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CPCU 551 Exam Questions and Verified Answers.
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CPCU 551 Exam Questions and Verified Answers.Discovery form-Form that covers losses discovered during the policy period even
though they may have occurred before the policy period. - Correct Answer D
(Compared with loss sustained form, re: commercial crime. Loss sustained is the most
commonly used of these two.) - Correct Answer D
Loss sustained form-Form that covers losses actually sustained during the policy period
and discovered no later than one year after policy expiration. - Correct Answer ...
(Compared with discovery form, re: commercial crime. Loss sustained is the most
commonly used of these two.) - Correct Answer ...
Employee Theft coverge-Insures an employer against theft of its property by its own
employees. - Correct Answer ...
Theft (definition as part of Employee Theft coverage)-The unlawful taking of money,
securities, or other property to the deprivation of the insured. - Correct Answer ...
For the purposes of employee theft coverage, theft includes forgery. - Correct 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. - Correct Answer ...
(Proof of unlawful taking does not have to meet the standards needed to obtain a
criminal conviction.) - Correct 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. - Correct Answer ...
"Employee" as defined for employee theft coverage-A natural person (as opposed to a
corporation engaged by the insured) who is: - Correct Answer ...
* 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 - Correct 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. - Correct Answer ...
,Difference b/w "temp" and "leased" employee-Temps 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. - Correct Answer ...
LLC-Limited 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. - Correct Answer ...
Difference b/w "employee theft" and "employee dishonesty"-Employee dishonesty forms
cover loss resulting from an employee's dishonest act, and that phrase encompasses a
broader range of offenses than "theft". - Correct Answer ...
What qualifies as "employee dishonesty"?-To 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. - Correct Answer ...
"Securities" definition for employee theft coverage-Negoitiable adn nonegotiable
instruments or contracts representing eithe rmoney or other property. (Stocks, bonds,
tokens, tickets, stamps in current use, etc.) - Correct Answer ...
"Other property" definition for employee theft coverage-All tangible property, other than
money and securities, which has intrinsic value. - Correct Answer ...
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. - Correct Answer ...
"Occurrence" in the context of employee theft-(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; - Correct Answer ...
committed by an "employee" acting alone or in collusion with other persons. - Correct
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. - Correct
Answer ...
Termination as to Any Employee condition (employee theft)-Provides 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. - Correct Answer ...
Employee Benefit Plans condition (employee theft)-Eliminates 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. - Correct Answer ...
"Forgery" definition-The 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. -
Correct Answer ...
"Disappearance and destruction" for commercial crime insurance-The 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. - Correct Answer ...
Robbery-The 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) -
Correct Answer ...
Custodian-A person who has care and custody of property inside the premises,
excluding any person while acting as a "watchperson" or janitor. - Correct Answer ...
Safe Burglary-The 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; - Correct Answer ...
or the unlawful taking of a safe or vault from inside the premises. - Correct Answer ...
Marks of forcible entry into the premises are not required. - Correct Answer ...
Difference between custodians and messengers-Custodian has care & custody of
property INSIDE the premises; a messenger has care and custody fo property
OUTSIDE the premises - Correct Answer ...
, A watchperson or janitor can be a messenger, but not a custodian. An employee taking
cash and checks to the bank for deposit in the insured's account is an example of a
messenger. - Correct Answer ...
Computer fraud coverage-Coverage for loss of covered property due to use of a
computer to fraudulently transfer covered property to the wrongdoer - Correct Answer ...
Most organizations do not buy all 8 of the coverages included in the Commercial Crime
Form. A typical firm might select the following-1. Employee Theft
2. Forgery or Alteration
3. Inside the Premises: Theft of Money and Securities
5. Outside the Premises
6. Computer Fraud
7. Funds Transfer Fraud - Correct Answer ...
leaving out: - Correct Answer ...
4. Inside the Premises - Robbery or Safe Burglary of Other Property
8. Money Orders and Counterfeit Money - Correct Answer ...
Transfer or Surrender of Property exclusion (to INside the Premises commercial crime
coverage)-Excludes transfer or surrender of property to someone outside the premises
because of unauthorized instructions or any of several different types of threats against
the insured. Many unauthorized instructions losses involve computer fraud, which is
excluded because it can be insured under the Computer Fraud insuring agreement. -
Correct Answer ...
This exclusion also applies when an employee designs unauthorized instructions to
defraud the employer. - Correct Answer ...
This exclusion does NOT apply under insurance agreement 5 (Outside the Premises) to
the types of threats that might be made against a messenger in a typical robbery. -
Correct Answer ...
Discovery-The time when the named insured first becomes aware of facts taht would
cause a reasonable person to assume that a covered loss has been incurred; the
amount of the loss or its details need not be known for a loss to have been discovered. -
Correct Answer ...
Mere suspicion of a loss is not sufficient to constitute discovery. - Correct Answer ...
Extended discovery period-A specified period following the cancellation of a commercial
crime policy; if discovered by the insured during this period, a loss that occurred before
the cancellation date will be covered under the canceled policy. - Correct Answer ...
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