or absolute liability
13. A sprinkler system, vehicle air bags, and smoke alarms are all examples of: 1.16
a. Loss avoidance techniques
b. Loss prevention techniques
c. Post-accident techniques
d. Loss reduction techniques
14. Mary tells the salesperson at the dealership that she is trying to decide which SUV to purchase,
as she is not sure that the SUV she prefers will fit in her garage. The salesperson at the Acura
3
1. A written law passed by a legislative body at the state or federal level is a _________. 1.7
a. Codicil
b. Statute
c. Tort
d. Contract
2. If you want to insure owned and hired /non-owned autos for liability and only scheduled autos
for physical damage, you would select these coverage symbols: 4.9-4.10
a. Symbol 1 for liability, Symbols 8 and 9 for physical damage
b. Symbol 1 for liability, Symbol 7 for physical damage
c. Symbols 2, 8, 9 for liability and physical damage
3. This is one of the four elements of negligence: 1.4
a. A tangential causal connection between the negligent act and the resulting harm.
b. Violation of a hold-harmless agreement.
c. A close causal connection between the negligent act and the resulting harm.
d. A breach of strict liability.
4. Adam is a salesperson with a company car and a non-driving spouse. Adam wants to use his
company car to drive his children to school and to run errands, rather than buying another car
for his personal use, but he’s concerned about insurance coverage. What endorsement can
Adam’s employer include on the business auto policy to cover Adam’s personal use of the
company car? 4.35
a. Individual Named Insured Endorsement
b. Drive Other Car – Broadened Coverage for Named Insured
c. Employees as Insureds
d. None, there is no such endorsement; Adam will need to purchase a personal /
family auto policy.
5. Sue Smith was asked by her manager to bring a package to the FedEx office during the workday.
On the way back to the office, Sue rear-ended another vehicle, which resulted in a neck injury to
its driver. Sue and her employer were both sued by the injured party. Under what legal doctrine
might Sue’s employer be held partially or entirely liable for this accident? 1.9 & classroom
discussion
a. Employers liability
1
, b. Vicarious liability
c. Strict liability
d. Absolute liability
6. A Las Vegas casino houses three tigers in a glassed-in enclosure, where patrons can come to
look at them. At 2 am, when almost no one is around, an animal handler takes one of the tigers
out and guides him through the casino to a parking area, where the animal is to be transported
to a vet. The tiger is on a leash and has been tranquilized. Despite these precautions, the tiger
lunges at a man leaving the casino and bites his arm. The patron sues the casino for pain and
suffering. Will the casino be liable and if so, under what doctrine? 1.5
a. Yes, under strict or absolute liability
b. Yes, under premises liability
c. No, because the casino took all reasonable precautions
d. Yes, under intentional tort
7. The declarations page of a commercial automobile liability policy lists Symbol 4. The policy has
this symbol because: 4.10
a. The policyholder’s fleet has only private passenger autos.
b. The policyholders’ fleet has private passenger autos and trucks.
c. The policyholders’ fleet has only trucks.
d. The policyholder operates a bus service.
8. Joan Smith decides to hold her daughter’s wedding at the Whitehouse Station Country Club.
Joan is concerned that if a guest slips and falls at the wedding reception, she will be sued. What
risk transfer measure can Joan do to reduce her liability exposure? 1.5
a. Ask the club to provide a certificate of insurance adding her as an additional insured for
workers’ compensation coverage
b. Ask the club to take measures to address hazards such as the slippery dance floor
c. Ask the club to sign a hold-harmless agreement
d. Ask the club to provide an evidence of insurance certificate
9. Joe gave his car keys to his thirteen-year old son and asked him to drive one-half mile from their
home to pick up milk at a convenience store. On the way to the store, Joe’s son hit a fence,
causing $4000 damage. In most states, will Joe be liable for this damage? 1.9
a. No, Joe was not the driver
b. Yes, Joe was negligent in giving his car keys to an underage driver
c. Yes, Joe is liable under the absolute, or strict, liability doctrine
d. No, Joe knew that his son has been driving without a license and was a cautious,
experienced driver, so there isn’t any negligence.
2
, 10. A clothing store in a mall employs a security guard. The guard detains two teenagers as they are
exiting the store, and accuses one of them of putting merchandise in her purse without paying
for the goods. The teenager screams at the guard, telling him that she did pay for the item and
has a receipt for it. The guard pulls her by the arm into a back room and questions her in front of
several people. The teenager later hires an attorney and sues the guard and the clothing store
for false arrest or detention, mental anguish, and humiliation. What coverage might respond to
these allegations? 1.26
a. Bodily injury
b. Third-party over liability
c. Personal and advertising injury
d. None
11. Don has a small business and employs several sales representatives, who are provided with
company cars to be used on the job. Don’s business has these autos insured under a
commercial auto policy. Don wants to be able to rent a replacement vehicle if one of the autos
is damaged due to an insured peril and have the rental costs covered under the policy. What
coverage should be purchased? 4.31
a. Comprehensive and collision damage
b. Comprehensive and collision damage including transportation expenses
c. Comprehensive and collision damage including rental reimbursement coverage
d. Nothing, this is not available under the business auto policy
12. Sam recently became a machine shop employee. He was unfamiliar with one of the machines
and did not utilize the guard correctly, which was intended to prevent hand injuries. While using
this machine, Sam seriously injured three fingers, which required surgery. Will Sam’s
contributory negligence reduce or bar payment of his medical expenses and lost time wages?
1.24
a. Yes, if Sam was injured in a state that permits reduction of payment for contributory
negligence on the part of the plaintiff
b. No, because workers’ compensation benefits are not reduced even if the employee is
negligent
c. Yes, benefits will be reduced by 30% since Sam was contributorily negligent
d. No, because of the doctrine of strict or absolute liability
13. A sprinkler system, vehicle air bags, and smoke alarms are all examples of: 1.16
a. Loss avoidance techniques
b. Loss prevention techniques
c. Post-accident techniques
d. Loss reduction techniques
14. Mary tells the salesperson at the dealership that she is trying to decide which SUV to purchase,
as she is not sure that the SUV she prefers will fit in her garage. The salesperson at the Acura
3
