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CISR Insuring Commercial Property exam ALL
COMPLETE 300 QUESTIONS WITH DETAILED
SOLUTIONS JUST RELEASED THIS YEAR
SECTION 1: FUNDAMENTALS OF COMMERCIAL PROPERTY INSURANCE
1. Which of the following is the best definition of real property in commercial insurance?
A) Furniture, fixtures, and equipment used in the business
B) Land, buildings, and structures permanently attached to the land
C) Inventory and stock held for sale
D) Personal property of others in the insured's care
E) Vehicles and mobile equipment
Answer: B Real property consists of land and anything permanently attached to it, including
buildings and other structures.
2. Which of the following is classified as business personal property?
A) The building structure
B) Land and water
C) Furniture, fixtures, machinery, and equipment used in the business
D) Growing crops
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E) Underground pipes and flues
Answer: C Business personal property includes furniture and fixtures, machinery and equipment,
stock, and other personal property owned and used in the business.
3. Which parties can have an insurable interest in commercial property?
A) Only the owner of the property
B) Owners, mortgage holders, lessees, and signers of a contract
C) Only the mortgage company
D) Only tenants with a lease
E) Neighboring businesses
Answer: B Insurable interest can be held by owners, mortgage holders, lessees/tenants, and
parties with contractual agreements.
4. What is the difference between direct loss and indirect loss?
A) Direct loss is physical damage; indirect loss is loss of income or extra expense
B) Direct loss is covered; indirect loss is never covered
C) Direct loss affects buildings; indirect loss affects personal property
D) There is no difference
E) Direct loss is caused by fire; indirect loss is caused by water
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Answer: A Direct loss is damage to tangible property, while indirect loss refers to loss of income
or extra expense resulting from the direct loss.
5. How is Actual Cash Value (ACV) calculated?
A) Replacement cost minus depreciation
B) Original purchase price
C) Market value at the time of loss
D) Replacement cost plus depreciation
E) Functional replacement cost
Answer: A Actual Cash Value is calculated as replacement cost minus depreciation and
obsolescence.
6. What is Replacement Cost in property insurance?
A) The original cost of the property
B) The amount needed to replace with like kind and quality at today's prices
C) The market value of the property
D) The assessed value for tax purposes
E) The depreciated value of the property
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Answer: B Replacement cost is the amount needed to replace the property with like kind and
quality using today's labor and materials.
7. What is Functional Replacement Cost?
A) Replacement cost without depreciation
B) A valuation method that provides for replacement with a different structure that performs
the same function but is less costly
C) The cost to replace with identical materials
D) The original construction cost
E) The insured's estimated value
Answer: B Functional replacement cost applies when like-kind replacement is not feasible,
allowing substitute parts and materials that serve the same purpose.
8. Which of the following is NOT a type of commercial property exposed to loss?
A) Real property
B) Business personal property
C) Personal property of others
D) Employees' personal vehicles
E) The insured's personal property used in the business
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SUCCESS!
CISR Insuring Commercial Property exam ALL
COMPLETE 300 QUESTIONS WITH DETAILED
SOLUTIONS JUST RELEASED THIS YEAR
SECTION 1: FUNDAMENTALS OF COMMERCIAL PROPERTY INSURANCE
1. Which of the following is the best definition of real property in commercial insurance?
A) Furniture, fixtures, and equipment used in the business
B) Land, buildings, and structures permanently attached to the land
C) Inventory and stock held for sale
D) Personal property of others in the insured's care
E) Vehicles and mobile equipment
Answer: B Real property consists of land and anything permanently attached to it, including
buildings and other structures.
2. Which of the following is classified as business personal property?
A) The building structure
B) Land and water
C) Furniture, fixtures, machinery, and equipment used in the business
D) Growing crops
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E) Underground pipes and flues
Answer: C Business personal property includes furniture and fixtures, machinery and equipment,
stock, and other personal property owned and used in the business.
3. Which parties can have an insurable interest in commercial property?
A) Only the owner of the property
B) Owners, mortgage holders, lessees, and signers of a contract
C) Only the mortgage company
D) Only tenants with a lease
E) Neighboring businesses
Answer: B Insurable interest can be held by owners, mortgage holders, lessees/tenants, and
parties with contractual agreements.
4. What is the difference between direct loss and indirect loss?
A) Direct loss is physical damage; indirect loss is loss of income or extra expense
B) Direct loss is covered; indirect loss is never covered
C) Direct loss affects buildings; indirect loss affects personal property
D) There is no difference
E) Direct loss is caused by fire; indirect loss is caused by water
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Answer: A Direct loss is damage to tangible property, while indirect loss refers to loss of income
or extra expense resulting from the direct loss.
5. How is Actual Cash Value (ACV) calculated?
A) Replacement cost minus depreciation
B) Original purchase price
C) Market value at the time of loss
D) Replacement cost plus depreciation
E) Functional replacement cost
Answer: A Actual Cash Value is calculated as replacement cost minus depreciation and
obsolescence.
6. What is Replacement Cost in property insurance?
A) The original cost of the property
B) The amount needed to replace with like kind and quality at today's prices
C) The market value of the property
D) The assessed value for tax purposes
E) The depreciated value of the property
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Answer: B Replacement cost is the amount needed to replace the property with like kind and
quality using today's labor and materials.
7. What is Functional Replacement Cost?
A) Replacement cost without depreciation
B) A valuation method that provides for replacement with a different structure that performs
the same function but is less costly
C) The cost to replace with identical materials
D) The original construction cost
E) The insured's estimated value
Answer: B Functional replacement cost applies when like-kind replacement is not feasible,
allowing substitute parts and materials that serve the same purpose.
8. Which of the following is NOT a type of commercial property exposed to loss?
A) Real property
B) Business personal property
C) Personal property of others
D) Employees' personal vehicles
E) The insured's personal property used in the business
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