CPCU 551 EXAM QUESTIONS WITH ALL CORRECT ANSWERS

CPCU 551 EXAM QUESTIONS WITH ALL CORRECT ANSWERS The Covington Shops needs building and personal property coverage for a warehouse it recently acquired. It has long term plans to rebuild the structure due to its distressed construction and lack of public water supply. In the interim, the chain's best option is to purchase a Builders Risk Coverage Form (BRCF) to cover the warehouse B Standard Property Policy (SPP) to cover the warehouse. Legal Liability Coverage Form to cover the warehouse. D Commercial Building and Personal Property Coverage Form (BPP) to cover the warehouse. - Answer-Standard Property Policy (SPP) to cover the warehouse. Roy's Toy Manufacturing is covered by a Building and Personal Property Coverage Form (BPP) with a Value Reporting Form endorsement. Roy's policy limit is $1,000,000 with a $1,500 deductible. In November, Roy's filed a report with its insurer declaring $70,000 in values which was a correct value for that month. As the holiday shopping season approached, Roy's suffered a fire that badly damaged a large portion of its inventory. Estimated inventory losses were $80,000 and total inventory values for December were calculated at $100,000. How much will Roy's insurer pay for the loss of inventory? $54,500 B $56,000 $78,500 D $80,000 - Answer-$78,500 An insured has a Business Income (and Extra Expense) Coverage Form (BIC) with an Extended Period of Indemnity coverage option for 180 days. Following a covered loss, the period of restoration is 120 days. It takes an additional 90 days for revenue to return to normal. Ignoring waiting periods, for what period would the BIC cover the business income loss? A 90 days 120 days 180 days 210 days - Answer-210 days William is helping his client to select business income coverage endorsements. The client is considering payroll limitation or exclusion, discretionary payroll expense, business income / extra expense from dependent properties, and ordinance or law-increased period of restoration. Which one of the following endorsements should William recommend if his client is concerned that a business shutdown would cause him to lose employees to other employers? Business income / extra expense from dependent properties Ordinance or law-increased period of restoration C Payroll limitation or exclusion Discretionary payroll expense - Answer-Discretionary payroll expense Tania is working with her insurance agent to select business income coverage endorsements for her organic restaurant. She is considering payroll limitation or exclusion, discretionary payroll expense, business income / extra expense from dependent properties, and ordinance or law-increased period of restoration. Which one of the following endorsements Should Tania select if she is concerned that business interruption at the organic farm that supplies most of her ingredients would affect her ability to operate? Business income / extra expense from dependent properties Discretionary payroll expense C Payroll limitation or exclusion D Ordinance or law-increased period of restoration - Answer-Business income / extra expense from dependent properties Malvern Manufacturing has an Equipment Breakdown Protection (EBP) Coverage Form with a limit per breakdown of $350,000. The declarations page shows the Spoilage Damage insuring agreement with a limit of $25,000 and the word "included" next to it. Which one of the following statements is correct regarding Malvern Manufactuing's EBP coverage? The insurer will pay up to $25,000 for a Spoilage Damage loss, in addition to the $350,000 limit per breakdown. В The amount paid for a Spoilage Damage loss will not affect the Property Damage limit. C he insurer will not pay more than $25,000 for a Spoilage Damage loss. D The insurer will pay up to the $25,000 limit, less any applicable deductible, for a Spoilage Damage loss - Answer-The insurer will not pay more than $25,000 for a Spoilage Damage loss. Palmer and Sons was building a new office building. It purchased a Builders Risk Coverage Form (BRCF) to cover the property exposures to the building during the course of construction. Which one of the following statements is correct regarding the BRCF? The BRCF valuation condition calls for settlement of covered losses at replacement cost value. At policy inception, the BRCF is designed to offer a fixed amount of coverage equal to the building's full completed value A 90 percent coinsurance clause applies to the BRCF. D Under the BRCF, coverage ceases 10 days after the completed building is occupied or put to its intended use. - Answer-At policy inception, the BRCF is designed to offer a fixed amount of coverage equal to the building's full completed value