CPCU 552 EXAM QUESTIONS & ANSWERS
Which one of these is not an example of a coverage that is excluded under Coverage A
of the CGL coverage form because it is insured under another policy? - Answer -Liquor
liability (Liquor liability is not an example of a coverage that is excluded under Coverage
A of the CGL coverage form because it is insured under another policy.
An endorsement that eliminates the liquor liability exclusion and provides coverage for
organizations in the business of selling or serving alcoholic beverages is an example of
which type of endorsement? - Answer -Miscellaneous coverage amendment
endorsement (
Which one of the following is true regarding the Commercial General Liability's (CGL's)
unmanned aircraft coverage endorsements? - Answer -Premium for these
endorsements is on a "refer to company" basis.
Jill, who is the named insured on an unendorsed Business Auto Coverage Form
(BACF), hired Jimmy to assist in her business. Jill asked Jimmy to purchase some
business supplies. While he was driving his own car, Jimmy's vehicle was hit by an
uninsured motorist. Jimmy's medical expenses were $2,000, and the damage to his car
was $4,000. Which one of the following correctly indicates how much Jill's auto insurer
will pay Jimmy for his losses? - Answer -$0 (An employee of the insured is not an
insured if the covered auto is owned by the employee.
An auto dealer advertises that a new vehicle is available for $18,000 with no down
payment and an interest rate of 1 percent. A customer attempts to purchase the vehicle,
but is told that the price is now $21,000 and the interest rate is 9 percent. The customer
files suit, alleging false advertisement of prices and failure to comply with the Truth in
Lending Act. Which one of the following correctly describes coverage for this claim
under the Auto Dealers Coverage Form? - Answer -There will be coverage for the
failure to comply with the Truth in Lending Act, but not for the false advertisement of
prices. (There will be coverage for the failure to comply with the Truth in Lending Act,
but not for the false advertisement of prices.
A claim representative is handling a claim for an auto dealership insured under the Auto
Dealers Coverage Form (ADCF). Several new autos and autos left for service by
customers were damaged when a fire started in the service building. The representative
has verified that the loss occurred to the named insured at an insured location during
the policy period; that Sections I and II of the ADCF apply to the losses and that the
autos qualify as covered autos. The next step that the representative should take in
determining whether coverage applies is to - Answer -Review the policy conditions to
determine whether they preclude coverage at the time of loss. (The next step that the
representative should take in determining whether coverage applies is to review the
policy conditions to determine whether they preclude coverage at the time of loss.
,The Motor Carrier Coverage Form (MCCF) covers owners and lessors of autos hired by
the named insured, subject to conditions. When the hired auto is a trailer, the owner, or
anyone else from whom the named insured hires or borrows a covered trailer, is an
insured while the trailer is connected to a power unit that is a covered auto or while the
trailer is - Answer -Not connected to a power unit but is being used exclusively in the
named insured's business. (The owner is an insured while the trailer is connected to a
power unit that is a covered auto or while the trailer is not connected to a power unit but
is being used exclusively in the named insured's business.
Which one of the following would always be excluded under employers liability
insurance? - Answer -An employee files a claim for depression resulting from
harassment at work.
Bill's Premium Packing (BPP) operates a fruit and vegetable canning operation. It
purchases its produce from growers in three states in the Northeast. As a result, its
operations are seasonal and during peak periods it depends on large numbers of casual
laborers who are exempt from coverage under the applicable state workers
compensation laws. Therefore, the company has purchased a Voluntary Compensation
and Employers Liability Endorsement for its Workers Compensation and Employers
Liability Insurance (WC&EL) Policy. When a casual laborer is badly injured on the job,
the worker launches a lawsuit against BPP, alleging negligence. Which one of the
following best describes how BPP's WC&EL insurer would respond? - Answer -The
insurer would defend the insured against the employee's suit and pay any settlement
awarded, subject to the stipulated limits of liability.
Some organizations such as school boards, municipalities, and non-profit organizations
carry a special type of directors and officers (D&O) liability policy. What is the name
given to this type of D&O coverage? - Answer -Occupation-specific
An unendorsed securities brokers professional liability policy will insure the firm and
registered representatives for claims alleging negligence committed on the firm's behalf
in which one of the following capacities? - Answer -Selling life insurance products (An
unendorsed securities brokers professional liability policy will insure the firm and
registered representatives for claims alleging negligence committed on the firm's behalf
while selling life insurance products.
Concerning environmental liability, any organization can cause an intentional tort by -
Answer -Making loud noises. (Concerning environmental liability, any organization can
cause an intentional tort by making loud noises.
