©THEBRIGHT 2025 ALL RIGHTS RESERVED 11:11PM.
CPCU 500 Exam Questions And Answers
2025 Update.
Which one of the following is not compulsary unless contractually required by a client or
customer? - Answer✔ISO 31000:2009
With respect to residential property loss name three causes of loss which involve a large
number or similar exposure units. - Answer✔Fire, windstorm, and flood
In the context of risk, the chance of being injured while driving to and from work, loading a
truck at work, moving furniture at home, or falling in an icy parking lot at the mall are all
examples of - Answer✔Possibilities.
Which one of the following best describes effective and efficient risk control measures? -
Answer✔They are the least expensive measures that achieve an organization's risk
management goals.
With regards to probability distributions what can be used to evaluate the effect of various
deductibles and policy limits on insured loss exposures?. - Answer✔Cumulative probabilities
Property insurance policies using the agreed value method - Answer✔Pay the agreed value for
total losses.
What type of contract is a typical insurance contracts? - Answer✔Contracts of adhesion
In terms of insurance to value principles applying to liability insurance policies, liability insurers
seek to use insurance rates that are adequate for whatever "layer" of coverage they are
insuring. - Answer✔True
With a post-loss goal of profitability, what may senior management establish? - Answer✔A
minimum amount of profit that no loss can be allowed to reduce.
Business continuity management was initially developed with a focus on - Answer✔Information
technology concerns.
George has received an inheritance and is deciding what to do with the money. He has limited
his options to four choices: donate all the money to his favorite charity, use the entire
inheritance to buy a yacht, invest the inheritance in a small rental property, or use the entire
amount to purchase T-bills. Which one of the following statements is true regarding the risk
1
, ©THEBRIGHT 2025 ALL RIGHTS RESERVED 11:11PM.
involved in George's options? - Answer✔The rental property presents both pure and
speculative risk; property values may increase, but the building could burn down.
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) published
what is referred to as COSO II. COSO II, a risk management framework, - Answer✔Focuses on
threats to the organization and application of controls.
Edna, who participates in a homeowners' reciprocal exchange knows that the members of the
exchange insure members' loss exposures. A policy issued by the reciprocal insurer specifies the
attorney-in-fact's authority to implement its powers on behalf of Edna and the other members
of the exchange. Information regarding the powers of the attorney-in-fact is most likely to be
found in Edna's policy's - Answer✔Miscellaneous provisions.
Which one of the following planned retention measures is appropriate for funding losses with a
low expected value, but becomes less advisable as the expected value of losses gets larger? -
Answer✔Current expensing of losses
One of the differences between traditional risk management (RM) and enterprise-wide risk
management (ERM) is in the organizational structure. The chief risk officer in an ERM structure
typically reports to the - Answer✔Chief executive officer (CEO).
What happens to the level of liquidity required as an organization's retention level increases? -
Answer✔So does the level of liquidity required
Regarding the use of deductibles on liability insurance policies, which one of the following
statements is true? - Answer✔Under liability policies that include a deductible, the insurer
usually pays all defense costs on a first-dollar basis.
Since manuscript forms do not have the same history of court interpretations with regard to
policy analysis, substantial delays in claim adjusting or strained relations between the insured
and the insurer can occur. To reduce the likelihood of such problems, most manuscript forms
are - Answer✔Adapted from wording previously developed and used in standard forms.
Which one of the following statements is correct regarding net income loss exposures? -
Answer✔Net income loss exposures associated with property losses exhibit almost all the
characteristics of ideally insurable risks
Which one of the following statements regarding monitoring the results of a risk management
program is true? - Answer✔Activities standards are necessary to obtain a complete picture of
the success or failure of a risk management program.
The numbers and edition dates of all attached forms and endorsements are found in the policy
- Answer✔Declarations.
Which one of the following is an example of a noninsurance agreement that may overlap with
insurance coverage of losses? - Answer✔Home warranty is an example of a noninsurance
agreement that may overlap with insurance coverage of losses.
