CPCU 552 LATEST EXAM 2024-
j j j j
2025 TEST BANK WITH 500 ACTUAL EXAM QUESTIONS AND CORRECT A
j j j j j j j j j j
NSWERS GRADED A (100% CORRECTANSWERS) ALREADY GRADED A
j j j j j j j j
Anjindividualjallegesjajwrongfuljactjbyjthejdirectorjofjajcompany.jInjorderjtojclassifyjthejallegat
ionjasjajclaimjunderjajdirectorsj&jofficersjpolicy,jwhichjonejofjthejfollowingjmustjoccur?
a) Ajwrittenjdemandjforjmonetaryjorjnon-monetaryjrelief
b) Ajverbaljdemandjforjmonetaryjorjnon-monetaryjrelief
c) Thejthreatjofjajfiledjlawsuitjagainstjthejdirector
d) Thejinitiationjofjcriminaljproceedingsj-ja
Whatjisjthejdifferencejinjthejcoveragejprovidedjbyjajdirectorsjandjofficersjliabilityjinsurancejpol
icyj(D&O)jandjthejcoveragejprovidedjunderjthejCommercialjGeneraljLiabilityjCoveragejFormj(
CGL)jandjthejBusinessjAutojCoveragejFormj(BACF)?
a) ThejD&Ojliabilityjinsurancejpolicyjprovidesjcoveragejagainstjindirectjlosses,jwhilejthej
CGLj&jBACFjcoverjonlyjdirectjlosses.
b) ThejD&Ojliabilityjinsurancejpolicyjprovidesjcoveragejforjwrongfuljactsjthatjdojnotjquali
fyjasjbodilyjinjury,jpropertyjdamage,jpersonaljinjury,jorjadvertisingjinjury.
c)ThejD&Ojliabilityjinsurancejpolicyjprovidesjcoveragejagainstjdirectjlosses,jwhilejthejGLj&
jBACFjcoverjonlyjindirectjlosses.
d) ThejD&Ojliabilityjinsurancejpolicyjonlyjprovidesjremediesjinjthejformjofj"actions",jwhile
jthejCGLj&jBACFjpayjcash.j -jb
Howjisjthejwordj"loss"jusedjdifferentlyjinjajdirectorsjandjofficersj(D&O)jliabilityjpolicyjversusjinja
jCommercialjGeneraljLiabilityj(CGL)jpolicy?
a) InjajCGLjpolicy,jthejtotalj"loss"jpayablejincludesjpaymentsjofjdefensejexpense;jinjajD&Oj
policy,jdefensejexpensesjarejoutsidejthejtotaljamountjpayable
b) InjajD&Ojpolicy,jdefensejexpensesjarejnotjpayable.
c) InjajCGLjpolicy,jdefensejexpensesjarejnotjpayable.
d) InjajD&Ojpolicy,jthejtotalj"loss"jpayablejincludesjpaymentjofjdefensejexpense;jinjajCGLjp
olicy,jdefensejexpensesjarejoutsidejthejtotaljamountjpayable.j -jd
WhatjisjthejpurposejofjCoveragejAjunderjajDirectorsjandjOfficersj(D&O)jliabilityjpolicy?
a) Tojindemnifyjthejcorporationjforjitsjownjwrongfuljacts,jifjsuchjindemnificationjisjnotjrequi
redjorjpermittedjbyjlaw.
b) Tojindemnifyjthejindividualjdirectorsjandjofficersjforjtheirjwrongfuljacts,jifjsuchjinde
mnificationjisjneitherjrequiredjnorjpermittedjbyjlaw.