A vessel valued at $40 million is carrying cargo for two customers. One customer's
cargo consists of $6 million of handheld electronic games. The other customer's cargo
consists of $4 million of designer shoes. During a storm, the crew throws overboard
$1.5 million in cargo to prevent the vessel from sinking. What is the contribution to
general average for the customer who owns the shoes? - Answer -$120,000 (The
, contribution to general average for the customer who owns the shoes is $120,000.
$4M/$50M = .08; .08 x $1.5M = $120,000
Which one of the following events would normally trigger the automatic termination
provisions of a marine policy and cancel the hull coverage on a cargo vessel? - Answer
-The ship is chartered by a third party on a bareboat basis. (War risk coverage is
excluded, but the policy would remain in force; a bareboat charter would terminate the
policy.
A large scrap metal dealer sends product to its warehouse in Mexico before it is sold to
manufacturers of automobile parts. The scrap metal dealer is headquartered in the
United States and covers its foreign risk exposures by using an international package
policy. The insurer that issues the policy is most likely domiciled in - Answer -The
United States.
The Better Hardware Store recently installed new floors to minimize the chance that
customers will slip and injure themselves. This risk management technique is an
example of - Answer -Loss prevention.
Which one of the following statements about the general aggregate limit of the
Commercial General Liability (CGL) Coverage Form is most accurate? - Answer -The
general aggregate limit is applied to the sum of damages from Coverage A other than
products-completed operations damages, plus damages under Coverage B plus
damages under Coverage C. (The general aggregate limit is applied to the sum of
damages from Coverage A (except for products-completed operations), Coverage B
and Coverage C.
Some ISO liability coverage forms provide only claims-made versions. Which one of the
following forms is of this type? - Answer -Electronic Data Liability Coverage Form (CG
00 65)(The ISO Electronic Data Liability Coverage Form provides only a claims made
version. The Commercial General Liability Coverage Form, Liquor Liability Coverage
Form, and Products/Completed Operations Liability Coverage Form provide both
occurrence and claims-made versions.
The definition for "unmanned aircraft" in the Commercial General Liability (CGL)
Coverage Form - Answer -Clarifies that control is not by a person in or on the aircraft.
Matthew Jones, the named insured under an unendorsed Business Auto Coverage
Form (BACF), requires his employees to use their own cars for business purposes. One
of Matthew's employees, Paul, causes an accident while driving his own truck for the
business.
Matthew's BACF shows symbol 1 for liability coverage. Which one of the following
correctly indicates whether Paul is an insured under the policy for the accident? -
Answer -Paul is not covered because employees are not insured while using their own
Which one of these is not an example of a coverage that is excluded under Coverage A
of the CGL coverage form because it is insured under another policy? - Answer -Liquor
liability (Liquor liability is not an example of a coverage that is excluded under Coverage
A of the CGL coverage form because it is insured under another policy.
An endorsement that eliminates the liquor liability exclusion and provides coverage for
organizations in the business of selling or serving alcoholic beverages is an example of
which type of endorsement? - Answer -Miscellaneous coverage amendment
endorsement (
Which one of the following is true regarding the Commercial General Liability's (CGL's)
unmanned aircraft coverage endorsements? - Answer -Premium for these
endorsements is on a "refer to company" basis.
Jill, who is the named insured on an unendorsed Business Auto Coverage Form
(BACF), hired Jimmy to assist in her business. Jill asked Jimmy to purchase some
business supplies. While he was driving his own car, Jimmy's vehicle was hit by an
uninsured motorist. Jimmy's medical expenses were $2,000, and the damage to his car
was $4,000. Which one of the following correctly indicates how much Jill's auto insurer
will pay Jimmy for his losses? - Answer -$0 (An employee of the insured is not an
insured if the covered auto is owned by the employee.
An auto dealer advertises that a new vehicle is available for $18,000 with no down
payment and an interest rate of 1 percent. A customer attempts to purchase the vehicle,
but is told that the price is now $21,000 and the interest rate is 9 percent. The customer
files suit, alleging false advertisement of prices and failure to comply with the Truth in
Lending Act. Which one of the following correctly describes coverage for this claim
under the Auto Dealers Coverage Form? - Answer -There will be coverage for the
failure to comply with the Truth in Lending Act, but not for the false advertisement of
prices. (There will be coverage for the failure to comply with the Truth in Lending Act,
but not for the false advertisement of prices.
A claim representative is handling a claim for an auto dealership insured under the Auto
Dealers Coverage Form (ADCF). Several new autos and autos left for service by
customers were damaged when a fire started in the service building. The representative
has verified that the loss occurred to the named insured at an insured location during
the policy period; that Sections I and II of the ADCF apply to the losses and that the
autos qualify as covered autos. The next step that the representative should take in
determining whether coverage applies is to - Answer -Review the policy conditions to
determine whether they preclude coverage at the time of loss. (The next step that the
representative should take in determining whether coverage applies is to review the
policy conditions to determine whether they preclude coverage at the time of loss.
