1 | Page
CPCU 552 Questions and Correct Answers
Civil Law Ans: A classification of law that applies to legal matters
not governed by criminal law and that protects rights and provides
remedies for breaches of duties owed to others.
Criminal law Ans: The branch of the law that imposes penalties
for wrongs against society. And insurance can not respond to
criminal charges
legal liability Ans: The legally enforceable obligation of a person
or an organization to pay a sum of money (called damages) to
another person or organization.
liability loss Ans: Any loss that a person or an organization
sustains as a result of a claim or suit against that person or
organization by someone seeking damages or some other remedy
permitted by law.
liability insurance Ans: insurance that pays damages assessed
against an insured
What are 3 sources of legal liability? Ans: 1.) Torts
2.) Contracts
3.) Statutes
© 2025 All rights reserved
, 2 | Page
What is a tort? Ans: A wrongful act or an omission, other than a
crime or a breach of contract, that invades a legally protected right
What are the 3 types of torts? Ans: 1.) Negligence
2.) Intentional
3.) Strict liability
What is a negligence tort? Ans: The failure to exercise the degree
of care that a reasonable person in a similar situation would
exercise to avoid harming others
What is an intentional tort? Ans: An act committed by a person
who knows (or should know) that his act will harm another person
What is strict liability? Ans: Liability imposed by a court or by a
statute in the absence of fault when harm results from activities or
conditions that are extremely dangerous, unnatural,
ultrahazardous, extraordinary, abnormal or inappropriate.
Example= Blasting sites and worker's compensation
What is a hold-harmless agreement or an indemnity agreement?
Ans: A contractual provision that obligates one of the parties to
assume the legal liability of another party
What is a statute? Ans: a written law passed by a legislative body
at either the federal or state level
© 2025 All rights reserved
, 3 | Page
What are the 5 pre-accident techniques? Ans: 1.) Cost-
effectiveness
2.) Legal requirements
3.) Insurer requirements and recommendations
4.) Public Perception
5.) Management risk aversion
loss prevention Ans: A risk control technique that reduces the
frequency of a particular loss (a sign versus action)
loss reduction Ans: A risk control technique that reduces the
severity of a particular loss.
loss avoidance Ans: a risk control technique that involves ceasing
or never undertaking an activity so that the possibility of a future
loss occurring from that activity is eliminated
What is common law or case law? Ans: Laws that develop out of
court decisions in particular cases and establish precedents for
future cases
What is tort law? Ans: the branch of civil law that deals with civil
wrongs other than breaches of contract
© 2025 All rights reserved
CPCU 552 Questions and Correct Answers
Civil Law Ans: A classification of law that applies to legal matters
not governed by criminal law and that protects rights and provides
remedies for breaches of duties owed to others.
Criminal law Ans: The branch of the law that imposes penalties
for wrongs against society. And insurance can not respond to
criminal charges
legal liability Ans: The legally enforceable obligation of a person
or an organization to pay a sum of money (called damages) to
another person or organization.
liability loss Ans: Any loss that a person or an organization
sustains as a result of a claim or suit against that person or
organization by someone seeking damages or some other remedy
permitted by law.
liability insurance Ans: insurance that pays damages assessed
against an insured
What are 3 sources of legal liability? Ans: 1.) Torts
2.) Contracts
3.) Statutes
© 2025 All rights reserved
, 2 | Page
What is a tort? Ans: A wrongful act or an omission, other than a
crime or a breach of contract, that invades a legally protected right
What are the 3 types of torts? Ans: 1.) Negligence
2.) Intentional
3.) Strict liability
What is a negligence tort? Ans: The failure to exercise the degree
of care that a reasonable person in a similar situation would
exercise to avoid harming others
What is an intentional tort? Ans: An act committed by a person
who knows (or should know) that his act will harm another person
What is strict liability? Ans: Liability imposed by a court or by a
statute in the absence of fault when harm results from activities or
conditions that are extremely dangerous, unnatural,
ultrahazardous, extraordinary, abnormal or inappropriate.
Example= Blasting sites and worker's compensation
What is a hold-harmless agreement or an indemnity agreement?
Ans: A contractual provision that obligates one of the parties to
assume the legal liability of another party
What is a statute? Ans: a written law passed by a legislative body
at either the federal or state level
© 2025 All rights reserved
, 3 | Page
What are the 5 pre-accident techniques? Ans: 1.) Cost-
effectiveness
2.) Legal requirements
3.) Insurer requirements and recommendations
4.) Public Perception
5.) Management risk aversion
loss prevention Ans: A risk control technique that reduces the
frequency of a particular loss (a sign versus action)
loss reduction Ans: A risk control technique that reduces the
severity of a particular loss.
loss avoidance Ans: a risk control technique that involves ceasing
or never undertaking an activity so that the possibility of a future
loss occurring from that activity is eliminated
What is common law or case law? Ans: Laws that develop out of
court decisions in particular cases and establish precedents for
future cases
What is tort law? Ans: the branch of civil law that deals with civil
wrongs other than breaches of contract
© 2025 All rights reserved
