CPCU 552 QUESTIONS AND ANSWERS
liability loss exposure - Answer -Any condition or situation that presents the possibility
of a claim alleging legal responsibility of a person or business for injury or damage
suffered by another party.
legal liability - Answer -The legally enforceable obligation of a person or an organization
to pay a sum of money (called damages) to another person or organization.
civil law - Answer -A classification of law that applies to legal matters not governed by
criminal law and that protects rights and provides remedies for breaches of duties owed
to others.
criminal law - Answer -The branch of the law that imposes penalties for wrongs against
society.
civil wrong - Answer -A wrong against a person or persons, for which remedies include
damages awarded to the victim and court-ordered injunctions to prevent further injury.
crimes - Answer -Certain activities deemed by society to be harmful to public welfare.
damages - Answer -money claimed by, or a monetary awarded to, a party who has
suffered loss or injury for which another party is legally responsible.
tort - Answer -A wrongful act or an omission, other than a crime or a breach of contract,
that invades a legally protected right.
negligence - Answer -The failure to exercise the degree of care that a reasonable
person in a similar situation would exercise to avoid harming others.
intentional tort - Answer -A tort committed by a person who foresees (or should be able
to foresee) that his of her act will harm another person.
Strict liability (absolute liability) - Answer -Liability imposed by a court or by a statute in
the absence of fault when harm results from activities or conditions that are extremely
dangerous, unnatural, ultrahazardous, extraordinary, abnormal, or inappropriate.
contract - Answer -A legally enforceable agreement between two or more parties.
breach of contract - Answer -The failure, without legal excuse, to fulfill a contractual
promise.
hold-harmless agreement (or indemnity agreement) - Answer -A contractual provision
that obligates one of the parties to assumer the legal liability of another party.
, Statute - Answer -A written law passed by a legislative body at either the federal or
state level.
loss of consortium - Answer -The loss of benefits that one spouse is entitled to receive
from the other, including companionship, affection, and sexual relations resulting from
the injury or death of a spouse.
loss prevention - Answer -A risk control technique that reduces the frequency of a
particular loss.
loss reduction - Answer -A risk control technique that reduces the severity of a
particular loss.
bail bond - Answer -A bond that guarantees that the accused insured will appear in
court at the time designated for the trial or hearing.
release of attachment bond - Answer -A bond that guarantees that the insured will pay
any damages and court costs if the court should decide in the claimant's favor.
Indemnitee - Answer -Party in a hold-harmless agreement whose legal liability is
assumed by the indemnitor.
excess liability insurance - Answer -Insurance coverage for losses that exceeded the
limits of underlying insurance coverage or a retention amount.
umbrella liability policy - Answer -A liability policy that provides excess coverage above
underlying policies and may also provide coverage not available in the underlying
policies, subject to a self-insured retention.
dram shop act - Answer -A statute holding establishments that serve alcoholic
beverages responsible for ham that results from serving patrons alcohol in violation of
the statute.
personal loss exposure - Answer -Any condition or situation that presents the possibility
of a financial loss to an individual, or a family by such causes as death, sickness, injury,
or unemployment
commercial package policy (CPP) - Answer -Policy that covers two or more lines of
business by combining ISO's commercial lines coverage parts.
Monoline policy - Answer -Policy that covers only one line of business.
Garagekeepers coverage - Answer -Coverage for damage to customers' auto left in the
named insured's care while the insured is attending, servicing, repairing, parking, or
storing them.
liability loss exposure - Answer -Any condition or situation that presents the possibility
of a claim alleging legal responsibility of a person or business for injury or damage
suffered by another party.
legal liability - Answer -The legally enforceable obligation of a person or an organization
to pay a sum of money (called damages) to another person or organization.
civil law - Answer -A classification of law that applies to legal matters not governed by
criminal law and that protects rights and provides remedies for breaches of duties owed
to others.
criminal law - Answer -The branch of the law that imposes penalties for wrongs against
society.
civil wrong - Answer -A wrong against a person or persons, for which remedies include
damages awarded to the victim and court-ordered injunctions to prevent further injury.
crimes - Answer -Certain activities deemed by society to be harmful to public welfare.
damages - Answer -money claimed by, or a monetary awarded to, a party who has
suffered loss or injury for which another party is legally responsible.
tort - Answer -A wrongful act or an omission, other than a crime or a breach of contract,
that invades a legally protected right.
negligence - Answer -The failure to exercise the degree of care that a reasonable
person in a similar situation would exercise to avoid harming others.
intentional tort - Answer -A tort committed by a person who foresees (or should be able
to foresee) that his of her act will harm another person.
Strict liability (absolute liability) - Answer -Liability imposed by a court or by a statute in
the absence of fault when harm results from activities or conditions that are extremely
dangerous, unnatural, ultrahazardous, extraordinary, abnormal, or inappropriate.
contract - Answer -A legally enforceable agreement between two or more parties.
breach of contract - Answer -The failure, without legal excuse, to fulfill a contractual
promise.
hold-harmless agreement (or indemnity agreement) - Answer -A contractual provision
that obligates one of the parties to assumer the legal liability of another party.
, Statute - Answer -A written law passed by a legislative body at either the federal or
state level.
loss of consortium - Answer -The loss of benefits that one spouse is entitled to receive
from the other, including companionship, affection, and sexual relations resulting from
the injury or death of a spouse.
loss prevention - Answer -A risk control technique that reduces the frequency of a
particular loss.
loss reduction - Answer -A risk control technique that reduces the severity of a
particular loss.
bail bond - Answer -A bond that guarantees that the accused insured will appear in
court at the time designated for the trial or hearing.
release of attachment bond - Answer -A bond that guarantees that the insured will pay
any damages and court costs if the court should decide in the claimant's favor.
Indemnitee - Answer -Party in a hold-harmless agreement whose legal liability is
assumed by the indemnitor.
excess liability insurance - Answer -Insurance coverage for losses that exceeded the
limits of underlying insurance coverage or a retention amount.
umbrella liability policy - Answer -A liability policy that provides excess coverage above
underlying policies and may also provide coverage not available in the underlying
policies, subject to a self-insured retention.
dram shop act - Answer -A statute holding establishments that serve alcoholic
beverages responsible for ham that results from serving patrons alcohol in violation of
the statute.
personal loss exposure - Answer -Any condition or situation that presents the possibility
of a financial loss to an individual, or a family by such causes as death, sickness, injury,
or unemployment
commercial package policy (CPP) - Answer -Policy that covers two or more lines of
business by combining ISO's commercial lines coverage parts.
Monoline policy - Answer -Policy that covers only one line of business.
Garagekeepers coverage - Answer -Coverage for damage to customers' auto left in the
named insured's care while the insured is attending, servicing, repairing, parking, or
storing them.