,The Motor Carrier Coverage Form (MCCF) covers owners and lessors of autos hired by
the named insured, subject to conditions. When the hired auto is a trailer, the owner, or
anyone else from whom the named insured hires or borrows a covered trailer, is an
insured while the trailer is connected to a power unit that is a covered auto or while the
trailer is - Answer -Not connected to a power unit but is being used exclusively in the
named insured's business. (The owner is an insured while the trailer is connected to a
power unit that is a covered auto or while the trailer is not connected to a power unit but
is being used exclusively in the named insured's business.
Which one of the following would always be excluded under employers liability
insurance? - Answer -An employee files a claim for depression resulting from
harassment at work.
Bill's Premium Packing (BPP) operates a fruit and vegetable canning operation. It
purchases its produce from growers in three states in the Northeast. As a result, its
operations are seasonal and during peak periods it depends on large numbers of casual
laborers who are exempt from coverage under the applicable state workers
compensation laws. Therefore, the company has purchased a Voluntary Compensation
and Employers Liability Endorsement for its Workers Compensation and Employers
Liability Insurance (WC&EL) Policy. When a casual laborer is badly injured on the job,
the worker launches a lawsuit against BPP, alleging negligence. Which one of the
following best describes how BPP's WC&EL insurer would respond? - Answer -The
insurer would defend the insured against the employee's suit and pay any settlement
awarded, subject to the stipulated limits of liability.
Some organizations such as school boards, municipalities, and non-profit organizations
carry a special type of directors and officers (D&O) liability policy. What is the name
given to this type of D&O coverage? - Answer -Occupation-specific
An unendorsed securities brokers professional liability policy will insure the firm and
registered representatives for claims alleging negligence committed on the firm's behalf
in which one of the following capacities? - Answer -Selling life insurance products (An
unendorsed securities brokers professional liability policy will insure the firm and
registered representatives for claims alleging negligence committed on the firm's behalf
while selling life insurance products.
Concerning environmental liability, any organization can cause an intentional tort by -
Answer -Making loud noises. (Concerning environmental liability, any organization can
cause an intentional tort by making loud noises.
A vessel valued at $40 million is carrying cargo for two customers. One customer's
cargo consists of $6 million of handheld electronic games. The other customer's cargo
consists of $4 million of designer shoes. During a storm, the crew throws overboard
$1.5 million in cargo to prevent the vessel from sinking. What is the contribution to
general average for the customer who owns the shoes? - Answer -$120,000 (The
, contribution to general average for the customer who owns the shoes is $120,000.
$4M/$50M = .08; .08 x $1.5M = $120,000
Which one of the following events would normally trigger the automatic termination
provisions of a marine policy and cancel the hull coverage on a cargo vessel? - Answer
-The ship is chartered by a third party on a bareboat basis. (War risk coverage is
excluded, but the policy would remain in force; a bareboat charter would terminate the
policy.
A large scrap metal dealer sends product to its warehouse in Mexico before it is sold to
manufacturers of automobile parts. The scrap metal dealer is headquartered in the
United States and covers its foreign risk exposures by using an international package
policy. The insurer that issues the policy is most likely domiciled in - Answer -The
United States.
The Better Hardware Store recently installed new floors to minimize the chance that
customers will slip and injure themselves. This risk management technique is an
example of - Answer -Loss prevention.
Which one of the following statements about the general aggregate limit of the
Commercial General Liability (CGL) Coverage Form is most accurate? - Answer -The
general aggregate limit is applied to the sum of damages from Coverage A other than
products-completed operations damages, plus damages under Coverage B plus
damages under Coverage C. (The general aggregate limit is applied to the sum of
damages from Coverage A (except for products-completed operations), Coverage B
and Coverage C.
Some ISO liability coverage forms provide only claims-made versions. Which one of the
following forms is of this type? - Answer -Electronic Data Liability Coverage Form (CG
00 65)(The ISO Electronic Data Liability Coverage Form provides only a claims made
version. The Commercial General Liability Coverage Form, Liquor Liability Coverage
Form, and Products/Completed Operations Liability Coverage Form provide both
occurrence and claims-made versions.
The definition for "unmanned aircraft" in the Commercial General Liability (CGL)
Coverage Form - Answer -Clarifies that control is not by a person in or on the aircraft.
Matthew Jones, the named insured under an unendorsed Business Auto Coverage
Form (BACF), requires his employees to use their own cars for business purposes. One
of Matthew's employees, Paul, causes an accident while driving his own truck for the
business.
Matthew's BACF shows symbol 1 for liability coverage. Which one of the following
correctly indicates whether Paul is an insured under the policy for the accident? -
Answer -Paul is not covered because employees are not insured while using their own
