CPCU 500 COMPREHENSIVE EXAM ACTUAL QUESTIONS
AND ANSWERS SURE A+
✔✔Calculating a Business Income Loss - ✔✔Business Income Loss = Lost Profit +
Expenses
✔✔Business Income Loss Example
Expected:
- Revenue $300m
- Expenses $240m
- Net Profit (or loss) $60m
Actual:
- Revenue $0
- Expenses $120m
- Net profit (or loss) ($120m) - ✔✔$60m (lost profit) + $120m (expenses) = $180m
business income loss
✔✔Commercial general liability insurance - ✔✔Encompasses three main coverages:
bodily injury and property damage liability, personal and advertising injury liability, and
medical payments.
✔✔Commercial auto insurance - ✔✔Can be used to cover liability loss exposures,
property loss exposures, and personal loss exposures arising out of the ownership,
maintenance, or use of autos.
✔✔Workers Compensation Liability - ✔✔Covers an employer's obligation to pay
benefits required by workers compensation statutes, with payments limited by
applicable workers compensation law.
✔✔Insurer's duty - ✔✔The insurer has a duty to defend the insured against claims,
proceedings, or suits seeking benefits payable by the policy.
✔✔Reimbursement requirement - ✔✔The insured is required to reimburse the insurer
for any penalties applied under a workers compensation law due to the employer's
willful misconduct or other violations.
✔✔Right of recovery transfer - ✔✔When the insurer pays workers compensation
benefits, any right of recovery the insured or the injured employee may have against a
third party is transferred to the insurer.
✔✔Claim for care and loss of services - ✔✔The spouse or family member of an injured
employee sues the employer for loss of companionship or services resulting from the
injury.
, ✔✔Personal loss exposure - ✔✔Any condition or situation that presents the possibility
of a financial loss to an individual or a family by such causes as death, sickness, injury,
or unemployment.
✔✔Third-party-over action - ✔✔A separate legal action, brought by a defendant in a
lawsuit, against a third party that might be liable to the defendant for all or part of the
plaintiff's claim.
✔✔Loss of consortium - ✔✔The loss of benefits that one spouse is entitled to receive
from the other, including companionship, affection, and sexual relations resulting from
the injury or death of a spouse.
✔✔Dual-capacity doctrine - ✔✔A legal doctrine giving the employee the right to sue the
employer when the employer acts in a capacity other than that of employer.
✔✔Insurable interest - ✔✔An interest in the subject of an insurance policy that is not
unduly remote and that would cause the interested party to suffer financial loss if an
insured event occurred.
✔✔Ratemaking - ✔✔The process insurers use to calculate insurance rates, which are a
premium component.
✔✔Coinsurance - ✔✔An insurance-to-value provision in many property insurance
policies providing that if the property is underinsured, the amount that an insurer will pay
for a covered loss is reduced.
✔✔Replacement cost - ✔✔The cost to repair or replace property using new materials of
like kind and quality with no deduction for depreciation.
✔✔Actual cash value (ACV) - ✔✔The cost to replace property with new property of like
kind and quality less depreciation.
✔✔Blanket insurance - ✔✔Provides coverage for one type of property in more than one
separately rated building or two or more types of property in one or more separately
rated buildings under a single limit.
✔✔Agreed value method - ✔✔A method of valuing property in which the insurer and the
insured agree, at the time the policy is written, on the maximum amount that will be paid
in the event of a total loss.
✔✔Deductible - ✔✔A portion of a covered loss that is not paid by the insurer.
✔✔Waiver - ✔✔The intentional relinquishment of a known right.
AND ANSWERS SURE A+
✔✔Calculating a Business Income Loss - ✔✔Business Income Loss = Lost Profit +
Expenses
✔✔Business Income Loss Example
Expected:
- Revenue $300m
- Expenses $240m
- Net Profit (or loss) $60m
Actual:
- Revenue $0
- Expenses $120m
- Net profit (or loss) ($120m) - ✔✔$60m (lost profit) + $120m (expenses) = $180m
business income loss
✔✔Commercial general liability insurance - ✔✔Encompasses three main coverages:
bodily injury and property damage liability, personal and advertising injury liability, and
medical payments.
✔✔Commercial auto insurance - ✔✔Can be used to cover liability loss exposures,
property loss exposures, and personal loss exposures arising out of the ownership,
maintenance, or use of autos.
✔✔Workers Compensation Liability - ✔✔Covers an employer's obligation to pay
benefits required by workers compensation statutes, with payments limited by
applicable workers compensation law.
✔✔Insurer's duty - ✔✔The insurer has a duty to defend the insured against claims,
proceedings, or suits seeking benefits payable by the policy.
✔✔Reimbursement requirement - ✔✔The insured is required to reimburse the insurer
for any penalties applied under a workers compensation law due to the employer's
willful misconduct or other violations.
✔✔Right of recovery transfer - ✔✔When the insurer pays workers compensation
benefits, any right of recovery the insured or the injured employee may have against a
third party is transferred to the insurer.
✔✔Claim for care and loss of services - ✔✔The spouse or family member of an injured
employee sues the employer for loss of companionship or services resulting from the
injury.
, ✔✔Personal loss exposure - ✔✔Any condition or situation that presents the possibility
of a financial loss to an individual or a family by such causes as death, sickness, injury,
or unemployment.
✔✔Third-party-over action - ✔✔A separate legal action, brought by a defendant in a
lawsuit, against a third party that might be liable to the defendant for all or part of the
plaintiff's claim.
✔✔Loss of consortium - ✔✔The loss of benefits that one spouse is entitled to receive
from the other, including companionship, affection, and sexual relations resulting from
the injury or death of a spouse.
✔✔Dual-capacity doctrine - ✔✔A legal doctrine giving the employee the right to sue the
employer when the employer acts in a capacity other than that of employer.
✔✔Insurable interest - ✔✔An interest in the subject of an insurance policy that is not
unduly remote and that would cause the interested party to suffer financial loss if an
insured event occurred.
✔✔Ratemaking - ✔✔The process insurers use to calculate insurance rates, which are a
premium component.
✔✔Coinsurance - ✔✔An insurance-to-value provision in many property insurance
policies providing that if the property is underinsured, the amount that an insurer will pay
for a covered loss is reduced.
✔✔Replacement cost - ✔✔The cost to repair or replace property using new materials of
like kind and quality with no deduction for depreciation.
✔✔Actual cash value (ACV) - ✔✔The cost to replace property with new property of like
kind and quality less depreciation.
✔✔Blanket insurance - ✔✔Provides coverage for one type of property in more than one
separately rated building or two or more types of property in one or more separately
rated buildings under a single limit.
✔✔Agreed value method - ✔✔A method of valuing property in which the insurer and the
insured agree, at the time the policy is written, on the maximum amount that will be paid
in the event of a total loss.
✔✔Deductible - ✔✔A portion of a covered loss that is not paid by the insurer.
✔✔Waiver - ✔✔The intentional relinquishment of a known right.
