CPCU 551 Exam Questions and Answers
Graded A+
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 - Correct answer-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
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,process. The express shipping costs would be considered which one of the
following type of expenses?
A. Non-continuing expense.
B. Continuing expense.
C. Extra expense. - Correct answer-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.
- Correct answer-700000
Which one of the following policies would respond to a pressure fired boiler
explosion?
A. Commercial property policy.
B. Equipment breakdown policy.
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,C. Business owners policy. - Correct answer-B. Equipment breakdown policy
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. - Correct answer-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?
The leasehold improvements section of the building owner's BPP
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, 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 - Correct answer-
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
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Graded A+
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 - Correct answer-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
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,process. The express shipping costs would be considered which one of the
following type of expenses?
A. Non-continuing expense.
B. Continuing expense.
C. Extra expense. - Correct answer-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.
- Correct answer-700000
Which one of the following policies would respond to a pressure fired boiler
explosion?
A. Commercial property policy.
B. Equipment breakdown policy.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,C. Business owners policy. - Correct answer-B. Equipment breakdown policy
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. - Correct answer-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?
The leasehold improvements section of the building owner's BPP
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, 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 - Correct answer-
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
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