CPCU 557 Questions with correct
detailed answers graded a+ 2025\2026-
50
C. It excludes loss caused by earth movement, other than by sinkhole collapse. - correct answers Which
one of the following statements is correct with respect to the Causes of Loss-Basic Form?
Select one:
A. The Water exclusion contains an exception for damage due to the backing up of sewers, drains, or
sumps.
B. It excludes loss caused by power failure only if the damage causing such failure occurs on the
described premises.
C. It excludes loss caused by earth movement, other than by sinkhole collapse.
D. The War and Military Action exclusion eliminates coverage for loss caused by acts of terrorism, such
as the terrorist attacks of September 11, 2001.
B. The weight of snow, ice, or sleet cause of loss does not cover damage to personal property in the
open. - correct answers Which one of the following statements is correct with regard to the Causes of
Loss—Broad Form?
Select one:
A. The water damage cause of loss excludes the cost of tearing out and replacing any part of an insured
building to repair damage to any appliance or system that leaked water or steam.
B. The weight of snow, ice, or sleet cause of loss does not cover damage to personal property in the
open.
C. The water damage cause of loss includes coverage for damage due to discharge or leakage from roof
drains, gutters, downspouts, or similar fixtures or equipment
D. The falling objects cause of loss provides coverage for falling objects that damage personal property
in the open.
A. It shifts the burden of proof as to whether a loss is covered from the insured to the insurer. - correct
answers Which one of the following statements is correct with respect to the Causes of Loss—Special
Form?
,Select one:
A. It shifts the burden of proof as to whether a loss is covered from the insured to the insurer.
B. It specifically excludes all loss or damage caused by or resulting from vehicles owned by the named
insured or operated in the course of the named insured's business.
C. It covers theft by looting at the time of a riot or civil commotion, but it does not cover theft under any
other circumstances.
D. It includes a much longer list of specified causes of loss than either the basic or the broad form.
B. The BPP lists several classes of property or kinds of property losses that do not qualify as covered
property. - correct answers Which one of the following statements is correct with respect to the Building
and Personal Property Coverage Form (BPP)?
Select one:
A. The BPP must be written to provide coverage for all of the following: buildings, business personal
property, and personal property of others.
B. The BPP lists several classes of property or kinds of property losses that do not qualify as covered
property.
C. The BPP covers business personal property and property of others up to a specified percentage of the
building coverage limit.
D. The BPP provides coverage against both direct and indirect loss or damage caused by a covered cause
of loss.
C. Increased Cost of Construction additional coverage - correct answers Under which one of the
following provisions of the Building and Personal Property Coverage Form (BPP) is the maximum
payment $10,000 or five percent of the building limit, whichever is less?
Select one:
A. Outdoor Property coverage extension
B. Pollutant Cleanup and Removal additional coverage
C. Increased Cost of Construction additional coverage
D. Debris Removal additional coverage
D. Property in Transit - correct answers Which one of the following Additional Coverage Extensions is
covered under the Causes of Loss—Special Form but not under the Causes of Loss—Broad Form?
Select one:
,A. Vandalism.
B. "Fungus", Wet Rot, Dry Rot and Bacteria
C. Collapse
D. Property in Transit
C. Wear and tear - correct answers Which one of the following is an exclusion unique to the Causes of
Loss—Special Form?
Select one:
A. Mudslide or mudflow
B. War
C. Wear and tear
D. Rupture or bursting of water pipes
D. Actual cash value. - correct answers A claim representative explains the settlement of a claim to an
insured. The insured is concerned that he will not be able to replace his damaged business personal
property when he learns that depreciation will be applied. The cost to replace property with new
property of like kind and quality less depreciation is referred to as the
Select one:
A. Selling price.
B. Replacement cost.
C. Depreciated value.
D. Actual cash value.
B. Actual cash value. - correct answers The policy valuation approach that determines the basis for using
new property of like kind and quality and adjusts for depreciation to determine the amount to be paid at
the time of a loss is called
Select one:
A. Replacement cost.
B. Actual cash value.
C. Reporting value.
D. Agreed value.
, D. Building $500,000 with Replacement Cost and Agreed Value Optional Coverages; Business Personal
Property $100,000 with Replacement Cost and Agreed Value Optional Coverages; Extension of
Replacement Cost to Personal Property of Others $50,000 - correct answers An insured's office building
is valued at $500,000, business personal property valued at $100,000 and leased computers valued at
$50,000. The insured wants to be certain covered property can be repaired or replaced without any
coinsurance or depreciation penalties in the event of physical loss or damage. Which Limits and Optional
Coverage(s) on the Building and Personal Property Coverage Form would best suit the insured?
