CCS CCS Condominium Insurance & Risk Management 2

Question 1

Condominium associations in flood-prone areas are typically required to purchase flood insurance through which program?

Accepted Answer

The National Flood Insurance Program (NFIP)

Answer

The National Flood Insurance Program (NFIP), administered by FEMA, is the primary source of flood insurance for condominiums in participating communities.

Question 2

What is coinsurance in the context of a condominium association's property insurance policy?

Accepted Answer

A penalty applied when the insured carries less than the required percentage of the property's replacement value

Answer

Coinsurance requires the association to insure the property to a specified percentage (typically 80–100%) of replacement value or face a penalty reducing claim payouts.

Question 3

Which liability coverage is essential for a condominium association that operates a pool or fitness center on common property?

Accepted Answer

Commercial general liability (CGL) insurance

Answer

Commercial general liability insurance covers bodily injury and property damage claims arising from accidents on common areas such as pools and fitness centers.

Question 4

An association's insurance deductible for hurricane damage is often expressed as a percentage rather than a flat dollar amount. This percentage is applied to:

Accepted Answer

The insured replacement value of the building

Answer

Hurricane (wind/hail) percentage deductibles are applied to the total insured replacement value of the building, which can result in very large deductible amounts.

Question 5

What risk management strategy involves the association retaining financial risk internally rather than transferring it to an insurer?

Accepted Answer

Risk retention (self-insurance)

Answer

Risk retention means the association accepts financial responsibility for certain losses, often using reserves or a self-insurance fund instead of purchasing insurance.

(CCS) Certified Condominium Specialist Practice Test

(CCS) Certified Condominium Specialist Practice Test

CCS CCS Condominium Insurance & Risk Management 2