CPCU 551 EXAM 2025 COMMERCIAL PROPERTY
MANAGEMENT 450 QUESTIONS AND CORRECT ANSWERS/
CPCU 551 EXAM 2025 PREP TEST BANK (BRAND NEW!)
A building had been vacant for 60 days, and the insurer didn't know about it, when it sustained 100K,
5K, and 1K losses due to windstorm, theft, and sprinkler leakage, respectively. What amount is
covered under CPP? - ANSWER-85K, 0, and 0. If a building is vacant for 60 or more consecutive
days before the loss, they won't pay for any loss caused by vandalism, sprinkler leakage, building
glass breakage, water damage, theft, or attempted theft... otherwise you'll only get 85%
Various building design features can help prevent the spread of a hostile fire. For example, a solid
piece of material that is inserted between wall studs to delay the flow of heat or fire through this
open space is a - ANSWER-Fire stop.
Pete insures his motorcycle rental property for $100,000 on an actual cash value (ACV) basis. The
ACV of the property is $150,000 and his Commercial Insurance Policy (CIP) has a 90 percent
coinsurance clause. A fire caused $50,000 of damage to the building structure. How much will Pete
recoup under his insurance policy? - ANSWER-$37,037
If the improvements and betterments sustained a loss sometime during a business's lease and if the
building owner repairs the rental space, but the company (lessee) does not replace the
improvements and betterments once the space is repaired, what valuation method is used under the
lessee's BPP policy? - ANSWER-Pro-rata based on the length of the lease, the time expired since
the improvements and betterments were installed, and the original cost
A building is insured for $200,000 under an agreed value policy. The policy has a $10,000 deductible
and the agreed value of the building is $250,000. After suffering a $43,000 loss, the insurer will pay
(rounded to the nearest $100) - ANSWER-24,400
The risk manager for a painting company has purchased an outdoor property extension policy to
cover their trees, shrubs and signs not attached to the building. Which of the following would not be
considered a covered cause of loss? Civil Commotion, lightning, explosion, windstorm? - ANSWER-
Windstorm.
A landlord leases a portion of a strip mall to a dry cleaning business. When the tenant moved into
the building, the tenant installed dry cleaning equipment for the business. It also installed new
carpeting and tile throughout the building.
,Under the landlord's BPP - are the improvements considered part of building coverage or personal
property of others? - ANSWER-Building Coverage. The owners' use interest in improvements and
betterments are covered as the 'owner's property'
What is the payment under BPP if the insured does not meet the coinsurance requirement? -
ANSWER-Did/shouldxloss-deductible
(should = value of covered property x coinsurance %)
A small business owner purchased an unendorsed Building and Personal Property Coverage Form
(BPP). The limit on the policy is $500,000 which meets the coinsurance requirements. The deductible
is $1,000. The total value of the insured property is $525,000. The insured suffered a $510,000
covered loss to the property. What will the insurer pay? - ANSWER-500K. The deductible comes off
the loss not the limit of insurance.
How much coverage does the Causes of Loss—Special Form provide under its Additional Coverages
and Extensions for Property in Transit? - ANSWER-It provides $5,000 of additional insurance for
the insured's property in a motor vehicle.
A disgruntled employee of the insured returned to his employer's store late at night and broke into
the locked registers, taking the minimal morning cash set up. The employee also damaged the lock
boxes and took some store merchandise. Which types of property in this scenario would be covered
under the Causes of Loss—Special Form? - ANSWER-The damaged registers and lock boxes would
be covered as items stolen by employees are not covered.
What condition must be met in order for the 6 BPP coverage extensions to apply? - ANSWER-80%
or higher coinsurance or value reporting applies as additional insurance, no coinsurance. Whatever
the **** that means.
Name the 10 special form exclusions - ANSWER-maintenance, employee dishonesty, voluntary
parting, unauthorized instructions, inventory shortage, unexplained disappearance, concurrent
causation (weather, acts/decisions, faulty planning), pollutants, production errors.
Whats the difference between basic/broad form vs. special form? - ANSWER-Basic/Broad forms
are "named peril" forms whereas Special form provides "all risk" coverage.
, What are the main things that special form covers that broad form does not cover? - ANSWER-
theft, friendly fire, vehicle damage, and water damage caused by ice dams
What are the four basic things covered under board form? - ANSWER-falling objects, weight of
snow, ice, or sleet, water damage (w/ exclusions) additional coverage-collapse
what is the coinsurance requirement for blanket insurance? - ANSWER-90%
When does the coverage period begin for the bPP limited international coverage endorsement? -
ANSWER-When the property LEAVES the insured's premises.
Ordinance or Law Coverage Endorsement... a? b? c? - ANSWER-a - covers loss to undamaged
portion that is not permitted to be used. b - covers cost to demolish undamaged portion/debris. c -
covers increased cost to repair up to standards (within 2 yrs)
SCF Company manufactures candy and has been in business for over 80 years in the same building.
Because of the change in building materials and building codes, an endorsement the owner should
consider for replacing the building in the event of a loss is - ANSWER-Functional Valuation
method, which also includes ordinance and law coverage
True or False:
Blanket Insurance covers additional debris removal if the loss only occurs at one location. -
ANSWER-True
True or False:
Under the Ordinance or Law Coverage Endorsement, a replacement building may be on the same
premises or elsewhere, but it must be intended for occupancy similar to the damaged premises. -
ANSWER-True
The Brands and Labels endorsement - ANSWER-Cover the additional costs to the insured when
they are preparing salvage items for sale.