2
CPCU 500 Exam Questions And Answers
2025 Update.
Which one of the following is not compulsary unless contractually required by a client or
customer? - Answer✔ISO 31000:2009
With respect to residential property loss name three causes of loss which involve a large
number or similar exposure units. - Answer✔Fire, windstorm, and flood
In the context of risk, the chance of being injured while driving to and from work, loading a
truck at work, moving furniture at home, or falling in an icy parking lot at the mall are all
examples of - Answer✔Possibilities.
Which one of the following best describes effective and efficient risk control measures? -
Answer✔They are the least expensive measures that achieve an organization's risk
management goals.
With regards to probability distributions what can be used to evaluate the effect of various
deductibles and policy limits on insured loss exposures?. - Answer✔Cumulative probabilities
Property insurance policies using the agreed value method - Answer✔Pay the agreed value for
total losses.
What type of contract is a typical insurance contracts? - Answer✔Contracts of adhesion
In terms of insurance to value principles applying to liability insurance policies, liability insurers
seek to use insurance rates that are adequate for whatever "layer" of coverage they are
insuring. - Answer✔True
With a post-loss goal of profitability, what may senior management establish? - Answer✔A
minimum amount of profit that no loss can be allowed to reduce.
Business continuity management was initially developed with a focus on - Answer✔Information
technology concerns.
George has received an inheritance and is deciding what to do with the money. He has limited
his options to four choices: donate all the money to his favorite charity, use the entire
inheritance to buy a yacht, invest the inheritance in a small rental property, or use the entire
amount to purchase T-bills. Which one of the following statements is true regarding the risk
1
, ©THEBRIGHT 2025 ALL RIGHTS RESERVED 11:11PM.
involved in George's options? - Answer✔The rental property presents both pure and
speculative risk; property values may increase, but the building could burn down.
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) published
what is referred to as COSO II. COSO II, a risk management framework, - Answer✔Focuses on
threats to the organization and application of controls.
Edna, who participates in a homeowners' reciprocal exchange knows that the members of the
exchange insure members' loss exposures. A policy issued by the reciprocal insurer specifies the
attorney-in-fact's authority to implement its powers on behalf of Edna and the other members
of the exchange. Information regarding the powers of the attorney-in-fact is most likely to be
found in Edna's policy's - Answer✔Miscellaneous provisions.
Which one of the following planned retention measures is appropriate for funding losses with a
low expected value, but becomes less advisable as the expected value of losses gets larger? -
Answer✔Current expensing of losses
One of the differences between traditional risk management (RM) and enterprise-wide risk
management (ERM) is in the organizational structure. The chief risk officer in an ERM structure
typically reports to the - Answer✔Chief executive officer (CEO).
What happens to the level of liquidity required as an organization's retention level increases? -
Answer✔So does the level of liquidity required
Regarding the use of deductibles on liability insurance policies, which one of the following
statements is true? - Answer✔Under liability policies that include a deductible, the insurer
usually pays all defense costs on a first-dollar basis.
Since manuscript forms do not have the same history of court interpretations with regard to
policy analysis, substantial delays in claim adjusting or strained relations between the insured
and the insurer can occur. To reduce the likelihood of such problems, most manuscript forms
are - Answer✔Adapted from wording previously developed and used in standard forms.
Which one of the following statements is correct regarding net income loss exposures? -
Answer✔Net income loss exposures associated with property losses exhibit almost all the
characteristics of ideally insurable risks
Which one of the following statements regarding monitoring the results of a risk management
program is true? - Answer✔Activities standards are necessary to obtain a complete picture of
the success or failure of a risk management program.
The numbers and edition dates of all attached forms and endorsements are found in the policy
- Answer✔Declarations.
Which one of the following is an example of a noninsurance agreement that may overlap with
insurance coverage of losses? - Answer✔Home warranty is an example of a noninsurance
agreement that may overlap with insurance coverage of losses.
2
