CPCU 551 EXAM QUESTIONS
COMPILATION 2025 WITH 100%
VERIFIED QUESTIONS AND CORRECT
SOLUTIONS
1. How Do You Calculate The Agreed Value Payment If The
Limit Is Less Than The Agreed Value? - Correct Answer-=
(Limit/Agreed Value X Loss)- Deductible.
2. An Insured Chooses The "Agreed Value" Option For Its
Building And Personal Property Coverage Form (Bpp).
The Agreed Value For The Property Is $100,000 And The
Limit Of Insurance Is $120,000 With A
$5,000 Deductible. The Building Is Totally Destroyed By A
Covered Cause Of Loss. At The Time Of The Loss, The Value
Of The Building Was $130,000. The Insurer Would Pay -
Correct Answer-$120k.
3. What Is The Agreed Value Payment If The Limit Of Insurance Is
Greater Than Or Equal To The Agreed Value Stated In The
Declarations? (Bpp) - Correct Answer-Losses Will Be Paid In
Full Up To The Limit Of Insurance (Each Loss Subject To
Deductible).
1 | Page
,4. How Is The Deductible Applied In Bpp? - Correct
Answer-Once Per Occurrence.
5. When Analyzing What Deductible Amount To Choose For Its
Building And Personal Property Coverage Form (Bpp), An
Insured Should Consider - Correct Answer-If The Items On The
Bpp Will Be Listed Separately Or On A Blanket Basis.
6. Acv. 100k Limit. 1k Deductible. 110k Loss. What Is Payment? -
Correct Answer-100k, Since 110k-1k Deductible Exceeds The
Limit Of Insurance. Not 99k!
7. If Blanket Insurance W/ A $100k Deductible, What Would The
Payment Be If A Fire Loss Caused $800 To Building And $400
To Business Personal Property (If These Items Were
Scheduled Separately). - Correct Answer- Zero.
8. 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? - Correct Answer-Pro-Rata Based
On The Length Of The Lease, The Time Expired Since The
Improvements And Betterments Were Installed, And The
Original Cost
2 | Page
,9. 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) - Correct Answer-24,400
10. 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? -
Correct Answer-Windstorm.
11. 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? - Correct
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%
12. 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 -
Correct Answer-Fire Stop.
3 | Page
, 13. 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? - Correct Answer-
$37,037
14. A Manufacturing Company Has Business Personal Property
Valued At $1,500,000. The Risk Manager Is Considering
Insuring The Business Personal Property With 80 Percent
Coinsurance At A $0.40 Rate Per $100 Of Coverage. The 100
Percent Rate Is $0.35 Per $100 Of Coverage. If The Business
Personal Property Is Insured With An 80 Percent Coinsurance,
How Much Premium Will Be Saved? - Correct Answer-The
Savings Will Be
$5,250 − $4,800 = $450
15. When (If) Can An Insurer Examine Their Insured's Books And
Records?
- Correct Answer-Anytime During The Policy Period And Up
To 3 Years After. The Final Premium Is Established After
The Policy Period Expires. Premiums Are Estimated At Its
Formation.
16. Can An Insured Transfer Duties Under Common Policy
Conditions? - Correct Answer-Only With The Insurer's
Written Consent.
4 | Page
COMPILATION 2025 WITH 100%
VERIFIED QUESTIONS AND CORRECT
SOLUTIONS
1. How Do You Calculate The Agreed Value Payment If The
Limit Is Less Than The Agreed Value? - Correct Answer-=
(Limit/Agreed Value X Loss)- Deductible.
2. An Insured Chooses The "Agreed Value" Option For Its
Building And Personal Property Coverage Form (Bpp).
The Agreed Value For The Property Is $100,000 And The
Limit Of Insurance Is $120,000 With A
$5,000 Deductible. The Building Is Totally Destroyed By A
Covered Cause Of Loss. At The Time Of The Loss, The Value
Of The Building Was $130,000. The Insurer Would Pay -
Correct Answer-$120k.
3. What Is The Agreed Value Payment If The Limit Of Insurance Is
Greater Than Or Equal To The Agreed Value Stated In The
Declarations? (Bpp) - Correct Answer-Losses Will Be Paid In
Full Up To The Limit Of Insurance (Each Loss Subject To
Deductible).
1 | Page
,4. How Is The Deductible Applied In Bpp? - Correct
Answer-Once Per Occurrence.
5. When Analyzing What Deductible Amount To Choose For Its
Building And Personal Property Coverage Form (Bpp), An
Insured Should Consider - Correct Answer-If The Items On The
Bpp Will Be Listed Separately Or On A Blanket Basis.
6. Acv. 100k Limit. 1k Deductible. 110k Loss. What Is Payment? -
Correct Answer-100k, Since 110k-1k Deductible Exceeds The
Limit Of Insurance. Not 99k!
7. If Blanket Insurance W/ A $100k Deductible, What Would The
Payment Be If A Fire Loss Caused $800 To Building And $400
To Business Personal Property (If These Items Were
Scheduled Separately). - Correct Answer- Zero.
8. 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? - Correct Answer-Pro-Rata Based
On The Length Of The Lease, The Time Expired Since The
Improvements And Betterments Were Installed, And The
Original Cost
2 | Page
,9. 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) - Correct Answer-24,400
10. 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? -
Correct Answer-Windstorm.
11. 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? - Correct
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%
12. 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 -
Correct Answer-Fire Stop.
3 | Page
, 13. 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? - Correct Answer-
$37,037
14. A Manufacturing Company Has Business Personal Property
Valued At $1,500,000. The Risk Manager Is Considering
Insuring The Business Personal Property With 80 Percent
Coinsurance At A $0.40 Rate Per $100 Of Coverage. The 100
Percent Rate Is $0.35 Per $100 Of Coverage. If The Business
Personal Property Is Insured With An 80 Percent Coinsurance,
How Much Premium Will Be Saved? - Correct Answer-The
Savings Will Be
$5,250 − $4,800 = $450
15. When (If) Can An Insurer Examine Their Insured's Books And
Records?
- Correct Answer-Anytime During The Policy Period And Up
To 3 Years After. The Final Premium Is Established After
The Policy Period Expires. Premiums Are Estimated At Its
Formation.
16. Can An Insured Transfer Duties Under Common Policy
Conditions? - Correct Answer-Only With The Insurer's
Written Consent.
4 | Page
