CPCU 551 Exam Questions Compilation | 262 Questions with 100% Correct Answers | Verified | 45 Pages
Question : An example of an administrative expense that can
minimize the cost of risk is
Correct answer: Risk management consulting
Question : The availability of funds to pay for losses is most
important to organizations when
Correct answer: Operations have been disrupted
Question : A self-supporting solid wall that prevents a fire
from passing through or around it is a
Correct answer: Fire wall
Question : A building with concrete exterior walls and
wooden support beams as defined by Insurance Services Office, Inc. (ISO)
Correct answer: Joisted masonry
Question : The analysis step of the risk management process
involves considering the four dimensions of a loss exposure.If any of these dimensions of loss exposure analysis involve empirical distributions developed from past losses, what needs to be determined?
Correct answer: The credibility of the data being used
Question : In theory, liability losses are limited only by the
Correct answer: Defendant's total wealth
Question : Customer Mary gave dry cleaner Ike her fur coat
so he could remove a large stain. Ike could not eliminate the stain so he asked restoration specialist Peter to attempt to remove it. The bailor in this scenario is
Correct answer: Mary
Question : Jack and Susan own and manage a hotel. They are
concerned about their responsibility for the property of their guests and whether they have an insurable interest in that property and thus could buy insurance to cover their responsibility. Most courts would hold that they do have an
insurable interest in their guests' property based on the legal basis of
Correct answer: Exposure to legal liability
Question : What is the primary advantage of using retention
as a risk financing measure to help an organization meet its risk financing goals?
Correct answer: Managing the cost of risk
Question : One way of jointly considering frequency and
severity is to combine both frequency and severity into
Correct answer: A total claims distribution
Question : What type of captive typically operates as a
formalized retention plan rather than a transfer measure?
Correct answer: Single-parent captive
Question : What is correct with respect to retention's ability to
meet risk financing goals?
Correct answer: Retention enables an organization to manage
its cost of risk
Question : Martin enters a warehouse by smashing a basement
window and climbing through the opening. He steals supplies and a box of petty cash and exits the building through the same window. This is an example of what type of theft?
Correct answer: Burglary
Question : If the organization wishes to pre-fund for retained
future losses, it must determine the present value of the expected future losses. Calculating the present value of a future amount is known as
Correct answer: Discounting
Question : What is used for a rating plan whereby the insured
receives a premium reduction for agreeing to reimburse the insurer for losses up to a substantial per accident or per occurrence limit?