CPCU 552 QUESTIONS AND ANSWERS
The unauthorized intrusion into a company's computer network resulting in damage to
intellectual property is best classified as which one of the following types of cyber
liability exposures? - Answer -Intangible property
Regarding the valuation and settlement of liability claims, which one of the following
statements is true? - Answer -With liability claims, both the claimant and the insurer
have an incentive to reach an out-of-court settlement because of the uncertainty, time,
and expense involved in a formal trial.
Smith Construction Company is covered under an unendorsed Commercial General
Liability (CGL) Coverage Form. While working at a job site, Smith ruptured a natural gas
line causing a small fire to a neighboring retail store. The following claims have been
made against Smith due to this occurrence.
Fire damage to the neighboring store
Pain and suffering claimed by the store owner
Loss of income by the store owner until repairs are made to the store
Fire damage to the backhoe owned by Smith
Which one of the following statements is correct? - Answer -The backhoe is property
owned and is excluded.
Shelton Industries is considering switching to a self-insured plan for its workers
compensation exposure. Which one of the following requirements must be met before
an employer may operate a "qualified" self-insurance workers compensation plan? -
Answer -Posting a surety bond
Which one of the following is true of the supplementary payments in the Commercial
General Liability (CGL) Coverage Form? - Answer -The obligation to pay these
supplementary payments ends when the limit of insurance is exhausted.
Which one of the following statements about uninsured motorists insurance coverage in
most states is true? - Answer -It is applicable only to bodily injury.
Under the ISO Commercial Lines Manual, the Nuclear Energy Liability Exclusion
Endorsement must be added to which one the following types of policies? - Answer -
Any policy containing a commercial liability coverage part
Which one of the following explains why the same "Workers Compensation and
Employers Liability Insurance Policy" is able to be used in all states even though the
provisions of the various state laws and the employee benefits have many differences?
- Answer -The coverage provided by Part 1 obligates the insurer to pay all benefits
required of the insured by the workers compensation law or occupational disease law of
any state listed in Item 3.A of the Information Page.
, A vehicle owner had a tire store install four new wheels and tires on the vehicle. On the
way home from the store, one of the wheels came off, causing the vehicle to
accidentally run off the road and strike a tree. The vehicle owner sued the tire store for
failing to properly tighten the lug nuts on the vehicle. The loss exposure faced by the tire
store in this case is known as - Answer -B. Completed operations liability.
Wally's is a waterfront facility that leases or rents dock space. Wally should consider
insuring its exposure for liability for damage to boats in their care, custody, or control,
through a - Answer -D. Marina operators liability policy.
The Coverage B—Personal and Advertising Injury Liability insuring agreement parallels
the Coverage A— Bodily Injury and Property Damage Liability insuring agreement in
that the insurer agrees to - Answer -D. Defend the insured against any suit seeking
such damages.
Adam, the risk manager for Carmichael Health Care, has determined that the company
needs liability insurance of $100 million. However, he cannot find any one insurer that
will write a policy of $100 million.
The final insurance arrangement that Adam submitted to the officers at Carmichael
Health Care is as follows:
Insurer A: $10 million
Insurer B: $20 million
Insurer C: $30 million
Insurer D: $40 million
This insurance arrangement is referred to as - Answer -layering
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) required that
certain provisions in fiduciary liability policies be changed. One of those changes was to
the definition of "wrongful act." How did some insurers change the definition of "wrongful
act" in their fiduciary liability policies in response to the passage of HIPAA? - Answer -
A. Some insurers added "breach of duties imposed by HIPAA" to the definition of
"wrongful act."
For the purpose of the Other Insurance condition of the Commercial General Liability
(CGL) Coverage Form, all applicable coverages are classified as either excess
insurance or - Answer -Primary insurance
The Rental Reimbursement Coverage endorsement pays the cost to rent a temporary
substitute auto when a covered auto has been damaged by any covered cause of loss.
