CPCU 530 EXAM FINAL QUESTIONS AND ANSWERS
VERIFIED 2025/2026
Cian purchased a house with money loaned to him by Keithly Mortgage Co. (KMC). Cian obtained a
homeowner policy from Melfor Insurance—containing a standard mortgage clause— which covered the
house for damage due to windstorm. A windstorm destroyed Cian's house three years later. Which one
of the following correctly states who is entitled to the proceeds payable under Cian's homeowner
policy?
Select one:
A. Cian, because the policy was solely for his benefitIncorrect. Under the standard mortgage clause,
insurance policy proceeds are payable to the mortgagee "as the mortgagee's interests may appear."
Thus, KMC would receive the proceeds up to the amount of its loan and Cian would receive any
remaining amount. B. KMC, as its interests appear.
C. KMC, under the doctrine of equitable conversion
D. KMC, because the policy was solely for its benefit - CORRECT ANSWER -
,An insured is accusing Millstone Insurance of unethical claims handling practices. The
Department of insurance (DOI) has issued a subpoena requiring Millstone Insurance to produce its
records for this claim and documents on its claim handling procedures. Which one of the following types
of subpoena is being used by the DOI?
Select one:
A. Subpoena ad testificandum
B. Final order subpoena
C. Self-incrimination subpoena
D. Subpoena duces tecum - CORRECT ANSWER -D. Subpoena duces tecum
Some contracts are voidable, and some agreements are void because they are not contracts. When a
contract is voidable, the right of avoidance is available only to
Select one:
A. Parties in privity of the contract.
B. The offeror of the contract.
C. The offeree of the contract.I
D. An innocent or injured party. - CORRECT ANSWER -D. An innocent or injured party.
Physician Betty administered medical services to stroke victim Karl who was unconscious. She provided
medication and direction and followed all procedures. When Karl woke up, he refused other medical
services and he also indicated that he could not be held liable for any expenses that he did not
personally authorize or to which he did not consent. It is likely that Karl might be required to pay the
reasonable value of the services received based on
Select one:
A. An implied-in-fact contract.
B. An implied-in-law contract.
C. A unilateral contract.
D. An executory contract. - CORRECT ANSWER -B. An implied-in-law contract.
,A contract is made between two parties for delivery of goods. The goods are delivered and the receiving
party pays for them. Which one of the following terms describes the contract?
Select one:
A. ExecutedCorrect.
B. Exacted
C. Executory
D. Completed - CORRECT ANSWER -A. Executed
A homeowners policy is an example of
Select one:
A. An executory contract
B. A personal contract.
C. An implied-in-fact contract.
D. An implied-in-law contract. - CORRECT ANSWER -A. An executory contract
for the extra two bushels and Hank refused to give her the apples unless she paid for all six bushels.
Which one of the following statements is true?
Select one:
A. Hank breached the contract.
B. There was no valid offer made and therefore no contract between Hilda and Hank.
C. Hank and Hilda did not mutually assent to the terms of the contract when it was formed.
D. There was no communication of intent to contract from Hank to Hilda. - CORRECT ANSWER -
A. Hank breached the contract.
Which one of the following most accurately describes the ability of an offeror to revoke an offer made to
an individual offeree?
Select one:
, A. An offeror can revoke an offer any time before acceptance, but the revocation is effective only
when communicated to the offeree and the offeree actually receives the communication.
B. An offeror can revoke an offer any time before acceptance, but must do so through the same
means of communication used in making the original offer.
C. An offeror can revoke an offer either by expressly refusing to abide by it or by making a new
offer to the offeree.
D. An offeror can revoke an offer by any reasonable means, at any time before the offeree
completes performance of the contract. - CORRECT ANSWER -A. An offeror can revoke an offer any time
before acceptance, but the revocation is effective only when communicated to the offeree and the
offeree actually receives the communication.
Charlotte wanted a swimming pool built in her backyard, so she asked various pool installers she knew
to give her an estimate. Only Emma replied, and the price she quoted to Charlotte was much more than
Charlotte wanted to pay. A party that asks for offers
Select one:
A. Is free to accept or reject any offers that the party receives.
B. Is actually making an offer, and any reply to the request is an acceptance of the original offer.
C. Must accept any reasonable offers that the party receives.
D. Must accept any offers that the party receives. - CORRECT ANSWER -A. Is free to accept or reject any
offers that the party receives.
Juan's Accounting wants to upgrade its software program. It has been working with Jane's
Software Company to select the upgrades that will meet its business needs and Juan's Accounting is
ready to make an offer. Which one of the following sets of elements must be included to constitute a
legal offer?