,c) Tojreimbursejthejcorporationjforjsumsjthatjitjmustjpayjonjbehalfjofjitsjdirectorsj andjofficer
sj,jifjsuchjreimbursementsjisjnotjrequiredjorjpermittedjbyjlaw.
d) TOjreimbursejthejcorporationjforjhtejpremiumsjpaidjtojthejD&Ojinsurerjifjsuchjreimb
ursementjisjnotjrequiredjorjpermittedjbyjlaw.j -jb
CoveragejAjandjCoveragejBjofjmostjD&Ojliabilityjpoliciesjinsurejdifferentjentitiesjforjthejs
amejtypejclaims.jWhichjonejofjthejfollowingjisjanjentityjinsuredjunderjthesejpoliciesjforjclai
msjbroughtjagainstjthejentityjorjindividual?
a) Thejcorporationjitself
b) Customersjofjthejcorporation
c) Stockholdersjofjthejcorporation
d) Employeesjofjthejcorporationj-ja
ManyjD&Ojliabilityjpoliciesjmayjcontainjaj3rdjinsuringjagreementjcalledjCoveragejC.jCover
agejCjmakesjthejcorporationjanjentityjforjclaimsjmadejagainstjitjforjwrongfuljacts.jWhichjonej
ofjthejfollowingjexplainsjwhyjbotherjCoveragejB,jwhichjinsuresjthejcorporation,jandjCovera
gejCjwhichjalsojinsuresjthejcorporation,jmayjbothjbejneeded?
a) CoveragejCjwouldjcoverjindividualjdirectorsjandjofficersjwhilejCoveragejBjcoversjforjreim
bursementjtojthejcorporation.
b) CoveragejBjcoversjforjindemnificationjtojitsjdirectorsjandjofficersjwhilejCoveragejCjcove
rsjforjthejcorporation'sjwrongfuljacts.
c) IfjthejInsurancejcarrierjwerejtojdeclinejcoveragejunderjCoveragejB,jthejInsuredjwoul
djstilljbejablejtojmakejclaimjunderjCoveragejC.
d) IfjthejlimitsjunderjCoveragejBjwerejexhaustedjthejInsuredjwouldjbejablejtojproceedjunderj
thejCoveragejCjprovisionjofjthejpolicy.j-jb
WhichjonejofjthejfollowingjstatementsjisjtruejregardingjCoveragejBjofjajdirectorsjandjofficersj(
D&O)jliabilityjpolicy?
a) CoveragejBjinsuresjthejindividualjdirectorsjandjofficers,jindemnifyingjthemjforjcov
eredjclaimsjwhenjneitherjrequiredjnorjpermittedjbyjlaw.
b) Coveragejinsuresjthejcorporationjforjamountsjthatjitjisjlawfullyjrequiredjtojpayjtojsettlej
claimsjagainstjthejdirectorsjandjofficers.
c) CoveragejBjcoveragejisjrestrictedjtojlossesjforjwhichjthejcorporationjdoesjnotjorjcann
otjprovidejindemnificationjtojthejdirectorjorjofficer.
d) CoveragejBjmakesjthejcorporationjitselfjasjanjinsuredjforjclaimsjmadejagainstjitjbeca
usejofjwrongfuljactsjcoveredjbyjthejpolicy.j-jb
Whichjonejofjthejfollowingjstatementsjisjtruejregardingjthejusejofjdeductiblesjandjcoins
urancejinjdirectorsjandjofficersj(D&O)jliabilityjpolicies?
a) SubstantialjdeductiblesjoftenjapplyjtojCoveragejB,jwithjajsmalljorjnojdeductiblejappli
cablejtojCoveragejA.
, b) MostjD&Ojpoliciesjincludejajpercentagejdeductiblejthatjdisappearsjafterjaj claimjhasjreac
hedjajcertainjamount.
c) Becausejtherejisjnoj"valuation"jinjD&OjInsurance,jD&Ojpoliciesjdojnotjcontainjajcoins
urancejprovision.
d) D&Ojpoliciesjdojnotjhavejdeductiblesjbutjgenerallyjimposejajsubstantialjcoinsurancejpen
altyjforjunderinsurance.j-ja
CoveragejBjofjthejinsuringjagreementjinjthejdirectorsjandjofficersj(D&O)jliabilityjpolicyjisjalso
jcalled:
a) Indemnificationjcoverage
b) Directjcoverage
c) Individualjcoverage
d) Entityjcoveragej-ja
Whichjonejofjthejfollowingjstatementsjisjaccuratejconcerningjajstandard,junendorsedjdire
ctorsjandjofficersj(D&O)jpolicy?
