CPCU 500 Exam Questions and Answers 100%
Verified
Question:
Key questions in determining insurable interest
Answer:
1. What is insurable interest 2. When must insurable interest exist 3. Why require insurable
interest 4. What is the legal basis of insurable interest 5. What happens when insurable
interest overlap
Question:
Problems associated with maintain insurance to value
Answer:
1. The amount of insurance required to maintain insurance to value is based on the
property's value at the time of loss, but the limit is chosen at the time of policy inception 2.
The insured often selects the policy limits based on his best guess, not on a valid appraisal.
3. Even with an appraisal, the true insurable value at the time of loss cannot be measured
exactly until the property is actually repaired or replaced 4. Values fluctuate over time
,Question:
Insurance buyers can minimize those four problems by
Answer:
1. Using a professional appraiser to determine the current replacement cost value and then
reappraising the property every few years 2. Adjusting the appraisal annually using indexes
and/or a record of additions and deletions 3. Reviewing and revising limits periodically 4.
Using appropriate coverage options such as Agreed value optional coverage Inflation guard
protection Peak season endorsement
Question:
Approaches used in property insurance to value property
Answer:
1. actual cash value 2. replacement cost 3. agreed value approach 4. functional value
Question:
Valuation of Liability Losses are typically based on
Answer:
1. The relevant policy provisions and 2. The extent of the bodily injury and/or property
damage to others
Question:
The most the insurer will pay is the lesser of
Answer:
1. The applicable policy limit 2. The compensable amount of the loss
, Question:
Purposes of deductibles
Answer:
1. To reduce the insurer's cost by eliminating the inefficiencies of dollar trading and
eliminating insurer loss settlement and other administrative expense for loss under the
deductable. 2. To encourage risk control 3. To reduce the morale and moral hazard incentive
Question:
How deductibles are handled in liability insurance: the insurer
Answer:
1. Defends the claim on a first - dollar basis 2. Pays all covered losses 3. Bills the insured for
the amount of losses up to the deductible.
Question:
Limited use of liability deductibles
Answer:
1. The insurer wants the insured to report every claim and not play adjuster and attorney.
Simply, the insurer wants to control the claim settlement. 2. The premium credit would be
small 3. Few people sue for small amounts 4. The insurer must try to collect the deductible
amount from the insured.
Verified
Question:
Key questions in determining insurable interest
Answer:
1. What is insurable interest 2. When must insurable interest exist 3. Why require insurable
interest 4. What is the legal basis of insurable interest 5. What happens when insurable
interest overlap
Question:
Problems associated with maintain insurance to value
Answer:
1. The amount of insurance required to maintain insurance to value is based on the
property's value at the time of loss, but the limit is chosen at the time of policy inception 2.
The insured often selects the policy limits based on his best guess, not on a valid appraisal.
3. Even with an appraisal, the true insurable value at the time of loss cannot be measured
exactly until the property is actually repaired or replaced 4. Values fluctuate over time
,Question:
Insurance buyers can minimize those four problems by
Answer:
1. Using a professional appraiser to determine the current replacement cost value and then
reappraising the property every few years 2. Adjusting the appraisal annually using indexes
and/or a record of additions and deletions 3. Reviewing and revising limits periodically 4.
Using appropriate coverage options such as Agreed value optional coverage Inflation guard
protection Peak season endorsement
Question:
Approaches used in property insurance to value property
Answer:
1. actual cash value 2. replacement cost 3. agreed value approach 4. functional value
Question:
Valuation of Liability Losses are typically based on
Answer:
1. The relevant policy provisions and 2. The extent of the bodily injury and/or property
damage to others
Question:
The most the insurer will pay is the lesser of
Answer:
1. The applicable policy limit 2. The compensable amount of the loss
, Question:
Purposes of deductibles
Answer:
1. To reduce the insurer's cost by eliminating the inefficiencies of dollar trading and
eliminating insurer loss settlement and other administrative expense for loss under the
deductable. 2. To encourage risk control 3. To reduce the morale and moral hazard incentive
Question:
How deductibles are handled in liability insurance: the insurer
Answer:
1. Defends the claim on a first - dollar basis 2. Pays all covered losses 3. Bills the insured for
the amount of losses up to the deductible.
Question:
Limited use of liability deductibles
Answer:
1. The insurer wants the insured to report every claim and not play adjuster and attorney.
Simply, the insurer wants to control the claim settlement. 2. The premium credit would be
small 3. Few people sue for small amounts 4. The insurer must try to collect the deductible
amount from the insured.
