CPCU 552 EVALUATION EXAM 2026 QUESTIONS AND
SOLUTIONS RATED A+
✔✔What is an Employment practices liability insurance (EPL) policy? - ✔✔It protects an
organization, D&Os, and employees against claims alleging damages. It can be added
to a D&O policy or a Business Owner Policy (BOP). It must have a third-party
discrimination endorsement if third-parties want to enter a claim
✔✔What is ERISA? (Employee Retirement Income Security Act) - ✔✔It covers
employee benefit plans of all types and sizes.
(Governmental bodies are exempt from ERISA and some religious organizations are
exempt from part of the Act.
✔✔What is the difference between Fiduciary Liability policies and D&O and EPL
policies? - ✔✔A wrongful act is usually a:
¬Breach of responsibilities legally required
¬Claim because of the insured's service as a fiduciary
¬Negligent act as part of the administration of any insured plan
--There is an endorsement to cover civil fines that HIPAA might impose
-- Named insured is a sponsor organization
-- there is an exclusion related to collection of employee contributions.
✔✔What are the 4 duties of D&Os? - ✔✔1.) to care
2.) to disclose
3.) to obedience
4.) loyalty
✔✔What are 4 categories of damages in a professional liability policy? - ✔✔1.)
Compensatory= intended to indemnify a person for damages. General limited to the
monetary loss sustained
2.) Consequential damages= for indirect losses. A payment will be awarded by a court
3.) Liquidated damages= if the contract specifies money will be stipulated in a contract
as the amount to recover if a breach
4.) Nominal damages= Small amounts awarded to a plaintiff when a breach of contract
occurs
✔✔What professional liability coverage is under a CGL policy? - ✔✔Only PD, BI, and
P&AI and minor exposure. There are 11 professional services that are required to be
excluded from CGL policies
✔✔Is defense within or outside limits of a professional liability policy? - ✔✔within
✔✔Why are umbrella/excess policies helpful? - ✔✔Because they help protect against
excessive frequent claims and single high severity claims
, ✔✔What are the main differences between umbrella and excess? - ✔✔--Excess does
not provide defense and might be narrower than primary. It has a basket aggregate
--Umbrella has additional coverages and includes defense. It can also provide drop-
down coverage
--Both coverage losses anywhere in the world and require the primary to cover defense.
They both do NOT use standardize forms
✔✔What is a following-form excess liability policy? - ✔✔Similar to an excess policy but
more strict in the fact that it will only come into play if the primary covered the beginning
of the loss and it is needed to cover the rest
✔✔What is a self-contained excess liability policy? - ✔✔This does not depend on the
provisions of the underlying policy for determining the scope of its coverage
✔✔What are specific and aggregate (stop loss) excess liability policies used for? -
✔✔Self-insured WC policies. Once they reach a limit of paid out claims the excess will
be triggered.
✔✔Are crew members included on an aviation policy? - ✔✔No, they are excluded
✔✔What is the difference between drop down coverage and stop-loss coverage? -
✔✔Drop-down coverage is when an umbrella liability policy pays claims that were not
covered by the underlying insurance policy because the underlying policy's aggregate
limits have been depleted.
✔✔why might you not want a local policy over a US? - ✔✔You lose bargaining leverage
and there is a lack of claims expertise
✔✔ Civil Law - ✔✔A classification of law that applies to legal matters not governed by
criminal law and that protects rights and provides remedies for breaches of duties owed
to others.
✔✔Criminal law - ✔✔The branch of the law that imposes penalties for wrongs against
society. And insurance can not respond to criminal charges
✔✔legal liability - ✔✔The legally enforceable obligation of a person or an organization
to pay a sum of money (called damages) to another person or organization.
✔✔liability loss - ✔✔Any loss that a person or an organization sustains as a result of a
claim or suit against that person or organization by someone seeking damages or some
other remedy permitted by law.