Select one:
A. Legal purpose, period of time the offer is valid, and acceptance terms
B. Period of time the offer is valid, acceptance options, and intent to contract
C. Intent to contract, definite terms, and communication to the offeree
D. Legal purpose, definite terms, and options for the offeree - CORRECT ANSWER -C. Intent to contract,
definite terms, and communication to the offeree
VERIFIED 2025/2026
Cian purchased a house with money loaned to him by Keithly Mortgage Co. (KMC). Cian obtained a
homeowner policy from Melfor Insurance—containing a standard mortgage clause— which covered the
house for damage due to windstorm. A windstorm destroyed Cian's house three years later. Which one
of the following correctly states who is entitled to the proceeds payable under Cian's homeowner
policy?
Select one:
A. Cian, because the policy was solely for his benefitIncorrect. Under the standard mortgage clause,
insurance policy proceeds are payable to the mortgagee "as the mortgagee's interests may appear."
Thus, KMC would receive the proceeds up to the amount of its loan and Cian would receive any
remaining amount. B. KMC, as its interests appear.
C. KMC, under the doctrine of equitable conversion
D. KMC, because the policy was solely for its benefit - CORRECT ANSWER -
,An insured is accusing Millstone Insurance of unethical claims handling practices. The
Department of insurance (DOI) has issued a subpoena requiring Millstone Insurance to produce its
records for this claim and documents on its claim handling procedures. Which one of the following types
of subpoena is being used by the DOI?
Select one:
A. Subpoena ad testificandum
B. Final order subpoena
C. Self-incrimination subpoena
D. Subpoena duces tecum - CORRECT ANSWER -D. Subpoena duces tecum
Some contracts are voidable, and some agreements are void because they are not contracts. When a
contract is voidable, the right of avoidance is available only to
Select one:
A. Parties in privity of the contract.
B. The offeror of the contract.
C. The offeree of the contract.I
D. An innocent or injured party. - CORRECT ANSWER -D. An innocent or injured party.
Physician Betty administered medical services to stroke victim Karl who was unconscious. She provided
medication and direction and followed all procedures. When Karl woke up, he refused other medical
services and he also indicated that he could not be held liable for any expenses that he did not
personally authorize or to which he did not consent. It is likely that Karl might be required to pay the
reasonable value of the services received based on
Select one:
A. An implied-in-fact contract.
B. An implied-in-law contract.
C. A unilateral contract.
D. An executory contract. - CORRECT ANSWER -B. An implied-in-law contract.
,A contract is made between two parties for delivery of goods. The goods are delivered and the receiving
party pays for them. Which one of the following terms describes the contract?
Select one:
A. ExecutedCorrect.
B. Exacted
C. Executory
D. Completed - CORRECT ANSWER -A. Executed
A homeowners policy is an example of
Select one:
A. An executory contract
B. A personal contract.
C. An implied-in-fact contract.
D. An implied-in-law contract. - CORRECT ANSWER -A. An executory contract
for the extra two bushels and Hank refused to give her the apples unless she paid for all six bushels.
Which one of the following statements is true?
Select one:
A. Hank breached the contract.
B. There was no valid offer made and therefore no contract between Hilda and Hank.
C. Hank and Hilda did not mutually assent to the terms of the contract when it was formed.
D. There was no communication of intent to contract from Hank to Hilda. - CORRECT ANSWER -
A. Hank breached the contract.
Which one of the following most accurately describes the ability of an offeror to revoke an offer made to
an individual offeree?
Select one:
, A. An offeror can revoke an offer any time before acceptance, but the revocation is effective only
when communicated to the offeree and the offeree actually receives the communication.
B. An offeror can revoke an offer any time before acceptance, but must do so through the same
means of communication used in making the original offer.
C. An offeror can revoke an offer either by expressly refusing to abide by it or by making a new
offer to the offeree.
D. An offeror can revoke an offer by any reasonable means, at any time before the offeree
completes performance of the contract. - CORRECT ANSWER -A. An offeror can revoke an offer any time
before acceptance, but the revocation is effective only when communicated to the offeree and the
offeree actually receives the communication.
Charlotte wanted a swimming pool built in her backyard, so she asked various pool installers she knew
to give her an estimate. Only Emma replied, and the price she quoted to Charlotte was much more than
Charlotte wanted to pay. A party that asks for offers
Select one:
A. Is free to accept or reject any offers that the party receives.
B. Is actually making an offer, and any reply to the request is an acceptance of the original offer.
C. Must accept any reasonable offers that the party receives.
D. Must accept any offers that the party receives. - CORRECT ANSWER -A. Is free to accept or reject any
offers that the party receives.
Juan's Accounting wants to upgrade its software program. It has been working with Jane's
Software Company to select the upgrades that will meet its business needs and Juan's Accounting is
ready to make an offer. Which one of the following sets of elements must be included to constitute a
legal offer?
Select one:
A. Legal purpose, period of time the offer is valid, and acceptance terms
B. Period of time the offer is valid, acceptance options, and intent to contract
C. Intent to contract, definite terms, and communication to the offeree
D. Legal purpose, definite terms, and options for the offeree - CORRECT ANSWER -C. Intent to contract,
definite terms, and communication to the offeree
