Exam (elaborations)
CPCU 500, QUESTIONS SET, CHAPTERS 1 – 8 QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
- Course
- Institution
CPCU 500, QUESTIONS SET, CHAPTERS 1 – 8 QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
[Show more]
Content preview
CPCU 500, QUESTIONS SET, CHAPTERS1 – 8 QUESTIONS AND ANSWERS WITH
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
4. functional value
, Valuation of Liability Losses are typically based on - ANSWER 1. The relevant policy provisions and
2. The extent of the bodily injury and/or property damage to others
The most the insurer will pay is the lesser of - ANSWER 1. The applicable policy limit
2. The compensable amount of the loss
Purposes of deductibles - ANSWER 1. To reduce the insurer's cost by eliminating the inefficiencies of
dollar trading and eliminating insurer loss settlement and other administrative expense for loss under
the deductable.
2. To encourage risk control
3. To reduce the morale and moral hazard incentive
How deductibles are handled in liability insurance: the insurer - ANSWER 1. Defends the claim on a first -
dollar basis
2. Pays all covered losses
3. Bills the insured for the amount of losses up to the deductible.
Limited use of liability deductibles - ANSWER 1. The insurer wants the insured to report every claim and
not play adjuster and attorney. Simply, the insurer wants to control the claim settlement.
2. The premium credit would be small
3. Few people sue for small amounts
4. The insurer must try to collect the deductible amount from the insured.
Other sources of recovery that affect amounts payable - ANSWER 1. Noninsurance agreements,
warranties, guarantees, lease agreements, service agreements etc.
2. Third parties
3. Other insurance in the same policy
4. Other insurance in a similar policy
5. Other insurance in a dissimilar policy
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Performance. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $16.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
76799 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now