CPCU 551 EXAM QUESTIONS WITH
ACCURATE A+ SOLUTIONS.
,Discovery form - ANSWERForm that covers losses discovered during the policy period
even though they may have occurred before the policy period.
(Compared with loss sustained form - ANSWERre: commercial crime. Loss sustained is
the most commonly used of these two.)
Loss sustained form - ANSWERForm that covers losses actually sustained during the
policy period and discovered no later than one year after policy expiration.
(Compared with discovery form re: commercial crime. Loss sustained is the most
commonly used of these two.) - ANSWER...
Employee Theft coverge, Insures an employer against theft of its property by its own
employees. - ANSWER...
Theft (definition as part of Employee Theft coverage) - ANSWERThe unlawful taking of
money, securities, or other property to the deprivation of the insured.
For the purposes of employee theft coverage, theft includes forgery. - ANSWER...
Unlawful taking (definition as part of Employee Theft coverage), An act that is not
authorized by law or is a violation of a civil or criminal law. - ANSWER...
(Proof of unlawful taking does not have to meet the standards needed to obtain a
criminal conviction.) - ANSWER...
Where employee theft coverage applies, United States (including its territories and
possessions), Puerto Rico, and Canada. Coverage also applies to loss caused by an
employee who is temporarily outside the covered territory for not more than ninety
consecutive days. - ANSWER...
"Employee" as defined for employee theft coverage - ANSWERA natural person (as
opposed to a corporation engaged by the insured) who is:
* Currently employed by the insured or an ex-employee who employment ended in the
past 30 days
* Compensated by the insured by salary,w ages, or commissions
* Subject to the control and direction of the insured - ANSWER...
,This also includes temps and leased employees (except outside the insured's
premises), plus the insured's corporate directors, managers (if an LLC), officers, or
trustees while performing duties. - ANSWER...
Difference b/w "temp" and "leased" employee - ANSWERTemps are persons furnished
to the insured either to substitute for permanent employees who are on leave or to meet
seasonal or short-term work load conditions. Leased employees are regular workers
who are nominally employed by a labor-leasing firm but subject to day-to-day control by
the organization that leases them.
LLC - ANSWERLimited liability corporation, a form of corporate organization that offers
the limited liability of a corporation but avoids the double taxation to which regular
corporations are subject.
Difference b/w "employee theft" and "employee dishonesty" - ANSWEREmployee
dishonesty forms cover loss resulting from an employee's dishonest act, and that
phrase encompasses a broader range of offenses than "theft".
What qualifies as "employee dishonesty"? - ANSWERTo reduce this broad scope of
coverage, employee dishonesty forms typically require that the employee must have
acted with "manifest intent" (that is, evident intent) to (1) cause a loss to the insured and
(2) obtain financial benefit for the employee or for another person or entitty that
employee wants to receive the benefit. Furthermore, the financial benefit must be
something other than wages, commisssions, or other employee benefits. Sometimes
referred to as a "dual trigger" or a "triple trigger", all elements of manifest intent must be
present in order for employee dishonesty coverage to apply.
"Securities" definition for employee theft coverage - ANSWERNegoitiable adn
nonegotiable instruments or contracts representing eithe rmoney or other property.
(Stocks, bonds, tokens, tickets, stamps in current use, etc.)
"Other property" definition for employee theft coverage - ANSWERAll tangible property,
other than money and securities, which has intrinsic value.
Does not include computer programs, electronic data, or any other specifically excluded
property. Also does not include intangibles such as copyrights, patents, intellectual
property, etc. - ANSWER...
"Occurrence" in the context of employee theft - ANSWER(1) An individual act
(2) The combined total of all separate acts whether or not related; or
(3) A series of acts whether or not related;
committed by an "employee" acting alone or in collusion with other persons. -
ANSWER...
, For example, if a bookkeeper fo a small insruance agency embezzled $190K by stealing
cash receipts or inserting her name as payee on customers' checks during 100 separate
incidents, each for less than $10,000, and the limit of insurance was $10,000, the court
would likely side with the interpretation that the theft constituted a single series of acts
and that the $10,000 limit was the most the insured was liable to pay. - ANSWER...
