©THEBRIGHT 2025 ALL RIGHTS RESERVED 11:11PM.
CPCU 530 Exam Questions And Answers
2025 Update.
Daniel offers a ride to Lily, a ten-year-old, and takes her to his house where he locks her in his
cellar and demands money from Lily's parents to secure her return. The parents agree to pay
and Lily is returned, but Daniel never receives the money. He sues Lily's parents for breach of
contract. Which one of the following explains why Daniel's contract with Lily's parents is not
legally binding? - Answer✔It lacks a legal purpose
Maria owns a commercial building and places insurance with Bastion Insurance. Because the
annual premium is high, and cash is tight, Maria decides to enter into a premium finance
agreement with Finance Co. ("Finance"). Under the premium finance agreement, Finance pays
Bastion the full annual premium and Maria pays Finance a monthly amount for the premium, a
fee and interest. At the midpoint of the policy year, which one of the following best describes
Maria's premium finance agreement with Finance? - Answer✔A bilateral contract
In February, Ann contracts with Mahdi to deliver clean garden top soil for $30 a cubic yard to
Mahdi's farm in Pennsylvania. No time for delivery is stated in their contract but the parties
understand that Mahdi wants to use the soil for this year's planting season. In March, Ann
delivers garden soil that is contaminated and Mahdi refuses to pay because he believes Ann
breached their agreement. Which one of the following best describes how a court would rule
on Mahdi's claim that Ann breached their agreement? - Answer✔The court would find for
Mahdi because Ann's goods are non-conforming.
Tile Roofing is a contractor specializing in roof installation for homes and commercial accounts.
Recently several Tile Roofing workers have fallen and suffered significant injuries because the
workers do not have any safety harnesses preventing falls. Under which one of the following
employee welfare laws would Tile Roofing potentially be subject to civil or criminal penalties? -
Answer✔Occupational Safety and Health Act
Tool Corporation has operated successfully for decades, but in recent years stiff price
competition from overseas suppliers and a lack of skilled labor at affordable prices have made
the company unprofitable. Tool Corporation has incurred substantial debt to keep the
operation running and save jobs, but they can no longer access bank financing. Tool
Corporation believes that it can return to profitability if it reorganizes. Under which chapter of
the bankruptcy code should Tool Corporation file? - Answer✔Chapter 11
1
, ©THEBRIGHT 2025 ALL RIGHTS RESERVED 11:11PM.
Diego and Georgia meet in a bar and enjoy cocktails together. Diego has many more drinks than
Georgia and is stumbling and slurring his speech. Sensing an opportunity, Georgia proposes that
Diego sell her his expensive Swiss wristwatch for a mere $100 and Diego agrees. The next day,
Georgia appears at Diego's office with $100 asking for the wristwatch. Which one of the
following arguments is best for Diego to avoid the contract? - Answer✔Diego lacked capacity to
enter into a contract because he was inebriated
Anna was recently diagnosed with a 95 percent blockage in an artery in her brain. She obtained
life insurance coverage from Cromley's Life Insurance Company shortly after the diagnosis.
Anna answered "no" to the questions on the life insurance application concerning preexisting
conditions. She was aware the coverage might be rejected by Cromley if she shared the
information about the probability of a stroke. If Anna dies from a stroke, which one of the
following must Cromley Life Insurance Company prove to deny Anna's beneficiary's claim? -
Answer✔Concealment
Estoppel arises in insurance law from the following sequence of events: false representation of
a material fact, reasonable reliance on that representation, and the - Answer✔Resulting injury
or detriment to the insured
Miu applied for auto insurance with Etchley Insurance. Etchley's application asked if Miu had
any accidents in the prior three years and she said she had not. In fact she had two at-fault
accidents, one of which involved alcohol. Etchley's underwriting guidelines state that it will not
write insurance for applicants with more than one accident in the last three years. Etchley
issued the policy. If Miu has an accident and Etchley learns about the prior accidents at that
time, Etchley should - Answer✔Deny Miu's claim due to her material misrepresentation on
which Etchley justly relied.
Leah called her insurance agent Matthias right after Leah purchased her first car. Leah said: "I
need coverage on my car (which she described in detail)—$100,000 liability and $250
deductible collision and comprehensive." Mathias responded: "Great—you have this insurance
effective immediately." Which one of the following statements about this conversation is true?
- Answer✔It resulted in a binding oral insurance contract.
Noncompliance with a warranty concerning one type of covered property will not defeat
coverage for another type of property to which the warranty does not relate, because courts
generally interpret insurance policies as - Answer✔Severable.
Sue has submitted a claim to her insurer for fire damage to a building insured under a property
policy. Which one of the following questions must be answered in the affirmative to determine
whether any coverage applies? - Answer✔Was the loss caused by a covered peril?
Cian purchased a house with money loaned to him by Keithly Mortgage Co. (KMC). Cian
obtained a homeowner policy from Melfor Insurance—containing a standard mortgage
clause—which covered the house for damage due to windstorm. A windstorm destroyed Cian's
house three years later. Which one of the following correctly states who is entitled to the
proceeds payable under Cian's homeowner policy? - Answer✔KMC, as its interests appear.