Select one:
A. Seek no Optional Coverages but make sure to provide the insurer a signed statement of values
B. Building $500,000 with Agreed Value Optional Coverage; Business Personal Property $100,000 with
Agreed Value Optional Coverage; Extension of Replacement Cost to Personal Property of Others $50,000
C. Building $480,000 with Replacement Cost Optional Coverage; Business Personal Property $80,000
with Replacement Cost and Agreed Value Optional Coverages; Extension of Replacement Cost to
Personal
D. $498,000 - correct answers Taunton Company (Taunton) has a Commercial Package Policy (CPP) that
has a Building and Personal Property Coverage Form (BPP) with a Causes of Loss—Broad Form. Because
the building is older and has unique architectural features, Taunton decided to insure the building on a
replacement cost basis. There is a $2 million coverage limit on the building, with a 90 percent
coinsurance clause and $2,000 deductible. The building was struck by lightning and a resulting fire
caused substantial damage to the building. The cost to repair the damaged portion of the building with
materials of like kind and quality was $500,000. At the time of the loss, the replacement cost value of
the building was determined to be $2.2 million. How much would the insurer pay when the repairs are
completed if the replacement cost option is activated?
Select one:
A. $0
B. $448,000
C. $450,000
D. $498,000
C. $10,000
Peter's insurer will pay $10,000. The BPP's definition of Building includes outdoor fixtures and
windstorm is a covered cause of loss in the Broad Form. Outdoor fixtures do not fall under the Outdoor
Property coverage extension, which excludes coverage for windstorm damage. - correct answers Peter
has a Commercial Package Policy (CPP) that has a Building and Personal Property Coverage Form (BPP)
detailed answers graded a+ 2025\2026-
50
C. It excludes loss caused by earth movement, other than by sinkhole collapse. - correct answers Which
one of the following statements is correct with respect to the Causes of Loss-Basic Form?
Select one:
A. The Water exclusion contains an exception for damage due to the backing up of sewers, drains, or
sumps.
B. It excludes loss caused by power failure only if the damage causing such failure occurs on the
described premises.
C. It excludes loss caused by earth movement, other than by sinkhole collapse.
D. The War and Military Action exclusion eliminates coverage for loss caused by acts of terrorism, such
as the terrorist attacks of September 11, 2001.
B. The weight of snow, ice, or sleet cause of loss does not cover damage to personal property in the
open. - correct answers Which one of the following statements is correct with regard to the Causes of
Loss—Broad Form?
Select one:
A. The water damage cause of loss excludes the cost of tearing out and replacing any part of an insured
building to repair damage to any appliance or system that leaked water or steam.
B. The weight of snow, ice, or sleet cause of loss does not cover damage to personal property in the
open.
C. The water damage cause of loss includes coverage for damage due to discharge or leakage from roof
drains, gutters, downspouts, or similar fixtures or equipment
D. The falling objects cause of loss provides coverage for falling objects that damage personal property
in the open.
A. It shifts the burden of proof as to whether a loss is covered from the insured to the insurer. - correct
answers Which one of the following statements is correct with respect to the Causes of Loss—Special
Form?
,Select one:
A. It shifts the burden of proof as to whether a loss is covered from the insured to the insurer.
B. It specifically excludes all loss or damage caused by or resulting from vehicles owned by the named
insured or operated in the course of the named insured's business.
C. It covers theft by looting at the time of a riot or civil commotion, but it does not cover theft under any
other circumstances.
D. It includes a much longer list of specified causes of loss than either the basic or the broad form.
B. The BPP lists several classes of property or kinds of property losses that do not qualify as covered
property. - correct answers Which one of the following statements is correct with respect to the Building
and Personal Property Coverage Form (BPP)?
