CPIA Flashcards
7 cards from real CPSA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 CPIA flashcards as text
An insured has a $500 deductible and suffers a $3,200 loss. The insurer pays $2,700. This arrangement is an example of which deductible type?
Answer: Straight deductible
A straight deductible subtracts a fixed amount from every covered loss before the insurer pays.
Which of the following best describes the concept of 'adverse selection' in insurance?
Answer: Higher-risk individuals are more likely to seek and obtain insurance
Adverse selection occurs when people with higher-than-average risk are disproportionately attracted to purchasing insurance.
A businessowner policy (BOP) combines which two primary coverages?
Answer: Commercial property and commercial general liability
A BOP packages commercial property insurance with commercial general liability coverage for eligible small-to-medium businesses.
Under the principle of indemnity, what is the maximum amount an insured should receive after a covered loss?
Answer: An amount that restores the insured to the pre-loss financial position
Indemnity prevents profit from insurance by limiting recovery to the amount needed to restore the insured's pre-loss financial condition.
Which coverage part of a commercial general liability (CGL) policy covers bodily injury or property damage claims made by third parties on the insured's premises?
Answer: Coverage A – Bodily Injury and Property Damage Liability
Coverage A of the CGL addresses third-party bodily injury and property damage for which the insured is legally liable.
What does 'subrogation' allow an insurer to do after paying a claim?
Answer: Recover the paid loss amount from the negligent third party
Subrogation gives the insurer the legal right to pursue recovery from the responsible third party after compensating the insured.
An umbrella policy that covers claims not covered by any underlying policy — in addition to providing excess limits — is called what?
Answer: True umbrella policy
A true umbrella policy both extends limits over underlying policies and may drop down to cover gaps not addressed by underlying coverage.