ACTUAL CPCU 551 FULL 50 PRACTICE TEXT QUESTIONS WITH
CORRECT ANALYZED ANSWERS LATEST SOLUTION
Question 1
ID# 5874037Points: 1
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Question text
Wholesale Merchandiser leases five warehouses, each in a different city, to supply retail customers in each
city with timely service. The average value of the merchandise at each warehouse is $750,000. Which one of
the following blanket insurance limits would best suit this insured's needs while minimizing the cost of over-
insuring?
Select one:
A. Blanket $3,750,000 limit
B. Blanket $3,375,000 limit
C. Blanket $4,500,000 limit
D. Blanket $5,000,000 limit - ANSWER ✔ - b
Question 2
ID# 5828907Points: 1
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Question text
Which one of the following is typically covered by an unendorsed builder's risk policy?
Select one:
A. Failure to complete on time due to a strike
B. Building materials and supplies
C. Loss caused by governmental seizure
D. Overruns in the cost of construction - ANSWER ✔ - b
Question 3
ID# 5829408Points: 1
Page | 1
CPCU 551
©®
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Question text
Which one of the following statements is correct with regard to the Building and Personal Property Coverage
Form (BPP)?
Select one:
A. Insureds who have selected the replacement cost option may also elect to have the personal property of
others valued at replacement cost.
B. Under the extension of replacement cost to personal property of others, the amount of a loss is calculated
according to a formula included in the additional coverage wording.
C. Insureds cannot obtain any coverage under the BPP or its optional coverages for leased photocopiers,
computers, phone systems, and other equipment.
D. If an insured extends replacement cost to the personal property of others, the amount of a loss is
calculated as the replacement cost of that property, even if that amount exceeds the applicable limit of
insurance. - ANSWER ✔ - a
Question 4
ID# 5869858Points: 1
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Question text
In the ISO Business Income Coverage forms (BIC), which one of the following is defined as the slowdown or
cessation of business activities or, in the case of rental value coverage, means that a part of the premises is
rendered un-tenantable (unfit for occupancy)?
Select one:
A. Operations
B. Suspension
C. Period of restoration
D. Premises - ANSWER ✔ - b
Question 5
ID# 5856418Points: 1
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Question text
One dimension of analyzing loss exposures is timing of losses. The timing of losses is significant because
Select one:
Page | 2
CPCU 551
©®
, A. Funds to pay for losses must be readily available and paid in full for valid claims.
B. Accurate reserves must be established.
C. Compliancy requirements must be met.
D. Money held in reserve to pay for a loss can earn interest until the actual payment is made. - ANSWER ✔ -
d
Question 6
ID# 5926846Points: 1
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Question text
A building with concrete exterior walls and wooden support beams is which one of the following types of
construction as defined by Insurance Services Office, Inc. (ISO)?
Select one:
A. Combustible
B. Noncombustible
C. Wood frame
D. Joisted masonry - ANSWER ✔ - d
Question 7
Points: 1
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Question text
Cray sells consumer goods. Cray carries a Commercial Package Policy that includes Insurance Services
Office's Commercial Crime Coverage Form (Loss Sustained) with the following insuring agreements:
Employee Theft; Forgery or Alteration; Inside the Premises—Theft of Money and Securities; and Inside the
Premises—Robbery or Safe Burglary of Other Property. The limit of i for each is $100,000 and the deductible
per occurrence for each one of these insuring agreements is $1,000. The policy year is 20X1.
During 20X1, Cray performed an inventory calculation and determined that the actual physical inventory on
hand was $102,000 less than what the company's records indicated.
Cray could not establish that it had sustained a loss without the inventory calculation. How much of this loss
will be covered by the Employee Theft insuring agreement of the Commercial Crime Coverage part?
A. $0
B. $99,000
Page | 3
CPCU 551
©®
CORRECT ANALYZED ANSWERS LATEST SOLUTION
Question 1
ID# 5874037Points: 1
Flag Question
Question text
Wholesale Merchandiser leases five warehouses, each in a different city, to supply retail customers in each
city with timely service. The average value of the merchandise at each warehouse is $750,000. Which one of
the following blanket insurance limits would best suit this insured's needs while minimizing the cost of over-
insuring?
Select one:
A. Blanket $3,750,000 limit
B. Blanket $3,375,000 limit
C. Blanket $4,500,000 limit
D. Blanket $5,000,000 limit - ANSWER ✔ - b
Question 2
ID# 5828907Points: 1
Flag Question
Question text
Which one of the following is typically covered by an unendorsed builder's risk policy?
Select one:
A. Failure to complete on time due to a strike
B. Building materials and supplies
C. Loss caused by governmental seizure
D. Overruns in the cost of construction - ANSWER ✔ - b
Question 3
ID# 5829408Points: 1
Page | 1
CPCU 551
©®
,Flag Question
Question text
Which one of the following statements is correct with regard to the Building and Personal Property Coverage
Form (BPP)?
Select one:
A. Insureds who have selected the replacement cost option may also elect to have the personal property of
others valued at replacement cost.
B. Under the extension of replacement cost to personal property of others, the amount of a loss is calculated
according to a formula included in the additional coverage wording.
C. Insureds cannot obtain any coverage under the BPP or its optional coverages for leased photocopiers,
computers, phone systems, and other equipment.
D. If an insured extends replacement cost to the personal property of others, the amount of a loss is
calculated as the replacement cost of that property, even if that amount exceeds the applicable limit of
insurance. - ANSWER ✔ - a
Question 4
ID# 5869858Points: 1
Flag Question
Question text
In the ISO Business Income Coverage forms (BIC), which one of the following is defined as the slowdown or
cessation of business activities or, in the case of rental value coverage, means that a part of the premises is
rendered un-tenantable (unfit for occupancy)?
Select one:
A. Operations
B. Suspension
C. Period of restoration
D. Premises - ANSWER ✔ - b
Question 5
ID# 5856418Points: 1
Flag Question
Question text
One dimension of analyzing loss exposures is timing of losses. The timing of losses is significant because
Select one:
Page | 2
CPCU 551
©®
, A. Funds to pay for losses must be readily available and paid in full for valid claims.
B. Accurate reserves must be established.
C. Compliancy requirements must be met.
D. Money held in reserve to pay for a loss can earn interest until the actual payment is made. - ANSWER ✔ -
d
Question 6
ID# 5926846Points: 1
Flag Question
Question text
A building with concrete exterior walls and wooden support beams is which one of the following types of
construction as defined by Insurance Services Office, Inc. (ISO)?
Select one:
A. Combustible
B. Noncombustible
C. Wood frame
D. Joisted masonry - ANSWER ✔ - d
Question 7
Points: 1
Flag Question
Question text
Cray sells consumer goods. Cray carries a Commercial Package Policy that includes Insurance Services
Office's Commercial Crime Coverage Form (Loss Sustained) with the following insuring agreements:
Employee Theft; Forgery or Alteration; Inside the Premises—Theft of Money and Securities; and Inside the
Premises—Robbery or Safe Burglary of Other Property. The limit of i for each is $100,000 and the deductible
per occurrence for each one of these insuring agreements is $1,000. The policy year is 20X1.
During 20X1, Cray performed an inventory calculation and determined that the actual physical inventory on
hand was $102,000 less than what the company's records indicated.
Cray could not establish that it had sustained a loss without the inventory calculation. How much of this loss
will be covered by the Employee Theft insuring agreement of the Commercial Crime Coverage part?
A. $0
B. $99,000
Page | 3
CPCU 551
©®
