CPCU 500 Study Guide Exam With Correct Solutions 2024.

Key questions in determining insurable interest - Answer 1. What is insurable interest 2. When must insurable interest exist 3. Why require insurable interest 4. What is the legal basis of insurable interest 5. What happens when insurable interest overlap Problems associated with maintain insurance to value - Answer 1. The amount of insurance required to maintain insurance to value is based on the property's value at the time of loss, but the limit is chosen at the time of policy inception 2. The insured often selects the policy limits based on his best guess, not on a valid appraisal. 3. Even with an appraisal, the true insurable value at the time of loss cannot be measured exactly until the property is actually repaired or replaced 4. Values fluctuate over time Insurance buyers can minimize those four problems by - Answer 1. Using a professional appraiser to determine the current replacement cost value and then reappraising the property every few years 2. Adjusting the appraisal annually using indexes and/or a record of additions and deletions 3. Reviewing and revising limits periodically 4. Using appropriate coverage options such as Agreed value optional coverage Inflation guard protection Peak season endorsement Approaches used in property insurance to value property - Answer 1. actual cash value 2. replacement cost 3. agreed value approach