Select one:
A. The BPP must be written to provide coverage for all of the following: buildings, business personal
property, and personal property of others.
B. The BPP lists several classes of property or kinds of property losses that do not qualify as covered
property.
C. The BPP covers business personal property and property of others up to a specified percentage of the
building coverage limit.
D. The BPP provides coverage against both direct and indirect loss or damage caused by a covered cause
of loss.
C. Increased Cost of Construction additional coverage - correct answers Under which one of the
following provisions of the Building and Personal Property Coverage Form (BPP) is the maximum
payment $10,000 or five percent of the building limit, whichever is less?
Select one:
A. Outdoor Property coverage extension
B. Pollutant Cleanup and Removal additional coverage
C. Increased Cost of Construction additional coverage
D. Debris Removal additional coverage
D. Property in Transit - correct answers Which one of the following Additional Coverage Extensions is
covered under the Causes of Loss—Special Form but not under the Causes of Loss—Broad Form?
Select one:
,A. Vandalism.
B. "Fungus", Wet Rot, Dry Rot and Bacteria
C. Collapse
D. Property in Transit
C. Wear and tear - correct answers Which one of the following is an exclusion unique to the Causes of
Loss—Special Form?
Select one:
A. Mudslide or mudflow
B. War
C. Wear and tear
D. Rupture or bursting of water pipes
D. Actual cash value. - correct answers A claim representative explains the settlement of a claim to an
insured. The insured is concerned that he will not be able to replace his damaged business personal
property when he learns that depreciation will be applied. The cost to replace property with new
property of like kind and quality less depreciation is referred to as the
Select one:
A. Selling price.
B. Replacement cost.
C. Depreciated value.
D. Actual cash value.
B. Actual cash value. - correct answers The policy valuation approach that determines the basis for using
new property of like kind and quality and adjusts for depreciation to determine the amount to be paid at
the time of a loss is called
Select one:
A. Replacement cost.
B. Actual cash value.
C. Reporting value.
D. Agreed value.
, D. Building $500,000 with Replacement Cost and Agreed Value Optional Coverages; Business Personal
Property $100,000 with Replacement Cost and Agreed Value Optional Coverages; Extension of
Replacement Cost to Personal Property of Others $50,000 - correct answers An insured's office building
is valued at $500,000, business personal property valued at $100,000 and leased computers valued at
$50,000. The insured wants to be certain covered property can be repaired or replaced without any
coinsurance or depreciation penalties in the event of physical loss or damage. Which Limits and Optional
Coverage(s) on the Building and Personal Property Coverage Form would best suit the insured?
Select one:
A. Seek no Optional Coverages but make sure to provide the insurer a signed statement of values
B. Building $500,000 with Agreed Value Optional Coverage; Business Personal Property $100,000 with
Agreed Value Optional Coverage; Extension of Replacement Cost to Personal Property of Others $50,000
C. Building $480,000 with Replacement Cost Optional Coverage; Business Personal Property $80,000
with Replacement Cost and Agreed Value Optional Coverages; Extension of Replacement Cost to
Personal
D. $498,000 - correct answers Taunton Company (Taunton) has a Commercial Package Policy (CPP) that
has a Building and Personal Property Coverage Form (BPP) with a Causes of Loss—Broad Form. Because
the building is older and has unique architectural features, Taunton decided to insure the building on a
replacement cost basis. There is a $2 million coverage limit on the building, with a 90 percent
coinsurance clause and $2,000 deductible. The building was struck by lightning and a resulting fire
caused substantial damage to the building. The cost to repair the damaged portion of the building with
materials of like kind and quality was $500,000. At the time of the loss, the replacement cost value of
the building was determined to be $2.2 million. How much would the insurer pay when the repairs are
completed if the replacement cost option is activated?
Select one:
A. $0
B. $448,000
C. $450,000
D. $498,000
C. $10,000
Peter's insurer will pay $10,000. The BPP's definition of Building includes outdoor fixtures and
windstorm is a covered cause of loss in the Broad Form. Outdoor fixtures do not fall under the Outdoor
Property coverage extension, which excludes coverage for windstorm damage. - correct answers Peter
has a Commercial Package Policy (CPP) that has a Building and Personal Property Coverage Form (BPP)
