CPCU 551 EXAM 2025 COMMERCIAL

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CPCU 551 EXAM 2025 COMMERCIAL

PROPERTY MANAGEMENT 350 QUESTIONS

AND CORRECT ANSWERS/ CPCU 551 EXAM

2025 PREP TEST BANK (BRAND NEW!)

How do rates from legal liability coverage forms compare to typical rates for direct property insurance?Legal Liability Coverage rates are typically lower.Roy's Toy Manufacturing is covered by a Building and Personal Property Coverage Form (BPP) with a Value Reporting Form endorsement. Roy's policy limit is $1,000,000 with a $1,500 deductible. In November, Roy's filed a report with its insurer declaring $70,000 in values which was a correct value for that month. As the holiday shopping season approached, Roy's suffered a fire that badly damaged a large portion of its inventory. Estimated inventory losses were $80,000 and total inventory values for December were calculated at $100,000. How much will Roy's insurer pay for the loss of inventory?

$54,500

B

$56,000

$78,500

D

$80,000 - ANSWER-$78,500

An insured has a Business Income (and Extra Expense) Coverage Form (BIC) with an Extended Period of Indemnity coverage option for 180 days. Following a covered loss, the period of restoration is 120 days. It takes an additional 90 days for revenue to return to normal. Ignoring waiting periods, for what period would the BIC cover the business income loss?A 90 days 1 / 4

pg. 2 120 days 180 days 210 days - ANSWER-210 days William is helping his client to select business income coverage endorsements. The client is considering payroll limitation or exclusion, discretionary payroll expense, business income / extra expense from dependent properties, and ordinance or law- increased period of restoration. Which one of the following endorsements should William recommend if his client is concerned that a business shutdown would cause him to lose employees to other employers?Business income / extra expense from dependent properties Ordinance or law-increased period of restoration C Payroll limitation or exclusion Discretionary payroll expense - ANSWER-Discretionary payroll expense 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 insurance is $10,000,000 with a $10,000 deductible. Reports are due monthly. Delta suffered a business personal property loss of $500,000 caused by an insured peril but the prior month's report made was $400,000. The actual value of business personal property at the time of this last report was $500,000. What amount would Delta's insurer pay for the described loss?Delta's insurer would pay $390,000. ($400,000 / $500,000) X $500,000 − $10,000

= $390,000

Computers XYZ Inc. that is sending a sales representative to Mexico to unveil a new product prototype at a trade show. The event will be held in the town square in the capital of Mexico. The representative will be in the country with the new product for an indeterminate amount of time in the event that more publicity opportunities arise. Computers XYZ has a Business Personal Property—Limited International Coverage endorsement attached to its Building and Personal Property Coverage Form (BPP). Will the endorsement indemnify Computers XYZ if the product prototype is destroyed by a covered peril? 2 / 4

pg. 3 No, because there is no return date indicated for the representative or the prototype.Which condominium association agreement concept includes improvements made by the unit owner as property owned by the association?The all-in concept In which condominium association agreement concept does the unit owner own everything inside load baring walls, including non-load baring walls and plumbing.The Bare-wall concept Which condominium association agreement concept is also called original specifications coverage, where the association owns all property originally sold to the unit owner?The single-entity concept What's the difference between the condo commercial unit owner's coverage form and a BPP coverage form?The former covers fixtures, improvements, and alterations owned by the unit owner while the BPP covers the insured's use interest in the same.What is an HO-6?a coverage form for a residential condo.What is one challenge a unit owner could face under the all-in concept?Since unit owners own improvements and upgrades, they could become under insured if they make too many improvements or upgrades.What does BPP stand for?Building and Personal Property (coverage form) What does CGL stand for?Comprehensive General Liability Who has a "fee simple" title to their unit?Planned Unit Development Homeowners.What do the unit owners (tenants) own in a cooperative corporation?Stock. Whereas it is the Cooperative Corporations own the real property. 3 / 4

pg. 4 Condominium unit owners may wish to limit the insurance coverage on their units...To avoid duplicating coverage maintained by the association.What is the distinguishing characteristic of a Standard Property Policy (SPP)?it is self contained Who owns the common elements of a condominium?They're owned jointly by all condo owners.Loss assessment coverage can be added by endorsement to the ISO Condominium Commercial Unit-Owners Coverage. With this endorsement attached the insurer will pay...The unit owner's share of an assessed loss charged to all unit owners by the association.A building under construction is insured on an unendorsed Builders Risk Basic Form policy for $100,000. During the course of construction, defective materials caused the main floor to collapse, resulting in a $10,000 loss. The actual cash value of the building at the time of loss was determined to be $110,000. Assuming a $1,000 deductible, the amount payable to the insured is

• as collapse is not a covered peril under the basic form.

Which of the following, if any, are covered under the NFIP's General Property Policy? Pollution damage, debris removal, loss avoidance measures, or earthquake/volcanic eruption?the first 3 are covered How is the deductible applied to building and contents under NFIP?separately How many ad's off-premise coverage are provided under NFIP?45 Can NFIP do LOU, blanket, coinsurance, or replacement cost?No What does the ensuing loss provision do?

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