CMCA EXAM 2024 REAL EXAM QUESTIONS AND
CORRECT ANSWERS(VERIFIED ANSWERS)|
AGRADE
Aggregate
a maximum amount an insurer will reimburse a policyholder for all covered losses
during a set time period, usually one year.
Risk Management
Identifying, assessing, responding to risk by reducing, removing, and insuring threats
Risk Inventory
Contacts, resources, areas to inspect & keep record of
Immediate exposers to risk
Severe weather, deficiencies, negligence
Speed of Response
Authorization, information, money, equipment, personnel, schedule
Types of Exposure
Property, Net Income, Liability, Personnel
Property Exposures
physical damages to property
Net Income exposures
Unexpected increase in cost/money
Personnel Exposures
death, retirement, resignation
Liability Exposures
3rd party claims against association. (worker injured and suing ex)
Liability Insurance Coverages
Bodily injury, property damage, personnel injury (said/did), advertising injury
(written/published)
D&O Insurance
Wrongful acts by association/board, negligence, omission, monetary (devalued), non-
monetary(freedom)
Community Manager role in Risk Responsibility
Identify, review, monitor risk, inform Board, oversee insurance.
Insurance Agent
sells insurance, works for single carrier
Insurance broker
Sells insurance, works with multiple carriers
Loss Frequency
Number of times loss may occur
Loss Severity
expected $ loss from event.
Risk Control
reduce or eliminate exposure
Risk Financing
,Options to cover $ of loss
Exposure avoidance
eliminating chance of loss
Loss Prevention
reducing likelihood of loss (training, inspections)
Loss Reduction
reducing severity of loss (fire sprinkler)
Contractual Transfer
shift loss from association to other (ex. vendor, insurance)
Risk Retention
association finds way to pay for losses
Risk Transfer
association finds way to transfer responsibility to another party
Funding to pay for losses: Current expensing
shifting cost from one GL to another
Funding to pay for losses: Funded Reserve
pull from reserves to cover cost
Funding to pay for losses: Unfunded expense.
Special assessment to cover cost
Funding to pay for losses: Borrowing
Taking out a loan/credit to cover expense
Decision Matrix: Risk Retention
Low frequency, low severity
Decision Matrix: Risk Transfer
Low frequency, High severity
Decision Matrix: Risk Control
High frequency, low severity
Decision Matrix: Combination
High frequency, High severity
Screening Bidders for Insurance
Policies tailored to your needs, HOA experience, carrier ratings.
RFP Components for Insurance
Intro, contacts, instruction/timing for submission, bid specs, fact sheet HOA, Gov Docs,
Loss runs.
RFP
primarily for large projects, bid specs, inform on association, work conditions,
surveys/outline job, dates, warranty reqs
BBB
Better Business Bureau
RFP Contract provisions
-parties involved
-scope of work
-compensation, time period
-warranty, indemnification, insurance
-permits/license
-default financial protection.
, Loss Run
History of claims on insurance policy
Insurance proposal: Binding
carrier gives agent authority to commit to insuring once association accepts.
Insurance proposal: Firm
numbers wont change unless specifications change
Insurance proposal: Conditional
all must be declared first
Insurance Premium Calculation: Property
Value of building x Rate
Insurance Premium Calculation: Commercial Gen Liability
# of units x rate + features
Insurance Premium Calculation: Workers Comp
Payroll x rate (not fixed)
Property Coverage
fidelity, environmental, flood, vehicle
Liability Coverage
general, D&O, umbrella, (vehicle non-owned)
Personnel Coverage
Worker comp, employment liability
Fidelity
to protect the association and property owners from financial fraud committed by the
individuals who handle money for the association.
Net Income Coverage
Money
Workers Comp
protects volunteers, board, association (even if workers not present)
Blanket Coverage
Includes all oversights of other coverages
Parts of Insurance Policy
conditions, declarations, exclusions, agreement, definition, endorsement.
Lien
Legal claim by association/one party on the property of another/homeowner to obtain
debt or obligation
Association Purpose
Provide for community, Government, and business.
Planned Community
Owner owns lot, association owns common area
Condominium
owner owns unit/owns divided interest in common areas, association owns no real
estate.
