1 | Page
CPCU 551 Questions and Correct Answers
What are business owners looking for in an insurance
professional? Ans: A risk consultant who can assess their
individual needs and develop a tailored risk management program
for them, because no two organizations are the same
How can insurance professionals be risk consultants and create a
valuable relationships with their clients? Ans: Identify the unique
risks their clients face and pair them with effective risk
management and coverage solutions
Building and Personal Property Coverage Form (BPP) Ans: -
provides coverage for buildings, business personal property, and
the personal property of others.
- also provides additional coverages and coverage extensions for
debris removal, the preservation of property, fire department
service charges, pollutant cleanup and removal, increased cost of
construction, electronic data, new property, personal effects,
property of others, valuable records, and nonowned detached
trailers.
Business Income Coverage Form (BIC) Ans: provide business
income insurance (also referred to as business interruption
insurance) to cover the reduction in an organization's income that
© 2025 All rights reserved
, 2 | Page
results when its operations are interrupted by damage that's
covered under its commercial property policy. Considered a 'time
element' coverage.
How is is the reduction in an organization's income caused by a
business interruption calculated? Ans: = Amount an organization
could have reasonably been expected to earn in the period of
interruption - Amount of net income that the organization actually
earned in the period of interruption
How are limits calculated for BIC coverage? Ans: Insurers typically
use their own, or an ISO, business income worksheet
How do you determine whether an organization has enough BIC
coverage? Ans: § Determining whether an organization is
underinsured requires understanding the Limits of Insurance, Loss
Conditions, and Additional Condition (Coinsurance) sections of the
BIC forms.
§ These sections help determine how much the BIC forms pay for
specific losses and the appropriate amount of coverage
commercial operations should purchase.
Related Expenses for Green Upgrades endorsement Ans: Standard
BPP coverage repairs and replaces standard building materials, but
would not cover green upgrades, such as solar panels.
© 2025 All rights reserved
, 3 | Page
This endorsement would provide additional coverage that includes
replacement costs of solar panels.
Brands and Labels endorsement Ans: After a loss, the insurer may
take control of property and attempt to salvage it. This
endorsement pays for the costs to stamp "salvage" or remove
brands/labels on merchandise after loss (without damaging it) so
that their reputation is not damaged.
Business Income Worksheet Ans: § A worksheet for calculating
the amount of insurance necessary to comply with the
Coinsurance condition of business income insurance forms, for
reporting business income values to the insurer, or for providing
underwriters with information they need to evaluate an
organization's business income loss exposure.
Continuing expenses Ans: Expenses that continue to be incurred
during a business interruption.
Noncontinuing expenses Ans: Expenses that will not continue
during a business interruption
Extra expenses Ans: expenses incurred by the insured above their
normal operating costs during the period of restoration and to
minimize suspension.
© 2025 All rights reserved
, 4 | Page
§ The extra expenses incurred for these items are not included in
the worksheet when calculating the coinsurance basis.
§ However, anticipated extra expenses covered under the
company's business income insurance should be included in the
EML.
What are examples of continuing expenses? Ans: Payroll of key
employees, debt repayments, taxes, insurance premiums, and
many other expenses will continue during the interruption.
However, if an interruption lasts a long time, some of these
expenses may be reduced or eliminated.
Examples of extra expenses Ans: Relocation, extra payroll,
additional utilities, new equipment
Examples of external business interruptions Ans: - Damage to
offsite property that provides utilities
- Damage to a major customer or key supplier
- Damage to a magnet property, such as a mall that usually brings
customers to the area
- Closed road or labor strike
- Not all of these risks are insurable
© 2025 All rights reserved
CPCU 551 Questions and Correct Answers
What are business owners looking for in an insurance
professional? Ans: A risk consultant who can assess their
individual needs and develop a tailored risk management program
for them, because no two organizations are the same
How can insurance professionals be risk consultants and create a
valuable relationships with their clients? Ans: Identify the unique
risks their clients face and pair them with effective risk
management and coverage solutions
Building and Personal Property Coverage Form (BPP) Ans: -
provides coverage for buildings, business personal property, and
the personal property of others.
- also provides additional coverages and coverage extensions for
debris removal, the preservation of property, fire department
service charges, pollutant cleanup and removal, increased cost of
construction, electronic data, new property, personal effects,
property of others, valuable records, and nonowned detached
trailers.
Business Income Coverage Form (BIC) Ans: provide business
income insurance (also referred to as business interruption
insurance) to cover the reduction in an organization's income that
© 2025 All rights reserved
, 2 | Page
results when its operations are interrupted by damage that's
covered under its commercial property policy. Considered a 'time
element' coverage.
How is is the reduction in an organization's income caused by a
business interruption calculated? Ans: = Amount an organization
could have reasonably been expected to earn in the period of
interruption - Amount of net income that the organization actually
earned in the period of interruption
How are limits calculated for BIC coverage? Ans: Insurers typically
use their own, or an ISO, business income worksheet
How do you determine whether an organization has enough BIC
coverage? Ans: § Determining whether an organization is
underinsured requires understanding the Limits of Insurance, Loss
Conditions, and Additional Condition (Coinsurance) sections of the
BIC forms.
§ These sections help determine how much the BIC forms pay for
specific losses and the appropriate amount of coverage
commercial operations should purchase.
Related Expenses for Green Upgrades endorsement Ans: Standard
BPP coverage repairs and replaces standard building materials, but
would not cover green upgrades, such as solar panels.
© 2025 All rights reserved
, 3 | Page
This endorsement would provide additional coverage that includes
replacement costs of solar panels.
Brands and Labels endorsement Ans: After a loss, the insurer may
take control of property and attempt to salvage it. This
endorsement pays for the costs to stamp "salvage" or remove
brands/labels on merchandise after loss (without damaging it) so
that their reputation is not damaged.
Business Income Worksheet Ans: § A worksheet for calculating
the amount of insurance necessary to comply with the
Coinsurance condition of business income insurance forms, for
reporting business income values to the insurer, or for providing
underwriters with information they need to evaluate an
organization's business income loss exposure.
Continuing expenses Ans: Expenses that continue to be incurred
during a business interruption.
Noncontinuing expenses Ans: Expenses that will not continue
during a business interruption
Extra expenses Ans: expenses incurred by the insured above their
normal operating costs during the period of restoration and to
minimize suspension.
© 2025 All rights reserved
, 4 | Page
§ The extra expenses incurred for these items are not included in
the worksheet when calculating the coinsurance basis.
§ However, anticipated extra expenses covered under the
company's business income insurance should be included in the
EML.
What are examples of continuing expenses? Ans: Payroll of key
employees, debt repayments, taxes, insurance premiums, and
many other expenses will continue during the interruption.
However, if an interruption lasts a long time, some of these
expenses may be reduced or eliminated.
Examples of extra expenses Ans: Relocation, extra payroll,
additional utilities, new equipment
Examples of external business interruptions Ans: - Damage to
offsite property that provides utilities
- Damage to a major customer or key supplier
- Damage to a magnet property, such as a mall that usually brings
customers to the area
- Closed road or labor strike
- Not all of these risks are insurable
© 2025 All rights reserved
