CISR Insuring Commercial Property Exam 2026/2027
NEWEST VERIFIED QUESTIONS WITH DETAILED
ANSWERS
• Coinsurance -✓✓ CORRECT ANSWER: A promise made between the insurer and
insured of what to expect as to what the insurer will pay
• Benefits of coinsurance for insured -✓✓ CORRECT ANSWER: 1. encourages insured
to adequately insure their property
2. lowers premiums
• Benefits of coinsurance for insurer -✓✓ CORRECT ANSWER: 1. provides better
premium levels per risk insured
2. prevents the insured purchasing insurance for payment of small losses only
3. knowing the true property exposures within an insurer's portfolio allows better rate
adequacy over time
• Coinsurance is only a factor in ____ loss -✓✓ CORRECT ANSWER: partial loss
• Coinsurance formula -✓✓ CORRECT ANSWER: (amount of insurance carried/amount
of insurance required) x loss = amount of recovery
• real property -✓✓ CORRECT ANSWER: things that are affixed or comprise a part of
the real estate
• personal property -✓✓ CORRECT ANSWER: things that are not affixed to the real
estate or can be physically moved. also includes property owned by others that are in
the care, custody or control of an insured.
• commercial property insurance covers real and personal property, but not ____ -✓✓
CORRECT ANSWER: land
• real property includes -✓✓ CORRECT ANSWER: - buildings
- structures (fences, carports, walkways)
- outdoor fixtures
- fixtures in a building that are permanently attached (ex. ceiling fans)
• insurable interest -✓✓ CORRECT ANSWER: a party having a financial stake in
property
• examples of insurable interest -✓✓ CORRECT ANSWER: owner of the property,
mortgage or lienholder of the property, lessee, tenant, bailee, those having contractual
rights to the property
,• direct loss -✓✓ CORRECT ANSWER: the actual damage to the tangible property
• indirect loss -✓✓ CORRECT ANSWER: the financial consequences of the direct loss
• actual cash value formula -✓✓ CORRECT ANSWER: replacement cost at time of loss
- depreciation = actual cash value
• replacement cost -✓✓ CORRECT ANSWER: the cost to replace the property or item
with like kind and quality at today's cost at the time of the loss
• indemnity -✓✓ CORRECT ANSWER: the insured is made whole after a loss
• this valuation is much lower than the cost to replace the property with property of like
kind and quality -✓✓ CORRECT ANSWER: functional replacement cost
• functional replacement cost -✓✓ CORRECT ANSWER: the amount needed to buy or
rebuild a property that serves the same purpose as the original property
• selling price valuation -✓✓ CORRECT ANSWER: property the insured has sold but not
delivered can be valued at its selling price
• why would an insured want to value their property with selling price valuation? -✓✓
CORRECT ANSWER: because replacement cost valuation wouldn't consider the profit
an insured made from the sale, it would only consider the cost to replace the property at
wholesale prices or current manufacturing costs
• how is the use interest of tenant's improvements and betterments calculated? -✓✓
CORRECT ANSWER: original cost at a pro rata value based on the remaining time left
on the lease
• valued policy laws -✓✓ CORRECT ANSWER: law in some states that requires
insurance companies to pay the full value of a policy to the insured in the event of a
total loss
• purpose of valued policy laws -✓✓ CORRECT ANSWER: to discourage insurance
companies from overvaluing property they insure in order to increase premiums
• coinsurance clause -✓✓ CORRECT ANSWER: imposes a penalty on a claim payment
if the insurance-to-value requirement is not met
• coinsurance applies to what type of loss? -✓✓ CORRECT ANSWER: partial loss
, • coinsurance -✓✓ CORRECT ANSWER: if an insured fails to purchase a limit at or
above their coinsurance %, then loss payment for the partial loss is reduced by the
same percentage the insured underinsured their property
• what amount of coverage SHOULD the policy carry? -✓✓ CORRECT ANSWER: the
value of the property at the time of loss multiplied by the coinsurance percentage shown
on the declarations
• optional coverage that insurance carriers offer to avoid coinsurance penalties after a
loss -✓✓ CORRECT ANSWER: agreed value
• agreed value -✓✓ CORRECT ANSWER: an upfront agreement between the insured
and the insurance company on the amount of insurance for the property that suspends
the coinsurance clause if certain conditions are met
• statement of values -✓✓ CORRECT ANSWER: a list of the insured property that
includes the value of each item expressed either in terms of its replacement cost or
actual cash value
• how to obtain coverage based on agreed value -✓✓ CORRECT ANSWER: the insured
submits an SOV at the beginning of the policy term, the carrier agrees to the stated
values, and the coinsurance is suspended for one year. for following renewals the
insured has to submit a new SOV
• what happens if the insured doesn't submit a new SOV at renewal? -✓✓ CORRECT
ANSWER: the agreed value coverage lapses and the coinsurance provision will be
reinstated
• 3 different types of commercial property limits -✓✓ CORRECT ANSWER: specific,
scheduled, blanket
• specific limits -✓✓ CORRECT ANSWER: a specific limit to a building or personal
property at a single location. this limit is the most the insurer will pay to repair or replace
it
• scheduled limits -✓✓ CORRECT ANSWER: separate limits of insurance for each
building and property type individually for multiple locations
• blanket limits -✓✓ CORRECT ANSWER: takes the value of all reported properties and
the resulting total limit is available to pay losses regardless of what property or location
has suffered the loss
• buildings are more likely to suffer a ____ loss than a ____ loss -✓✓ CORRECT
ANSWER: partial loss than a total loss
NEWEST VERIFIED QUESTIONS WITH DETAILED
ANSWERS
• Coinsurance -✓✓ CORRECT ANSWER: A promise made between the insurer and
insured of what to expect as to what the insurer will pay
• Benefits of coinsurance for insured -✓✓ CORRECT ANSWER: 1. encourages insured
to adequately insure their property
2. lowers premiums
• Benefits of coinsurance for insurer -✓✓ CORRECT ANSWER: 1. provides better
premium levels per risk insured
2. prevents the insured purchasing insurance for payment of small losses only
3. knowing the true property exposures within an insurer's portfolio allows better rate
adequacy over time
• Coinsurance is only a factor in ____ loss -✓✓ CORRECT ANSWER: partial loss
• Coinsurance formula -✓✓ CORRECT ANSWER: (amount of insurance carried/amount
of insurance required) x loss = amount of recovery
• real property -✓✓ CORRECT ANSWER: things that are affixed or comprise a part of
the real estate
• personal property -✓✓ CORRECT ANSWER: things that are not affixed to the real
estate or can be physically moved. also includes property owned by others that are in
the care, custody or control of an insured.
