CPCU 551 Exam Questions and Answers
Graded A+
A building and its contents are insured under Building and PP coverage form with
the Agreed Value option in effect. The limit of insurance is $1,000,000 with a
$5,000 deductible. The agreed value shown in the policy is $1,500,000. How much
will the insurer pay if the insured sustains a $300,000 loss by an insured peril? -
Correct answer-The insurer will pay $195,000 = [($1,000,000/$1,500,000) x
$300,000] - $5,000
Adjacent properties can increase the probability of loss to the insured's building
and contents. When'd aging commercial property exposures, the term used to refer
to the hazard posed by adjacent or surrounding properties is - - Correct answer-
External Exposure
Wholesale Merchandiser leases 5 warehouses, each in a different city, to supply
retail customers in each city with timely service. The average value of the merch at
each warehouse is $750,000. Which blanket insurance limit would bear suit the
insured's needs while minimizing the cost of over-insuring? - Correct answer-
Blanket $3,375,000 is best. (5 x $750,000) x 90% = $3,375,000
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
, Music Store insures it's BPP, including merch, under a Business Personal Property
Coverage Form with the Value Reporting Endorsement set up on a monthly
reporting basis. The limit of insurance is $750,000 and the deductible is $1,000. On
October 25, a fire destroyed all the merch and BPP. The resulting damages totaled
$700,000. The store's last report of values was $400,000 on September 30. It was
determined that the actual values that should have been reported on 9/30 were
$500,000. Based on these circumstances, how much will the store collect for a
$700,000 loss? - Correct answer-$559,000 = $400,000/$500,000 x $700,000 -
$1,000
Which endorsement would be particularly useful to companies in the clothing
manufacturing business? - Correct answer-The Manufacturer's Consequential Loss
Assumption endorsement modifies a commercial property coverage form to cover
the increased cost of replacing damaged property with environmentally sound
materials or methods.
The Condominium Association Coverage Form is designed to insure the building
and BPP loss exposures of condominium associations. In addition to the building
and the association's BPP, this coverage form also covers this major category of
property: - Correct answer-Personal Property of Others
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
Graded A+
A building and its contents are insured under Building and PP coverage form with
the Agreed Value option in effect. The limit of insurance is $1,000,000 with a
$5,000 deductible. The agreed value shown in the policy is $1,500,000. How much
will the insurer pay if the insured sustains a $300,000 loss by an insured peril? -
Correct answer-The insurer will pay $195,000 = [($1,000,000/$1,500,000) x
$300,000] - $5,000
Adjacent properties can increase the probability of loss to the insured's building
and contents. When'd aging commercial property exposures, the term used to refer
to the hazard posed by adjacent or surrounding properties is - - Correct answer-
External Exposure
Wholesale Merchandiser leases 5 warehouses, each in a different city, to supply
retail customers in each city with timely service. The average value of the merch at
each warehouse is $750,000. Which blanket insurance limit would bear suit the
insured's needs while minimizing the cost of over-insuring? - Correct answer-
Blanket $3,375,000 is best. (5 x $750,000) x 90% = $3,375,000
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
, Music Store insures it's BPP, including merch, under a Business Personal Property
Coverage Form with the Value Reporting Endorsement set up on a monthly
reporting basis. The limit of insurance is $750,000 and the deductible is $1,000. On
October 25, a fire destroyed all the merch and BPP. The resulting damages totaled
$700,000. The store's last report of values was $400,000 on September 30. It was
determined that the actual values that should have been reported on 9/30 were
$500,000. Based on these circumstances, how much will the store collect for a
$700,000 loss? - Correct answer-$559,000 = $400,000/$500,000 x $700,000 -
$1,000
Which endorsement would be particularly useful to companies in the clothing
manufacturing business? - Correct answer-The Manufacturer's Consequential Loss
Assumption endorsement modifies a commercial property coverage form to cover
the increased cost of replacing damaged property with environmentally sound
materials or methods.
The Condominium Association Coverage Form is designed to insure the building
and BPP loss exposures of condominium associations. In addition to the building
and the association's BPP, this coverage form also covers this major category of
property: - Correct answer-Personal Property of Others
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
