CPCU 500, Questions Set, Chapters 1 - 8 with
100% Correct Answers | Verified | Latest Update
2026/2027
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Terms in this set (77)
Key questions in determining 1. What is insurable interest
insurable interest 2. When must insurable interest exist
3. Why require insurable interest
4. What is the legal basis of insurable interest
5. What happens when insurable interest overlap
Problems associated with maintain 1. The amount of insurance required to maintain
insurance to value insurance to value is based on the property's value
at the time of loss, but the limit is chosen at the
time of policy inception
2. The insured often selects the policy limits based
on his best guess, not on a valid appraisal.
3. Even with an appraisal, the true insurable value
at the time of loss cannot be measured exactly
until the property is actually repaired or replaced
4. Values fluctuate over time
, Insurance buyers can minimize those 1. Using a professional appraiser to determine the
four problems by current replacement cost value and then
reappraising the property every few years
2. Adjusting the appraisal annually using indexes
and/or a record of additions and deletions
3. Reviewing and revising limits periodically
4. Using appropriate coverage options such as
Agreed value optional coverage
Inflation guard protection
Peak season endorsement
Approaches used in property 1. actual cash value
insurance to value property 2. replacement cost
3. agreed value approach
4. functional value
Valuation of Liability Losses are 1. The relevant policy provisions and
typically based on 2. The extent of the bodily injury and/or property
damage to others
The most the insurer will pay is the 1. The applicable policy limit
lesser of 2. The compensable amount of the loss
Purposes of deductibles 1. To reduce the insurer's cost by eliminating the
inefficiencies of dollar trading and eliminating
insurer loss settlement and other administrative
expense for loss under the deductable.
2. To encourage risk control
3. To reduce the morale and moral hazard incentive
How deductibles are handled in 1. Defends the claim on a first - dollar basis
liability insurance: the insurer 2. Pays all covered losses
3. Bills the insured for the amount of losses up to
the deductible.
100% Correct Answers | Verified | Latest Update
2026/2027
Save
Terms in this set (77)
Key questions in determining 1. What is insurable interest
insurable interest 2. When must insurable interest exist
3. Why require insurable interest
4. What is the legal basis of insurable interest
5. What happens when insurable interest overlap
Problems associated with maintain 1. The amount of insurance required to maintain
insurance to value insurance to value is based on the property's value
at the time of loss, but the limit is chosen at the
time of policy inception
2. The insured often selects the policy limits based
on his best guess, not on a valid appraisal.
3. Even with an appraisal, the true insurable value
at the time of loss cannot be measured exactly
until the property is actually repaired or replaced
4. Values fluctuate over time
, Insurance buyers can minimize those 1. Using a professional appraiser to determine the
four problems by current replacement cost value and then
reappraising the property every few years
2. Adjusting the appraisal annually using indexes
and/or a record of additions and deletions
3. Reviewing and revising limits periodically
4. Using appropriate coverage options such as
Agreed value optional coverage
Inflation guard protection
Peak season endorsement
Approaches used in property 1. actual cash value
insurance to value property 2. replacement cost
3. agreed value approach
4. functional value
Valuation of Liability Losses are 1. The relevant policy provisions and
typically based on 2. The extent of the bodily injury and/or property
damage to others
The most the insurer will pay is the 1. The applicable policy limit
lesser of 2. The compensable amount of the loss
Purposes of deductibles 1. To reduce the insurer's cost by eliminating the
inefficiencies of dollar trading and eliminating
insurer loss settlement and other administrative
expense for loss under the deductable.
2. To encourage risk control
3. To reduce the morale and moral hazard incentive
How deductibles are handled in 1. Defends the claim on a first - dollar basis
liability insurance: the insurer 2. Pays all covered losses
3. Bills the insured for the amount of losses up to
the deductible.