Delta is a manufacturer that makes seasonal products and insures its business personal property
with a Building and Personal Property Coverage Form (BPP) with a Value Reporting Form. The limit of
MANAGEMENT 450 QUESTIONS AND CORRECT ANSWERS/
CPCU 551 EXAM 2025 PREP TEST BANK (BRAND NEW!)
A building had been vacant for 60 days, and the insurer didn't know about it, when it sustained 100K,
5K, and 1K losses due to windstorm, theft, and sprinkler leakage, respectively. What amount is
covered under CPP? - ANSWER-85K, 0, and 0. If a building is vacant for 60 or more consecutive
days before the loss, they won't pay for any loss caused by vandalism, sprinkler leakage, building
glass breakage, water damage, theft, or attempted theft... otherwise you'll only get 85%
Various building design features can help prevent the spread of a hostile fire. For example, a solid
piece of material that is inserted between wall studs to delay the flow of heat or fire through this
open space is a - ANSWER-Fire stop.
Pete insures his motorcycle rental property for $100,000 on an actual cash value (ACV) basis. The
ACV of the property is $150,000 and his Commercial Insurance Policy (CIP) has a 90 percent
coinsurance clause. A fire caused $50,000 of damage to the building structure. How much will Pete
recoup under his insurance policy? - ANSWER-$37,037
If the improvements and betterments sustained a loss sometime during a business's lease and if the
building owner repairs the rental space, but the company (lessee) does not replace the
improvements and betterments once the space is repaired, what valuation method is used under the
lessee's BPP policy? - ANSWER-Pro-rata based on the length of the lease, the time expired since
the improvements and betterments were installed, and the original cost
A building is insured for $200,000 under an agreed value policy. The policy has a $10,000 deductible
and the agreed value of the building is $250,000. After suffering a $43,000 loss, the insurer will pay
(rounded to the nearest $100) - ANSWER-24,400
The risk manager for a painting company has purchased an outdoor property extension policy to
cover their trees, shrubs and signs not attached to the building. Which of the following would not be
considered a covered cause of loss? Civil Commotion, lightning, explosion, windstorm? - ANSWER-
Windstorm.
A landlord leases a portion of a strip mall to a dry cleaning business. When the tenant moved into
the building, the tenant installed dry cleaning equipment for the business. It also installed new
carpeting and tile throughout the building.
,Under the landlord's BPP - are the improvements considered part of building coverage or personal
property of others? - ANSWER-Building Coverage. The owners' use interest in improvements and
betterments are covered as the 'owner's property'
What is the payment under BPP if the insured does not meet the coinsurance requirement? -
ANSWER-Did/shouldxloss-deductible
(should = value of covered property x coinsurance %)
A small business owner purchased an unendorsed Building and Personal Property Coverage Form
(BPP). The limit on the policy is $500,000 which meets the coinsurance requirements. The deductible
is $1,000. The total value of the insured property is $525,000. The insured suffered a $510,000
covered loss to the property. What will the insurer pay? - ANSWER-500K. The deductible comes off
the loss not the limit of insurance.
How much coverage does the Causes of Loss—Special Form provide under its Additional Coverages
and Extensions for Property in Transit? - ANSWER-It provides $5,000 of additional insurance for
the insured's property in a motor vehicle.
A disgruntled employee of the insured returned to his employer's store late at night and broke into
the locked registers, taking the minimal morning cash set up. The employee also damaged the lock
boxes and took some store merchandise. Which types of property in this scenario would be covered
under the Causes of Loss—Special Form? - ANSWER-The damaged registers and lock boxes would
be covered as items stolen by employees are not covered.
What condition must be met in order for the 6 BPP coverage extensions to apply? - ANSWER-80%
or higher coinsurance or value reporting applies as additional insurance, no coinsurance. Whatever
the **** that means.
Name the 10 special form exclusions - ANSWER-maintenance, employee dishonesty, voluntary
parting, unauthorized instructions, inventory shortage, unexplained disappearance, concurrent
causation (weather, acts/decisions, faulty planning), pollutants, production errors.
Whats the difference between basic/broad form vs. special form? - ANSWER-Basic/Broad forms
are "named peril" forms whereas Special form provides "all risk" coverage.
, What are the main things that special form covers that broad form does not cover? - ANSWER-
theft, friendly fire, vehicle damage, and water damage caused by ice dams
What are the four basic things covered under board form? - ANSWER-falling objects, weight of
snow, ice, or sleet, water damage (w/ exclusions) additional coverage-collapse
what is the coinsurance requirement for blanket insurance? - ANSWER-90%
When does the coverage period begin for the bPP limited international coverage endorsement? -
ANSWER-When the property LEAVES the insured's premises.
Ordinance or Law Coverage Endorsement... a? b? c? - ANSWER-a - covers loss to undamaged
portion that is not permitted to be used. b - covers cost to demolish undamaged portion/debris. c -
covers increased cost to repair up to standards (within 2 yrs)
SCF Company manufactures candy and has been in business for over 80 years in the same building.
Because of the change in building materials and building codes, an endorsement the owner should
consider for replacing the building in the event of a loss is - ANSWER-Functional Valuation
method, which also includes ordinance and law coverage
True or False:
Blanket Insurance covers additional debris removal if the loss only occurs at one location. -
ANSWER-True
True or False:
Under the Ordinance or Law Coverage Endorsement, a replacement building may be on the same
premises or elsewhere, but it must be intended for occupancy similar to the damaged premises. -
ANSWER-True
The Brands and Labels endorsement - ANSWER-Cover the additional costs to the insured when
they are preparing salvage items for sale.
Delta is a manufacturer that makes seasonal products and insures its business personal property
with a Building and Personal Property Coverage Form (BPP) with a Value Reporting Form. The limit of
