CMCA CMCA - Certified Manager of Community Associations Risk Management and Insurance Questions and Answers 2

Question 1

Which type of insurance covers the association for claims arising from bodily injury or property damage occurring in common areas?

Accepted Answer

Commercial general liability

Answer

Commercial general liability or CGL insurance is the primary coverage for third-party claims of bodily injury or property damage that occur on association-maintained property.

Question 2

Directors and officers liability insurance protects:

Accepted Answer

Board members from personal liability for wrongful acts in their governance capacity

Answer

D&O insurance covers board members for claims alleging they made wrongful decisions, breached their fiduciary duty, or violated governing documents in their governance role.

Question 3

A community association's fidelity or crime insurance policy is specifically designed to cover:

Accepted Answer

Employee theft or dishonest acts that result in financial loss to the association

Answer

Fidelity or crime insurance protects the association against financial losses caused by dishonest acts of employees, board members, or management company staff such as embezzlement or fraud.

Question 4

An umbrella or excess liability policy for a community association primarily provides:

Accepted Answer

Additional liability coverage above the limits of the underlying policies

Answer

An umbrella policy extends the association's liability coverage beyond the limits of its primary policies, providing additional protection for large catastrophic claims.

Question 5

Before purchasing property insurance, the association should determine the replacement cost value of insured structures. This value represents:

Accepted Answer

The cost to rebuild the structures at current construction prices without depreciation

Answer

Replacement cost value is the amount needed to rebuild the insured structure from scratch using current labor and materials, without any deduction for depreciation or market fluctuations.

CMCA - Certified Manager of Community Associations Practice Test

CMCA - Certified Manager of Community Associations Practice Test

CMCA CMCA - Certified Manager of Community Associations Risk Management and Insurance Questions and Answers 2