Up-to-Date CPCU-500 Practice Test (V8.02) – Practice the Latest CPCU-500 Questions for Becoming a Leader in Risk Management and Insurance Exam

1. Risks that arise from property, liability, or personnel loss exposures and are generally the subject of insurance are known as

2. Bobbie works for Triple Hills Associates and is gathering current information to consider the application of a new account. She asks Reggie, a junior underwriter, to gather as much information as he can from public sources about the account to help in her analysis, but to be careful of bias and credibility issues.

Which one of the following situations might Reggie avoid reporting to Bobbie due to the informational hazards she mentioned?

3. The direct effects from labor union strikes fall under which one of the following general categories of risk sources?

4. Gulford’s is a large retail store chain with locations throughout the U.S. The operations are divided into three different profit centers. Each center has a separate executive-level position and management team. The profit centers are based on type of product and include apparel, electronics, and grocery.

Which one of the following types of organizational structure has Gulford selected?

5. Jack lives in a modified no-fault state which has a monetary threshold of $50,000 for noneconomic losses. His personal auto policy carries the state’s minimum PIP medical coverage limit of $15,000. Jack was injured in an accident when Katie ran through a red light and struck Jack’s vehicle. He incurred $20,000 in economic losses and $10,000 in noneconomic losses.

How much, if any, can Jack collect from his personal auto insurer under PIP coverage?

6. Gulford’s is a large retail store chain with locations throughout the U.S. The operations are divided into three different profit centers. Each center has a separate executive-level position and management team. The profit centers are based on type of product and include apparel, electronics, and grocery.

Which one of the following types of organizational structure has Gulford selected?

7. Which one of the following is the foundation of the “predict and prevent” mindset that is permeating

the insurance value chain?

8. Risks that can result in either a loss, no loss, or a gain are known as

9. 1.The Growers Insurance Company has begun a SWOT analysis because it has failed to meet its loss ratio goals for three consecutive years. Growers has various strategies in place that have proven successful in the past.

Which of the following would be considered a strength that Growers might be able to capitalize on to address its problem?

10. Which one of the following statements is correct about the enterprise-wide risk management process?

11. George is CFO of XYZ Medical and has just learned that the company is about to announce a major breach into its customer database. Two days before the proposed announcement date, George sells a 10,000 share block of his stock in XYZ Medical. After the hacking is announced, the share price falls by 27%. George’s actions likely constitute

12. It is important for insurance professionals to be able to communicate complicated ideas. Writing in a clear and concise manner is crucial to the professional success and financial health of an insurer.

Which one of the following situations could impose a financial burden on an insurance professional due to improper communication skills?

13. Sally recently went to a local nursery to purchase some plants for her yard. She was injured when she tripped over a piece of equipment that a salesperson had left in the aisle after demonstrating it for a customer. From the standpoint of the nursery, this is an example of which one of the following types of liability loss exposure?

14. An individual who purchases an apartment building to rent to tenants faces both pure risk and speculative risk.

Which one of the following is a pure risk?

15. The direct effects from labor union strikes fall under which one of the following general categories of risk sources?

16. Manufacturing Company applied for general liability insurance from Insurance Company. Underwriter Raul reviewed Manufacturing Company’s application and was favorably impressed with what he saw. No claims, lawsuits, or potential claims were disclosed. He spoke by phone to Manufacturing Company’s management and was equally impressed with their qualifications and attitude, so he approved the application. If Raul had conducted a web search, he would have found many complaints about the quality of the company’s products and several products liability court cases against it.

Which one of the following statements concerning Raul’s approach to handling Manufacturing Company’s application is correct?

17. The commercial lines unit at ABC Insurance has been given several objectives as a result of senior management’s strategic planning discussions. ABC wants to become a leader in professional liability insurance, offering not only specifically tailored insurance products, but also consulting services to assist insureds in reducing their professional liability loss exposures. The goal is to become recognized as a specialist insurer and to be able to charge appropriately higher rates for the coverage.

This is an example of which one of the following business-level strategies?

18. Thomas is the commercial lines underwriter for Shelton Manufacturing. Critical thinking helped him suggest that the insured consider a blanket business personal property limit for its three locations. This critical thinking will help Thomas to

19. Which one of the following best summarizes the forces that drive competition in the insurance industry, as analyzed under the Five Forces Model?

20. An earthquake destroyed the facilities of the main supplier of mufflers for an auto manufacturer.

This is an example of which one of the following types of operational risk for the auto manufacturer?