2025 M100 COMMUNITY ASSOCIATION MANAGEMENT
EXAM | COMPLETE EXAM QUESTIONS AND CORRECT
ANSWERS WITH RATIONALES | GRADED A+ | VERIFIED
ANSWERS | LATEST EXAM
Which of the following types of exposure to loss for a community
association is characterized by net losses that may involve a reduction in
income or an increase in operating expenses or both?
a. property exposure to loss
b. liability exposure to loss
c. income exposure to loss
d. personnel exposure to loss ---------CORRECT ANSWER-----------------c.
income exposure to loss
There are four types of accidental loss to which a community
association is exposed. Income exposure to loss are net losses that
may involve a reduction in income or an increase in operating
expenses or both.
Which of the following demonstrates the risk control technique of exposure
avoidance?
a. a community association rule prohibiting the use of alcohol in the
clubhouse
b. conducting weekly fire safety inspections where flammables are stored
c. contracting for landscape services
d. backing up all computer files and storing the backup files in a separate
place ---------CORRECT ANSWER-----------------a. a community association
rule prohibiting the use of alcohol in the clubhouse
Exposure avoidance involves avoiding the circumstances that would
expose the community association to certain type of loss. For
example, to avoid problems with serving alcohol in the clubhouse, the
community association has a rule prohibiting the use of alcohol in the
facility.
,True or false. The insurance industry is unregulated at the state level. -------
--CORRECT ANSWER-----------------False
The insurance industry is a highly regulated legal environment at the
state level. Insurers are either admitted or non-admitted at the state
level: both, if licensed, can write insurance, but only admitted
insurers are eligible for state guarantee funds if the insurer becomes
insolvent. Non-admitted insurers are often called Excess & Surplus
(E&S) Lines insurers. The insurance industry is highly regulated at
the state level in terms of policy forms and rates, claims practices,
financial operations, and other basic business practices.
True or false. The American Agency System is comprised of employees of
a single insurance company who only place the insurance of that company,
such as Allstate, Farmers, Nationwide, and State Farm. ---------CORRECT
ANSWER-----------------False
The American Agency System is comprised of insurance agencies
which place insurance for more than one insurance company.
Insurance companies who participate in this system include Aetna,
Chubb, CNA, and Travelers. The Direct Writer System is comprised of
employees of a single insurance company who only place the
insurance of that company. Insurance companies who participate in
this system include Allstate, Farmers, Nationwide, and State Farm.
Commercial package policies contain all of the following EXCEPT:
a. common declarations
b. a selection of forms
c. claims made coverage
d. glossaries ---------CORRECT ANSWER-----------------c. claims made
coverage
Community associations purchase commercial package policies
(CPP), sometimes called "package policies," which combine property
and liability insurance—and possibly other insurance coverages. All
commercial package policies contain common declarations, common
,policy conditions, a selection of forms, optional endorsements, and
glossaries. Claims made coverage means that the claim must be
made during the period of policy coverage.
True or false. The Federal National Mortgage Association (FannieMae) has
a direct impact on community association insurance obligations. ---------
CORRECT ANSWER-----------------True
The Federal National Mortgage Association (FannieMae) and the
Federal Home Loan Mortgage Corporation (FreddieMac) are
government sponsored enterprise, or GSEs. Both GSEs buy
mortgages from lenders and in doing so require certain types of
insurance to be in place, thus impacting community association
insurance obligations.
Which of the following is not a common insurance coverage and
endorsement for property exposures to loss?
a. commercial package policy (CPP) insurance
b. boiler and machinery insurance
c. flood insurance
d. hired and non-owned automobile liability insurance ---------CORRECT
ANSWER-----------------d. hired and non-owned automobile liability
insurance
Common insurance coverages and endorsements for property
exposures to loss include commercial package policy insurance,
boiler and machinery insurance, building ordinance insurance, flood
insurance, and electronic data processing. Hired and non-owned
automobile liability insurance, a common insurance coverage and
endorsement for liability exposures to loss, covers legal claims
arising out of the use of automobiles that are not owned by the
community association, but that are used while acting on behalf of
the association.
, True or false. Employers' liability insurance provides protection for claims
made by injured employees, such as third-party-over actions and dual
capacity actions ---------CORRECT ANSWER-----------------True
Employers' liability provides protection for claims made by injured
employees (and their spouses) for certain types of liability that is
excluded in the CGL, such as third-party-over actions, dual capacity
actions, and so forth. Every community association should consider
obtaining employers' liability insurance.
Which terminology for the following homeowner policies is for a
condominium or cooperative unit owner?
a. HO-6
b. HO-4
c. HO-1
d. HO-1 ---------CORRECT ANSWER-----------------a. HO-6
Terminology varies with insurer, but homeowner (HO) policies are
usually referred to by the following numbers: HO-1, HO-2, HO-3, and
HO-5 refer to policies for owner-occupied units, HO-4 is a tenant's
policy, and HO-6 is a policy for a condominium or cooperative unit
owner.
True or false. The preservation of life and property are paramount concerns
in any insurance contract ---------CORRECT ANSWER-----------------True
There are certain important things to consider when filing insurance
claims. Included among these are that every insurance contract has
its own requirements for filing claims, any possible claim that could
have an adverse economic impact on the community association
should be reported to the insurer, claims may require the filing of
formal proofs of loss, and the preservation of life and property are
paramount concerns in any insurance contract.