2
CPCU 530 Exam Questions And Answers
2025 Update.
Daniel offers a ride to Lily, a ten-year-old, and takes her to his house where he locks her in his
cellar and demands money from Lily's parents to secure her return. The parents agree to pay
and Lily is returned, but Daniel never receives the money. He sues Lily's parents for breach of
contract. Which one of the following explains why Daniel's contract with Lily's parents is not
legally binding? - Answer✔It lacks a legal purpose
Maria owns a commercial building and places insurance with Bastion Insurance. Because the
annual premium is high, and cash is tight, Maria decides to enter into a premium finance
agreement with Finance Co. ("Finance"). Under the premium finance agreement, Finance pays
Bastion the full annual premium and Maria pays Finance a monthly amount for the premium, a
fee and interest. At the midpoint of the policy year, which one of the following best describes
Maria's premium finance agreement with Finance? - Answer✔A bilateral contract
In February, Ann contracts with Mahdi to deliver clean garden top soil for $30 a cubic yard to
Mahdi's farm in Pennsylvania. No time for delivery is stated in their contract but the parties
understand that Mahdi wants to use the soil for this year's planting season. In March, Ann
delivers garden soil that is contaminated and Mahdi refuses to pay because he believes Ann
breached their agreement. Which one of the following best describes how a court would rule
on Mahdi's claim that Ann breached their agreement? - Answer✔The court would find for
Mahdi because Ann's goods are non-conforming.
Tile Roofing is a contractor specializing in roof installation for homes and commercial accounts.
Recently several Tile Roofing workers have fallen and suffered significant injuries because the
workers do not have any safety harnesses preventing falls. Under which one of the following
employee welfare laws would Tile Roofing potentially be subject to civil or criminal penalties? -
Answer✔Occupational Safety and Health Act
Tool Corporation has operated successfully for decades, but in recent years stiff price
competition from overseas suppliers and a lack of skilled labor at affordable prices have made
the company unprofitable. Tool Corporation has incurred substantial debt to keep the
operation running and save jobs, but they can no longer access bank financing. Tool
Corporation believes that it can return to profitability if it reorganizes. Under which chapter of
the bankruptcy code should Tool Corporation file? - Answer✔Chapter 11
1
, ©THEBRIGHT 2025 ALL RIGHTS RESERVED 11:11PM.
Diego and Georgia meet in a bar and enjoy cocktails together. Diego has many more drinks than
Georgia and is stumbling and slurring his speech. Sensing an opportunity, Georgia proposes that
Diego sell her his expensive Swiss wristwatch for a mere $100 and Diego agrees. The next day,
Georgia appears at Diego's office with $100 asking for the wristwatch. Which one of the
following arguments is best for Diego to avoid the contract? - Answer✔Diego lacked capacity to
enter into a contract because he was inebriated
Anna was recently diagnosed with a 95 percent blockage in an artery in her brain. She obtained
life insurance coverage from Cromley's Life Insurance Company shortly after the diagnosis.
Anna answered "no" to the questions on the life insurance application concerning preexisting
conditions. She was aware the coverage might be rejected by Cromley if she shared the
information about the probability of a stroke. If Anna dies from a stroke, which one of the
following must Cromley Life Insurance Company prove to deny Anna's beneficiary's claim? -
Answer✔Concealment
Estoppel arises in insurance law from the following sequence of events: false representation of
a material fact, reasonable reliance on that representation, and the - Answer✔Resulting injury
or detriment to the insured
Miu applied for auto insurance with Etchley Insurance. Etchley's application asked if Miu had
any accidents in the prior three years and she said she had not. In fact she had two at-fault
accidents, one of which involved alcohol. Etchley's underwriting guidelines state that it will not
write insurance for applicants with more than one accident in the last three years. Etchley
issued the policy. If Miu has an accident and Etchley learns about the prior accidents at that
time, Etchley should - Answer✔Deny Miu's claim due to her material misrepresentation on
which Etchley justly relied.
Leah called her insurance agent Matthias right after Leah purchased her first car. Leah said: "I
need coverage on my car (which she described in detail)—$100,000 liability and $250
deductible collision and comprehensive." Mathias responded: "Great—you have this insurance
effective immediately." Which one of the following statements about this conversation is true?
- Answer✔It resulted in a binding oral insurance contract.
Noncompliance with a warranty concerning one type of covered property will not defeat
coverage for another type of property to which the warranty does not relate, because courts
generally interpret insurance policies as - Answer✔Severable.
Sue has submitted a claim to her insurer for fire damage to a building insured under a property
policy. Which one of the following questions must be answered in the affirmative to determine
whether any coverage applies? - Answer✔Was the loss caused by a covered peril?
Cian purchased a house with money loaned to him by Keithly Mortgage Co. (KMC). Cian
obtained a homeowner policy from Melfor Insurance—containing a standard mortgage
clause—which covered the house for damage due to windstorm. A windstorm destroyed Cian's
house three years later. Which one of the following correctly states who is entitled to the
proceeds payable under Cian's homeowner policy? - Answer✔KMC, as its interests appear.
2