✔✔liability insurance - ✔✔insurance that pays damages assessed against an insured
SOLUTIONS RATED A+
✔✔What is an Employment practices liability insurance (EPL) policy? - ✔✔It protects an
organization, D&Os, and employees against claims alleging damages. It can be added
to a D&O policy or a Business Owner Policy (BOP). It must have a third-party
discrimination endorsement if third-parties want to enter a claim
✔✔What is ERISA? (Employee Retirement Income Security Act) - ✔✔It covers
employee benefit plans of all types and sizes.
(Governmental bodies are exempt from ERISA and some religious organizations are
exempt from part of the Act.
✔✔What is the difference between Fiduciary Liability policies and D&O and EPL
policies? - ✔✔A wrongful act is usually a:
¬Breach of responsibilities legally required
¬Claim because of the insured's service as a fiduciary
¬Negligent act as part of the administration of any insured plan
--There is an endorsement to cover civil fines that HIPAA might impose
-- Named insured is a sponsor organization
-- there is an exclusion related to collection of employee contributions.
✔✔What are the 4 duties of D&Os? - ✔✔1.) to care
2.) to disclose
3.) to obedience
4.) loyalty
✔✔What are 4 categories of damages in a professional liability policy? - ✔✔1.)
Compensatory= intended to indemnify a person for damages. General limited to the
monetary loss sustained
2.) Consequential damages= for indirect losses. A payment will be awarded by a court
3.) Liquidated damages= if the contract specifies money will be stipulated in a contract
as the amount to recover if a breach
4.) Nominal damages= Small amounts awarded to a plaintiff when a breach of contract
occurs
✔✔What professional liability coverage is under a CGL policy? - ✔✔Only PD, BI, and
P&AI and minor exposure. There are 11 professional services that are required to be
excluded from CGL policies
✔✔Is defense within or outside limits of a professional liability policy? - ✔✔within
✔✔Why are umbrella/excess policies helpful? - ✔✔Because they help protect against
excessive frequent claims and single high severity claims
, ✔✔What are the main differences between umbrella and excess? - ✔✔--Excess does
not provide defense and might be narrower than primary. It has a basket aggregate
--Umbrella has additional coverages and includes defense. It can also provide drop-
down coverage
--Both coverage losses anywhere in the world and require the primary to cover defense.
They both do NOT use standardize forms
✔✔What is a following-form excess liability policy? - ✔✔Similar to an excess policy but
more strict in the fact that it will only come into play if the primary covered the beginning
of the loss and it is needed to cover the rest
✔✔What is a self-contained excess liability policy? - ✔✔This does not depend on the
provisions of the underlying policy for determining the scope of its coverage
✔✔What are specific and aggregate (stop loss) excess liability policies used for? -
✔✔Self-insured WC policies. Once they reach a limit of paid out claims the excess will
be triggered.
✔✔Are crew members included on an aviation policy? - ✔✔No, they are excluded
✔✔What is the difference between drop down coverage and stop-loss coverage? -
✔✔Drop-down coverage is when an umbrella liability policy pays claims that were not
covered by the underlying insurance policy because the underlying policy's aggregate
limits have been depleted.
✔✔why might you not want a local policy over a US? - ✔✔You lose bargaining leverage
and there is a lack of claims expertise
✔✔ Civil Law - ✔✔A classification of law that applies to legal matters not governed by
criminal law and that protects rights and provides remedies for breaches of duties owed
to others.
✔✔Criminal law - ✔✔The branch of the law that imposes penalties for wrongs against
society. And insurance can not respond to criminal charges
✔✔legal liability - ✔✔The legally enforceable obligation of a person or an organization
to pay a sum of money (called damages) to another person or organization.
✔✔liability loss - ✔✔Any loss that a person or an organization sustains as a result of a
claim or suit against that person or organization by someone seeking damages or some
other remedy permitted by law.
✔✔liability insurance - ✔✔insurance that pays damages assessed against an insured