Termination as to Any Employee condition (employee theft) - ANSWERProvides
automatic termination of employee theft coverage with respect to any employee who
has committed a dishonest act as soon as the act is known to the insured or any
partner, officer, director, etc. not in collusion with the employee. Also, the condition
gives the insurer the right to cancel coverage with respect to any employee by providing
30 days' advance notice to the insured.
Employee Benefit Plans condition (employee theft) - ANSWEREliminates the need to
attach the Employee Retirement Income Security Act of 1974 (ERISA) compliance
endorsement to the policy to satisfy the fidelity bonding requirement of ERISA.
"Forgery" definition - ANSWERThe signing of the name of another person or
organization with intent to deceive; it does not mean a signature which consists in whole
or in part of one's own name signed with or without authority, in any capacity, for any
purpose.
"Disappearance and destruction" for commercial crime insurance - ANSWERThe
addition of the words 'disappearance and distruction' increases the scope of the
coverage to include losses even when they do not result from an unlawful act. For
example, coverage is provided for money and securities that are destroyed in a fire.
Disappearance is covered regardless of whether it is mysterious or whether theft
appears to be the cause of the disappearance.
Robbery - ANSWERThe unlawful taking of property from the care and custody of a
person by one who has caused or threatened to cause that person bodily harm;
includes situations in which the thief commits an obviously unlawful act that is witnessed
by the custodian of the stolen property (such as an observed "smash and grab" theft
from a shop window)
Custodian - ANSWERA person who has care and custody of property inside the
premises, excluding any person while acting as a "watchperson" or janitor.
Safe Burglary - ANSWERThe unlawful taking of property from within a locked safe or
vault by a person unlawfully entering the safe or vault as evidenced by marks of forcible
entry upon its exterior;
or the unlawful taking of a safe or vault from inside the premises. - ANSWER...
Marks of forcible entry into the premises are not required. - ANSWER...
ACCURATE A+ SOLUTIONS.
,Discovery form - ANSWERForm that covers losses discovered during the policy period
even though they may have occurred before the policy period.
(Compared with loss sustained form - ANSWERre: commercial crime. Loss sustained is
the most commonly used of these two.)
Loss sustained form - ANSWERForm that covers losses actually sustained during the
policy period and discovered no later than one year after policy expiration.
(Compared with discovery form re: commercial crime. Loss sustained is the most
commonly used of these two.) - ANSWER...
Employee Theft coverge, Insures an employer against theft of its property by its own
employees. - ANSWER...
Theft (definition as part of Employee Theft coverage) - ANSWERThe unlawful taking of
money, securities, or other property to the deprivation of the insured.
For the purposes of employee theft coverage, theft includes forgery. - ANSWER...
Unlawful taking (definition as part of Employee Theft coverage), An act that is not
authorized by law or is a violation of a civil or criminal law. - ANSWER...
(Proof of unlawful taking does not have to meet the standards needed to obtain a
criminal conviction.) - ANSWER...
Where employee theft coverage applies, United States (including its territories and
possessions), Puerto Rico, and Canada. Coverage also applies to loss caused by an
employee who is temporarily outside the covered territory for not more than ninety
consecutive days. - ANSWER...
"Employee" as defined for employee theft coverage - ANSWERA natural person (as
opposed to a corporation engaged by the insured) who is:
* Currently employed by the insured or an ex-employee who employment ended in the
past 30 days
* Compensated by the insured by salary,w ages, or commissions
* Subject to the control and direction of the insured - ANSWER...
,This also includes temps and leased employees (except outside the insured's
premises), plus the insured's corporate directors, managers (if an LLC), officers, or
trustees while performing duties. - ANSWER...
Difference b/w "temp" and "leased" employee - ANSWERTemps are persons furnished
to the insured either to substitute for permanent employees who are on leave or to meet
seasonal or short-term work load conditions. Leased employees are regular workers
who are nominally employed by a labor-leasing firm but subject to day-to-day control by
the organization that leases them.