• commercial property insurance covers real and personal property, but not ____ -✓✓
CORRECT ANSWER: land
• real property includes -✓✓ CORRECT ANSWER: - buildings
- structures (fences, carports, walkways)
- outdoor fixtures
- fixtures in a building that are permanently attached (ex. ceiling fans)
• insurable interest -✓✓ CORRECT ANSWER: a party having a financial stake in
property
• examples of insurable interest -✓✓ CORRECT ANSWER: owner of the property,
mortgage or lienholder of the property, lessee, tenant, bailee, those having contractual
rights to the property
,• direct loss -✓✓ CORRECT ANSWER: the actual damage to the tangible property
• indirect loss -✓✓ CORRECT ANSWER: the financial consequences of the direct loss
• actual cash value formula -✓✓ CORRECT ANSWER: replacement cost at time of loss
- depreciation = actual cash value
• replacement cost -✓✓ CORRECT ANSWER: the cost to replace the property or item
with like kind and quality at today's cost at the time of the loss
• indemnity -✓✓ CORRECT ANSWER: the insured is made whole after a loss
• this valuation is much lower than the cost to replace the property with property of like
kind and quality -✓✓ CORRECT ANSWER: functional replacement cost
• functional replacement cost -✓✓ CORRECT ANSWER: the amount needed to buy or
rebuild a property that serves the same purpose as the original property
• selling price valuation -✓✓ CORRECT ANSWER: property the insured has sold but not
delivered can be valued at its selling price
• why would an insured want to value their property with selling price valuation? -✓✓
CORRECT ANSWER: because replacement cost valuation wouldn't consider the profit
an insured made from the sale, it would only consider the cost to replace the property at
wholesale prices or current manufacturing costs
• how is the use interest of tenant's improvements and betterments calculated? -✓✓
CORRECT ANSWER: original cost at a pro rata value based on the remaining time left
on the lease
• valued policy laws -✓✓ CORRECT ANSWER: law in some states that requires
insurance companies to pay the full value of a policy to the insured in the event of a
total loss
• purpose of valued policy laws -✓✓ CORRECT ANSWER: to discourage insurance
companies from overvaluing property they insure in order to increase premiums
• coinsurance clause -✓✓ CORRECT ANSWER: imposes a penalty on a claim payment
if the insurance-to-value requirement is not met
• coinsurance applies to what type of loss? -✓✓ CORRECT ANSWER: partial loss
, • coinsurance -✓✓ CORRECT ANSWER: if an insured fails to purchase a limit at or
above their coinsurance %, then loss payment for the partial loss is reduced by the
same percentage the insured underinsured their property
• what amount of coverage SHOULD the policy carry? -✓✓ CORRECT ANSWER: the
value of the property at the time of loss multiplied by the coinsurance percentage shown
on the declarations
• optional coverage that insurance carriers offer to avoid coinsurance penalties after a
loss -✓✓ CORRECT ANSWER: agreed value
• agreed value -✓✓ CORRECT ANSWER: an upfront agreement between the insured
and the insurance company on the amount of insurance for the property that suspends
the coinsurance clause if certain conditions are met
• statement of values -✓✓ CORRECT ANSWER: a list of the insured property that
includes the value of each item expressed either in terms of its replacement cost or
actual cash value
• how to obtain coverage based on agreed value -✓✓ CORRECT ANSWER: the insured
submits an SOV at the beginning of the policy term, the carrier agrees to the stated
values, and the coinsurance is suspended for one year. for following renewals the
insured has to submit a new SOV
• what happens if the insured doesn't submit a new SOV at renewal? -✓✓ CORRECT
ANSWER: the agreed value coverage lapses and the coinsurance provision will be
reinstated
• 3 different types of commercial property limits -✓✓ CORRECT ANSWER: specific,
scheduled, blanket
• specific limits -✓✓ CORRECT ANSWER: a specific limit to a building or personal
property at a single location. this limit is the most the insurer will pay to repair or replace
it
• scheduled limits -✓✓ CORRECT ANSWER: separate limits of insurance for each
building and property type individually for multiple locations
• blanket limits -✓✓ CORRECT ANSWER: takes the value of all reported properties and
the resulting total limit is available to pay losses regardless of what property or location
has suffered the loss
• buildings are more likely to suffer a ____ loss than a ____ loss -✓✓ CORRECT
ANSWER: partial loss than a total loss
