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CPCU 551 Questions and Correct Answers
After touring the manufacturing facility of a prospective
policyholder, Vincent noted some property exposures that would
not be adequately covered under the standard ISO Building and
Personal Property Coverage Form (BPP). Which one of the following
should Vincent use to tailor the BPP coverage to meet the specific
needs of the prospective policyholder?
A. Endorsement
B. Coverage Extension
C. Reinsurance
D. Coinsurance Ans: A. Endorsement
Huntington Grill suffered a kitchen fire and was forced to close
while repairs were being done. The restaurant owners wanted to
reopen as quickly as possible to avoid losing customers to another
restaurant. They decided to pay for express shipping for cooking
equipment and other key supplies in order to expedite the
reopening process. The express shipping costs would be
considered which one of the following type of expenses?
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A. Non-continuing expense.
B. Continuing expense.
C. Extra expense. Ans: C. Extra expense.
Easttown Manufacturing (Easttown) makes automobile hubcaps
and sells them to auto manufacturers. Easttown has a fire that
destroys their building and stops production for 12 months. In the
year before the fire, Easttown earned a net profit of $500,000. In
order to maintain the operation so that they could resume after
the factory is restored, Easttown incurred expenses of $200,000.
What is the amount of Easttown's business income loss? Enter the
figure without dollar signs or commas. Ans: 700000
Which one of the following policies would respond to a pressure
fired boiler explosion?
A. Commercial property policy.
B. Equipment breakdown policy.
C. Business owners policy. Ans: B. Equipment breakdown policy
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Which one of the following best describes an advantage to insurers
of nonfiled classes compared with filed classes of inland marine
insurance?
A. Nonfiled classes are the same in all states.
B. Nonfiled classes are characterized by relatively homogeneous
loss exposures.
C. Nonfiled classes are characterized by a relatively large number
of potential insureds
D. Nonfiled classes allow for the customization of policy
provisions and rates for individual insureds. Ans: D. Nonfiled
classes allow for the customization of policy provisions and rates
for individual insureds.
Paris Cuisine, a fine-dining restaurant, rents space in a commercial
building, which is insured by its owner. Paris Cuisine spends
$50,000 on wallpaper, floor coverings, windows, and other
improvements that would remain in the building if Paris Cuisine
were to move out. Paris Cuisine's interest in these improvements is
insured under which one of the following?
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, 4 | Page
The leasehold improvements section of the building owner's BPP
The building portion of Paris Cuisine's Building and Personal
Property Coverage Form (BPP)
The property of others section of the building owner's BPP
The business personal property section of Paris Cuisine's BPP Ans:
The business personal property section of Paris Cuisine's BPP
Which one of the following statements is correct with respect to
the Preservation of Property additional coverage of the Building
and Personal Property Coverage Form (BPP)?
It does not provide protection while the property is in transit to a
new location.
It protects against "any direct physical loss or damage" and is not
limited to either the covered causes of loss or locations stipulated
in the coverage form.
C
The protection provided under this additional coverage is over and
above the limits of insurance stated in the declarations
D
© 2025 All rights reserved
CPCU 551 Questions and Correct Answers
After touring the manufacturing facility of a prospective
policyholder, Vincent noted some property exposures that would
not be adequately covered under the standard ISO Building and
Personal Property Coverage Form (BPP). Which one of the following
should Vincent use to tailor the BPP coverage to meet the specific
needs of the prospective policyholder?
A. Endorsement
B. Coverage Extension
C. Reinsurance
D. Coinsurance Ans: A. Endorsement
Huntington Grill suffered a kitchen fire and was forced to close
while repairs were being done. The restaurant owners wanted to
reopen as quickly as possible to avoid losing customers to another
restaurant. They decided to pay for express shipping for cooking
equipment and other key supplies in order to expedite the
reopening process. The express shipping costs would be
considered which one of the following type of expenses?
© 2025 All rights reserved
, 2 | Page
A. Non-continuing expense.
B. Continuing expense.
C. Extra expense. Ans: C. Extra expense.
Easttown Manufacturing (Easttown) makes automobile hubcaps
and sells them to auto manufacturers. Easttown has a fire that
destroys their building and stops production for 12 months. In the
year before the fire, Easttown earned a net profit of $500,000. In
order to maintain the operation so that they could resume after
the factory is restored, Easttown incurred expenses of $200,000.
What is the amount of Easttown's business income loss? Enter the
figure without dollar signs or commas. Ans: 700000
Which one of the following policies would respond to a pressure
fired boiler explosion?
A. Commercial property policy.
B. Equipment breakdown policy.
C. Business owners policy. Ans: B. Equipment breakdown policy
© 2025 All rights reserved
, 3 | Page
Which one of the following best describes an advantage to insurers
of nonfiled classes compared with filed classes of inland marine
insurance?
A. Nonfiled classes are the same in all states.
B. Nonfiled classes are characterized by relatively homogeneous
loss exposures.
C. Nonfiled classes are characterized by a relatively large number
of potential insureds
D. Nonfiled classes allow for the customization of policy
provisions and rates for individual insureds. Ans: D. Nonfiled
classes allow for the customization of policy provisions and rates
for individual insureds.
Paris Cuisine, a fine-dining restaurant, rents space in a commercial
building, which is insured by its owner. Paris Cuisine spends
$50,000 on wallpaper, floor coverings, windows, and other
improvements that would remain in the building if Paris Cuisine
were to move out. Paris Cuisine's interest in these improvements is
insured under which one of the following?
© 2025 All rights reserved
, 4 | Page
The leasehold improvements section of the building owner's BPP
The building portion of Paris Cuisine's Building and Personal
Property Coverage Form (BPP)
The property of others section of the building owner's BPP
The business personal property section of Paris Cuisine's BPP Ans:
The business personal property section of Paris Cuisine's BPP
Which one of the following statements is correct with respect to
the Preservation of Property additional coverage of the Building
and Personal Property Coverage Form (BPP)?
It does not provide protection while the property is in transit to a
new location.
It protects against "any direct physical loss or damage" and is not
limited to either the covered causes of loss or locations stipulated
in the coverage form.
C
The protection provided under this additional coverage is over and
above the limits of insurance stated in the declarations
D
© 2025 All rights reserved