EXAM | COMPLETE EXAM QUESTIONS AND CORRECT
ANSWERS WITH RATIONALES | GRADED A+ | VERIFIED
ANSWERS | LATEST EXAM
Which of the following types of exposure to loss for a community
association is characterized by net losses that may involve a reduction in
income or an increase in operating expenses or both?
a. property exposure to loss
b. liability exposure to loss
c. income exposure to loss
d. personnel exposure to loss ---------CORRECT ANSWER-----------------c.
income exposure to loss
There are four types of accidental loss to which a community
association is exposed. Income exposure to loss are net losses that
may involve a reduction in income or an increase in operating
expenses or both.
Which of the following demonstrates the risk control technique of exposure
avoidance?
a. a community association rule prohibiting the use of alcohol in the
clubhouse
b. conducting weekly fire safety inspections where flammables are stored
c. contracting for landscape services
d. backing up all computer files and storing the backup files in a separate
place ---------CORRECT ANSWER-----------------a. a community association
rule prohibiting the use of alcohol in the clubhouse
Exposure avoidance involves avoiding the circumstances that would
expose the community association to certain type of loss. For
example, to avoid problems with serving alcohol in the clubhouse, the
community association has a rule prohibiting the use of alcohol in the
facility.
,True or false. The insurance industry is unregulated at the state level. -------
--CORRECT ANSWER-----------------False
The insurance industry is a highly regulated legal environment at the
state level. Insurers are either admitted or non-admitted at the state
level: both, if licensed, can write insurance, but only admitted
insurers are eligible for state guarantee funds if the insurer becomes
insolvent. Non-admitted insurers are often called Excess & Surplus
(E&S) Lines insurers. The insurance industry is highly regulated at
the state level in terms of policy forms and rates, claims practices,
financial operations, and other basic business practices.
True or false. The American Agency System is comprised of employees of
a single insurance company who only place the insurance of that company,
such as Allstate, Farmers, Nationwide, and State Farm. ---------CORRECT
ANSWER-----------------False
The American Agency System is comprised of insurance agencies
which place insurance for more than one insurance company.
Insurance companies who participate in this system include Aetna,
Chubb, CNA, and Travelers. The Direct Writer System is comprised of
employees of a single insurance company who only place the
insurance of that company. Insurance companies who participate in
this system include Allstate, Farmers, Nationwide, and State Farm.
Commercial package policies contain all of the following EXCEPT:
a. common declarations
b. a selection of forms
c. claims made coverage
d. glossaries ---------CORRECT ANSWER-----------------c. claims made
coverage
Community associations purchase commercial package policies
(CPP), sometimes called "package policies," which combine property
and liability insurance—and possibly other insurance coverages. All
commercial package policies contain common declarations, common
,policy conditions, a selection of forms, optional endorsements, and
glossaries. Claims made coverage means that the claim must be
made during the period of policy coverage.
True or false. The Federal National Mortgage Association (FannieMae) has
a direct impact on community association insurance obligations. ---------
CORRECT ANSWER-----------------True
The Federal National Mortgage Association (FannieMae) and the
Federal Home Loan Mortgage Corporation (FreddieMac) are
government sponsored enterprise, or GSEs. Both GSEs buy
mortgages from lenders and in doing so require certain types of
insurance to be in place, thus impacting community association
insurance obligations.
Which of the following is not a common insurance coverage and
endorsement for property exposures to loss?
a. commercial package policy (CPP) insurance
b. boiler and machinery insurance
c. flood insurance
d. hired and non-owned automobile liability insurance ---------CORRECT
ANSWER-----------------d. hired and non-owned automobile liability
insurance
Common insurance coverages and endorsements for property
exposures to loss include commercial package policy insurance,
boiler and machinery insurance, building ordinance insurance, flood
insurance, and electronic data processing. Hired and non-owned
automobile liability insurance, a common insurance coverage and
endorsement for liability exposures to loss, covers legal claims
arising out of the use of automobiles that are not owned by the
community association, but that are used while acting on behalf of
the association.
, True or false. Employers' liability insurance provides protection for claims
made by injured employees, such as third-party-over actions and dual
capacity actions ---------CORRECT ANSWER-----------------True
Employers' liability provides protection for claims made by injured
employees (and their spouses) for certain types of liability that is
excluded in the CGL, such as third-party-over actions, dual capacity
actions, and so forth. Every community association should consider
obtaining employers' liability insurance.
Which terminology for the following homeowner policies is for a
condominium or cooperative unit owner?
a. HO-6
b. HO-4
c. HO-1
d. HO-1 ---------CORRECT ANSWER-----------------a. HO-6
Terminology varies with insurer, but homeowner (HO) policies are
usually referred to by the following numbers: HO-1, HO-2, HO-3, and
HO-5 refer to policies for owner-occupied units, HO-4 is a tenant's
policy, and HO-6 is a policy for a condominium or cooperative unit
owner.
True or false. The preservation of life and property are paramount concerns
in any insurance contract ---------CORRECT ANSWER-----------------True
There are certain important things to consider when filing insurance
claims. Included among these are that every insurance contract has
its own requirements for filing claims, any possible claim that could
have an adverse economic impact on the community association
should be reported to the insurer, claims may require the filing of
formal proofs of loss, and the preservation of life and property are
paramount concerns in any insurance contract.