a) Ajpolicyjprovidesj15-
25jdayjautomaticjtailjcoverage,jwithjanjoccurrencejcoveragejtrigger.
b) Ajpolicyjprovidesj30-
60jdayjautomaticjtailjcoverage,jwithjajclaimsjmadejcoveragejtrigger.
c) Ajpolicyjprovidesj120-dayjautomaticjtailjcoverage,jwithjajclaims-
madejcoveragejtrigger.
d) Ajpolicyjdoesjnotjprovidejautomaticjtailjcoverage,jwithjanjoccurrencejcoveragejtrigg
er.j-jb
ABCjCorporationjandjitsjdirectorsjhavejbeenjsuedjbyjajgroupjofjshareholders,jallegingjthatjmis
-managementjofjthejcompanyjledjtojajlargejdropjinjthejper-
sharejpricejofjthejstock.jABCjhasjajdirectorsjandjofficersj(D&O)jliabilityjpolicy.
Afterjajlong,jdrawn-
outjperiod,jABC'sjdirectorsjandjofficersjInsurerjhasjreachedjanjagreementjwithjthejshareh
oldersjtojsettlejtheirjclaimjforjajcertainjamountjofjmoney.jHowever,jABCjneitherjlikesjnorja
pprovesjofjthisjsettlementjandjrefusesjtojconsentjtojthejsettlement.jBecausejofjthatjrefusalj
tojconsentjtojthejsettlement,jthejinsurerjsaysjthatjABCjmustjfundjitsjownjdefensejfromjthisj
pointjforward.
WhatjisjthejnamejgivenjtojthejclausejinjthejpolicyjinvokedjbyjthejInsurerjinjthisjcase?
a) Thejout-of-pocketjclause
b) Thejhammerjclause
c) Thejextrajexpensejclause
d) Thejdefensejclausej-jb
Whichjonejofjthejfollowingjisjajmajorjresponsibilityjofjcorporatejdirectors?
j j j j
2025 TEST BANK WITH 500 ACTUAL EXAM QUESTIONS AND CORRECT A
j j j j j j j j j j
NSWERS GRADED A (100% CORRECTANSWERS) ALREADY GRADED A
j j j j j j j j
Anjindividualjallegesjajwrongfuljactjbyjthejdirectorjofjajcompany.jInjorderjtojclassifyjthejallegat
ionjasjajclaimjunderjajdirectorsj&jofficersjpolicy,jwhichjonejofjthejfollowingjmustjoccur?
a) Ajwrittenjdemandjforjmonetaryjorjnon-monetaryjrelief
b) Ajverbaljdemandjforjmonetaryjorjnon-monetaryjrelief
c) Thejthreatjofjajfiledjlawsuitjagainstjthejdirector
d) Thejinitiationjofjcriminaljproceedingsj-ja
Whatjisjthejdifferencejinjthejcoveragejprovidedjbyjajdirectorsjandjofficersjliabilityjinsurancejpol
icyj(D&O)jandjthejcoveragejprovidedjunderjthejCommercialjGeneraljLiabilityjCoveragejFormj(
CGL)jandjthejBusinessjAutojCoveragejFormj(BACF)?
a) ThejD&Ojliabilityjinsurancejpolicyjprovidesjcoveragejagainstjindirectjlosses,jwhilejthej
CGLj&jBACFjcoverjonlyjdirectjlosses.
b) ThejD&Ojliabilityjinsurancejpolicyjprovidesjcoveragejforjwrongfuljactsjthatjdojnotjquali
fyjasjbodilyjinjury,jpropertyjdamage,jpersonaljinjury,jorjadvertisingjinjury.
c)ThejD&Ojliabilityjinsurancejpolicyjprovidesjcoveragejagainstjdirectjlosses,jwhilejthejGLj&
jBACFjcoverjonlyjindirectjlosses.