Cooperative
owner owns stock/leases unit, association owns building/unit/common area
Umbrella Association
more than one association/has sub associations
Mixed use
CORRECT ANSWERS(VERIFIED ANSWERS)|
AGRADE
Aggregate
a maximum amount an insurer will reimburse a policyholder for all covered losses
during a set time period, usually one year.
Risk Management
Identifying, assessing, responding to risk by reducing, removing, and insuring threats
Risk Inventory
Contacts, resources, areas to inspect & keep record of
Immediate exposers to risk
Severe weather, deficiencies, negligence
Speed of Response
Authorization, information, money, equipment, personnel, schedule
Types of Exposure
Property, Net Income, Liability, Personnel
Property Exposures
physical damages to property
Net Income exposures
Unexpected increase in cost/money
Personnel Exposures
death, retirement, resignation
Liability Exposures
3rd party claims against association. (worker injured and suing ex)
Liability Insurance Coverages
Bodily injury, property damage, personnel injury (said/did), advertising injury
(written/published)
D&O Insurance
Wrongful acts by association/board, negligence, omission, monetary (devalued), non-
monetary(freedom)
Community Manager role in Risk Responsibility
Identify, review, monitor risk, inform Board, oversee insurance.
Insurance Agent
sells insurance, works for single carrier
Insurance broker
Sells insurance, works with multiple carriers
Loss Frequency
Number of times loss may occur
Loss Severity
expected $ loss from event.
Risk Control
reduce or eliminate exposure
Risk Financing
,Options to cover $ of loss
Exposure avoidance
eliminating chance of loss
Loss Prevention
reducing likelihood of loss (training, inspections)
Loss Reduction
reducing severity of loss (fire sprinkler)
Contractual Transfer
shift loss from association to other (ex. vendor, insurance)
Risk Retention
association finds way to pay for losses
Risk Transfer
association finds way to transfer responsibility to another party
Funding to pay for losses: Current expensing
shifting cost from one GL to another
Funding to pay for losses: Funded Reserve
pull from reserves to cover cost
Funding to pay for losses: Unfunded expense.
Special assessment to cover cost
Funding to pay for losses: Borrowing
Taking out a loan/credit to cover expense
Decision Matrix: Risk Retention
Low frequency, low severity
Decision Matrix: Risk Transfer
Low frequency, High severity
Decision Matrix: Risk Control
High frequency, low severity
Decision Matrix: Combination
High frequency, High severity
Screening Bidders for Insurance
Policies tailored to your needs, HOA experience, carrier ratings.
RFP Components for Insurance
Intro, contacts, instruction/timing for submission, bid specs, fact sheet HOA, Gov Docs,
Loss runs.
RFP
primarily for large projects, bid specs, inform on association, work conditions,
surveys/outline job, dates, warranty reqs
BBB
Better Business Bureau
RFP Contract provisions
-parties involved
-scope of work
-compensation, time period
-warranty, indemnification, insurance
-permits/license
-default financial protection.
, Loss Run
History of claims on insurance policy
Insurance proposal: Binding
carrier gives agent authority to commit to insuring once association accepts.
Insurance proposal: Firm
numbers wont change unless specifications change
Insurance proposal: Conditional
all must be declared first
Insurance Premium Calculation: Property
Value of building x Rate
Insurance Premium Calculation: Commercial Gen Liability
# of units x rate + features
Insurance Premium Calculation: Workers Comp
Payroll x rate (not fixed)
Property Coverage
fidelity, environmental, flood, vehicle
Liability Coverage
general, D&O, umbrella, (vehicle non-owned)
Personnel Coverage
Worker comp, employment liability
Fidelity
to protect the association and property owners from financial fraud committed by the
individuals who handle money for the association.
Net Income Coverage
Money
Workers Comp
protects volunteers, board, association (even if workers not present)
Blanket Coverage
Includes all oversights of other coverages
Parts of Insurance Policy
conditions, declarations, exclusions, agreement, definition, endorsement.
Lien
Legal claim by association/one party on the property of another/homeowner to obtain
debt or obligation
Association Purpose
Provide for community, Government, and business.
Planned Community
Owner owns lot, association owns common area
Condominium
owner owns unit/owns divided interest in common areas, association owns no real
estate.
Cooperative
owner owns stock/leases unit, association owns building/unit/common area
Umbrella Association
more than one association/has sub associations
Mixed use
