CPCU 500, Questions Set, Chapters 1 - 8 with
verified answers
Key quiz
. |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 |- |correct |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 |- |correct |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 |- |correct |answer |-1. |actual |cash |value
2. |replacement |cost
3. |agreed |value |approach