d) ThejD&Ojliabilityjinsurancejpolicyjonlyjprovidesjremediesjinjthejformjofj"actions",jwhile
jthejCGLj&jBACFjpayjcash.j -jb
Howjisjthejwordj"loss"jusedjdifferentlyjinjajdirectorsjandjofficersj(D&O)jliabilityjpolicyjversusjinja
jCommercialjGeneraljLiabilityj(CGL)jpolicy?
a) InjajCGLjpolicy,jthejtotalj"loss"jpayablejincludesjpaymentsjofjdefensejexpense;jinjajD&Oj
policy,jdefensejexpensesjarejoutsidejthejtotaljamountjpayable
b) InjajD&Ojpolicy,jdefensejexpensesjarejnotjpayable.
c) InjajCGLjpolicy,jdefensejexpensesjarejnotjpayable.
d) InjajD&Ojpolicy,jthejtotalj"loss"jpayablejincludesjpaymentjofjdefensejexpense;jinjajCGLjp
olicy,jdefensejexpensesjarejoutsidejthejtotaljamountjpayable.j -jd
WhatjisjthejpurposejofjCoveragejAjunderjajDirectorsjandjOfficersj(D&O)jliabilityjpolicy?
a) Tojindemnifyjthejcorporationjforjitsjownjwrongfuljacts,jifjsuchjindemnificationjisjnotjrequi
redjorjpermittedjbyjlaw.
b) Tojindemnifyjthejindividualjdirectorsjandjofficersjforjtheirjwrongfuljacts,jifjsuchjinde
mnificationjisjneitherjrequiredjnorjpermittedjbyjlaw.
,c) Tojreimbursejthejcorporationjforjsumsjthatjitjmustjpayjonjbehalfjofjitsjdirectorsj andjofficer
sj,jifjsuchjreimbursementsjisjnotjrequiredjorjpermittedjbyjlaw.
d) TOjreimbursejthejcorporationjforjhtejpremiumsjpaidjtojthejD&Ojinsurerjifjsuchjreimb
ursementjisjnotjrequiredjorjpermittedjbyjlaw.j -jb
CoveragejAjandjCoveragejBjofjmostjD&Ojliabilityjpoliciesjinsurejdifferentjentitiesjforjthejs
amejtypejclaims.jWhichjonejofjthejfollowingjisjanjentityjinsuredjunderjthesejpoliciesjforjclai
msjbroughtjagainstjthejentityjorjindividual?
a) Thejcorporationjitself
b) Customersjofjthejcorporation
c) Stockholdersjofjthejcorporation
d) Employeesjofjthejcorporationj-ja
ManyjD&Ojliabilityjpoliciesjmayjcontainjaj3rdjinsuringjagreementjcalledjCoveragejC.jCover
agejCjmakesjthejcorporationjanjentityjforjclaimsjmadejagainstjitjforjwrongfuljacts.jWhichjonej
ofjthejfollowingjexplainsjwhyjbotherjCoveragejB,jwhichjinsuresjthejcorporation,jandjCovera
gejCjwhichjalsojinsuresjthejcorporation,jmayjbothjbejneeded?
a) CoveragejCjwouldjcoverjindividualjdirectorsjandjofficersjwhilejCoveragejBjcoversjforjreim
bursementjtojthejcorporation.
b) CoveragejBjcoversjforjindemnificationjtojitsjdirectorsjandjofficersjwhilejCoveragejCjcove
rsjforjthejcorporation'sjwrongfuljacts.
c) IfjthejInsurancejcarrierjwerejtojdeclinejcoveragejunderjCoveragejB,jthejInsuredjwoul
djstilljbejablejtojmakejclaimjunderjCoveragejC.
d) IfjthejlimitsjunderjCoveragejBjwerejexhaustedjthejInsuredjwouldjbejablejtojproceedjunderj
thejCoveragejCjprovisionjofjthejpolicy.j-jb
WhichjonejofjthejfollowingjstatementsjisjtruejregardingjCoveragejBjofjajdirectorsjandjofficersj(
D&O)jliabilityjpolicy?