Coverage begins - Answer -24 hours after auto was damaged
On March 1, 2019, a townhouse association purchased a Directors & Officers Liability
Policy for the March 1, 2019, to March 1, 2020 policy period. The policy contains a
March 1, 2019 retroactive date. On April 23, 2019 the association was named in a
lawsuit alleging improper removal of a board member in which the removal took place
on February 1, 2019. Which one of the following best describes the scope of coverage
The unauthorized intrusion into a company's computer network resulting in damage to
intellectual property is best classified as which one of the following types of cyber
liability exposures? - Answer -Intangible property
Regarding the valuation and settlement of liability claims, which one of the following
statements is true? - Answer -With liability claims, both the claimant and the insurer
have an incentive to reach an out-of-court settlement because of the uncertainty, time,
and expense involved in a formal trial.
Smith Construction Company is covered under an unendorsed Commercial General
Liability (CGL) Coverage Form. While working at a job site, Smith ruptured a natural gas
line causing a small fire to a neighboring retail store. The following claims have been
made against Smith due to this occurrence.
Fire damage to the neighboring store
Pain and suffering claimed by the store owner
Loss of income by the store owner until repairs are made to the store
Fire damage to the backhoe owned by Smith
Which one of the following statements is correct? - Answer -The backhoe is property
owned and is excluded.
Shelton Industries is considering switching to a self-insured plan for its workers
compensation exposure. Which one of the following requirements must be met before
an employer may operate a "qualified" self-insurance workers compensation plan? -
Answer -Posting a surety bond
Which one of the following is true of the supplementary payments in the Commercial
General Liability (CGL) Coverage Form? - Answer -The obligation to pay these
supplementary payments ends when the limit of insurance is exhausted.
Which one of the following statements about uninsured motorists insurance coverage in
most states is true? - Answer -It is applicable only to bodily injury.
Under the ISO Commercial Lines Manual, the Nuclear Energy Liability Exclusion
Endorsement must be added to which one the following types of policies? - Answer -
Any policy containing a commercial liability coverage part
Which one of the following explains why the same "Workers Compensation and
Employers Liability Insurance Policy" is able to be used in all states even though the
provisions of the various state laws and the employee benefits have many differences?
- Answer -The coverage provided by Part 1 obligates the insurer to pay all benefits
required of the insured by the workers compensation law or occupational disease law of
any state listed in Item 3.A of the Information Page.
, A vehicle owner had a tire store install four new wheels and tires on the vehicle. On the
way home from the store, one of the wheels came off, causing the vehicle to
accidentally run off the road and strike a tree. The vehicle owner sued the tire store for
failing to properly tighten the lug nuts on the vehicle. The loss exposure faced by the tire
store in this case is known as - Answer -B. Completed operations liability.
Wally's is a waterfront facility that leases or rents dock space. Wally should consider
insuring its exposure for liability for damage to boats in their care, custody, or control,
through a - Answer -D. Marina operators liability policy.
The Coverage B—Personal and Advertising Injury Liability insuring agreement parallels
the Coverage A— Bodily Injury and Property Damage Liability insuring agreement in
that the insurer agrees to - Answer -D. Defend the insured against any suit seeking
such damages.
Adam, the risk manager for Carmichael Health Care, has determined that the company
needs liability insurance of $100 million. However, he cannot find any one insurer that
will write a policy of $100 million.
The final insurance arrangement that Adam submitted to the officers at Carmichael
Health Care is as follows:
Insurer A: $10 million
Insurer B: $20 million
Insurer C: $30 million
Insurer D: $40 million
This insurance arrangement is referred to as - Answer -layering
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) required that
certain provisions in fiduciary liability policies be changed. One of those changes was to
the definition of "wrongful act." How did some insurers change the definition of "wrongful
act" in their fiduciary liability policies in response to the passage of HIPAA? - Answer -
A. Some insurers added "breach of duties imposed by HIPAA" to the definition of
"wrongful act."
For the purpose of the Other Insurance condition of the Commercial General Liability
(CGL) Coverage Form, all applicable coverages are classified as either excess
insurance or - Answer -Primary insurance
The Rental Reimbursement Coverage endorsement pays the cost to rent a temporary
substitute auto when a covered auto has been damaged by any covered cause of loss.
Coverage begins - Answer -24 hours after auto was damaged
On March 1, 2019, a townhouse association purchased a Directors & Officers Liability
Policy for the March 1, 2019, to March 1, 2020 policy period. The policy contains a
March 1, 2019 retroactive date. On April 23, 2019 the association was named in a
lawsuit alleging improper removal of a board member in which the removal took place
on February 1, 2019. Which one of the following best describes the scope of coverage