LLC - ANSWERLimited liability corporation, a form of corporate organization that offers
the limited liability of a corporation but avoids the double taxation to which regular
corporations are subject.
Difference b/w "employee theft" and "employee dishonesty" - ANSWEREmployee
dishonesty forms cover loss resulting from an employee's dishonest act, and that
phrase encompasses a broader range of offenses than "theft".
What qualifies as "employee dishonesty"? - ANSWERTo reduce this broad scope of
coverage, employee dishonesty forms typically require that the employee must have
acted with "manifest intent" (that is, evident intent) to (1) cause a loss to the insured and
(2) obtain financial benefit for the employee or for another person or entitty that
employee wants to receive the benefit. Furthermore, the financial benefit must be
something other than wages, commisssions, or other employee benefits. Sometimes
referred to as a "dual trigger" or a "triple trigger", all elements of manifest intent must be
present in order for employee dishonesty coverage to apply.
"Securities" definition for employee theft coverage - ANSWERNegoitiable adn
nonegotiable instruments or contracts representing eithe rmoney or other property.
(Stocks, bonds, tokens, tickets, stamps in current use, etc.)
"Other property" definition for employee theft coverage - ANSWERAll tangible property,
other than money and securities, which has intrinsic value.
Does not include computer programs, electronic data, or any other specifically excluded
property. Also does not include intangibles such as copyrights, patents, intellectual
property, etc. - ANSWER...
"Occurrence" in the context of employee theft - ANSWER(1) An individual act
(2) The combined total of all separate acts whether or not related; or
(3) A series of acts whether or not related;
committed by an "employee" acting alone or in collusion with other persons. -
ANSWER...
, For example, if a bookkeeper fo a small insruance agency embezzled $190K by stealing
cash receipts or inserting her name as payee on customers' checks during 100 separate
incidents, each for less than $10,000, and the limit of insurance was $10,000, the court
would likely side with the interpretation that the theft constituted a single series of acts
and that the $10,000 limit was the most the insured was liable to pay. - ANSWER...
Termination as to Any Employee condition (employee theft) - ANSWERProvides
automatic termination of employee theft coverage with respect to any employee who
has committed a dishonest act as soon as the act is known to the insured or any
partner, officer, director, etc. not in collusion with the employee. Also, the condition
gives the insurer the right to cancel coverage with respect to any employee by providing
30 days' advance notice to the insured.
Employee Benefit Plans condition (employee theft) - ANSWEREliminates the need to
attach the Employee Retirement Income Security Act of 1974 (ERISA) compliance
endorsement to the policy to satisfy the fidelity bonding requirement of ERISA.
"Forgery" definition - ANSWERThe signing of the name of another person or
organization with intent to deceive; it does not mean a signature which consists in whole
or in part of one's own name signed with or without authority, in any capacity, for any
purpose.
"Disappearance and destruction" for commercial crime insurance - ANSWERThe
addition of the words 'disappearance and distruction' increases the scope of the
coverage to include losses even when they do not result from an unlawful act. For
example, coverage is provided for money and securities that are destroyed in a fire.
Disappearance is covered regardless of whether it is mysterious or whether theft
appears to be the cause of the disappearance.
Robbery - ANSWERThe unlawful taking of property from the care and custody of a
person by one who has caused or threatened to cause that person bodily harm;
includes situations in which the thief commits an obviously unlawful act that is witnessed
by the custodian of the stolen property (such as an observed "smash and grab" theft
from a shop window)
Custodian - ANSWERA person who has care and custody of property inside the
premises, excluding any person while acting as a "watchperson" or janitor.
Safe Burglary - ANSWERThe unlawful taking of property from within a locked safe or
vault by a person unlawfully entering the safe or vault as evidenced by marks of forcible
entry upon its exterior;
or the unlawful taking of a safe or vault from inside the premises. - ANSWER...
Marks of forcible entry into the premises are not required. - ANSWER...