a) CoveragejBjinsuresjthejindividualjdirectorsjandjofficers,jindemnifyingjthemjforjcov
eredjclaimsjwhenjneitherjrequiredjnorjpermittedjbyjlaw.
b) Coveragejinsuresjthejcorporationjforjamountsjthatjitjisjlawfullyjrequiredjtojpayjtojsettlej
claimsjagainstjthejdirectorsjandjofficers.
c) CoveragejBjcoveragejisjrestrictedjtojlossesjforjwhichjthejcorporationjdoesjnotjorjcann
otjprovidejindemnificationjtojthejdirectorjorjofficer.
d) CoveragejBjmakesjthejcorporationjitselfjasjanjinsuredjforjclaimsjmadejagainstjitjbeca
usejofjwrongfuljactsjcoveredjbyjthejpolicy.j-jb
Whichjonejofjthejfollowingjstatementsjisjtruejregardingjthejusejofjdeductiblesjandjcoins
urancejinjdirectorsjandjofficersj(D&O)jliabilityjpolicies?
a) SubstantialjdeductiblesjoftenjapplyjtojCoveragejB,jwithjajsmalljorjnojdeductiblejappli
cablejtojCoveragejA.
, b) MostjD&Ojpoliciesjincludejajpercentagejdeductiblejthatjdisappearsjafterjaj claimjhasjreac
hedjajcertainjamount.
c) Becausejtherejisjnoj"valuation"jinjD&OjInsurance,jD&Ojpoliciesjdojnotjcontainjajcoins
urancejprovision.
d) D&Ojpoliciesjdojnotjhavejdeductiblesjbutjgenerallyjimposejajsubstantialjcoinsurancejpen
altyjforjunderinsurance.j-ja
CoveragejBjofjthejinsuringjagreementjinjthejdirectorsjandjofficersj(D&O)jliabilityjpolicyjisjalso
jcalled:
a) Indemnificationjcoverage
b) Directjcoverage
c) Individualjcoverage
d) Entityjcoveragej-ja
Whichjonejofjthejfollowingjstatementsjisjaccuratejconcerningjajstandard,junendorsedjdire
ctorsjandjofficersj(D&O)jpolicy?
a) Ajpolicyjprovidesj15-
25jdayjautomaticjtailjcoverage,jwithjanjoccurrencejcoveragejtrigger.
b) Ajpolicyjprovidesj30-
60jdayjautomaticjtailjcoverage,jwithjajclaimsjmadejcoveragejtrigger.
c) Ajpolicyjprovidesj120-dayjautomaticjtailjcoverage,jwithjajclaims-
madejcoveragejtrigger.
d) Ajpolicyjdoesjnotjprovidejautomaticjtailjcoverage,jwithjanjoccurrencejcoveragejtrigg
er.j-jb
ABCjCorporationjandjitsjdirectorsjhavejbeenjsuedjbyjajgroupjofjshareholders,jallegingjthatjmis
-managementjofjthejcompanyjledjtojajlargejdropjinjthejper-
sharejpricejofjthejstock.jABCjhasjajdirectorsjandjofficersj(D&O)jliabilityjpolicy.
Afterjajlong,jdrawn-
outjperiod,jABC'sjdirectorsjandjofficersjInsurerjhasjreachedjanjagreementjwithjthejshareh
oldersjtojsettlejtheirjclaimjforjajcertainjamountjofjmoney.jHowever,jABCjneitherjlikesjnorja
pprovesjofjthisjsettlementjandjrefusesjtojconsentjtojthejsettlement.jBecausejofjthatjrefusalj
tojconsentjtojthejsettlement,jthejinsurerjsaysjthatjABCjmustjfundjitsjownjdefensejfromjthisj
pointjforward.
WhatjisjthejnamejgivenjtojthejclausejinjthejpolicyjinvokedjbyjthejInsurerjinjthisjcase?
a) Thejout-of-pocketjclause
b) Thejhammerjclause
c) Thejextrajexpensejclause
d) Thejdefensejclausej-jb
Whichjonejofjthejfollowingjisjajmajorjresponsibilityjofjcorporatejdirectors?
