CPSA CPIA 2

Question 1

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?

Accepted Answer

Straight deductible

Answer

A straight deductible subtracts a fixed amount from every covered loss before the insurer pays.

Question 2

Which of the following best describes the concept of 'adverse selection' in insurance?

Accepted Answer

Higher-risk individuals are more likely to seek and obtain insurance

Answer

Adverse selection occurs when people with higher-than-average risk are disproportionately attracted to purchasing insurance.

Question 3

A businessowner policy (BOP) combines which two primary coverages?

Accepted Answer

Commercial property and commercial general liability

Answer

A BOP packages commercial property insurance with commercial general liability coverage for eligible small-to-medium businesses.

Question 4

Under the principle of indemnity, what is the maximum amount an insured should receive after a covered loss?

Accepted Answer

An amount that restores the insured to the pre-loss financial position

Answer

Indemnity prevents profit from insurance by limiting recovery to the amount needed to restore the insured's pre-loss financial condition.

Question 5

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?

Accepted Answer

Coverage A – Bodily Injury and Property Damage Liability

Answer

Coverage A of the CGL addresses third-party bodily injury and property damage for which the insured is legally liable.

CPSA Exam Practice Test

CPSA Exam Practice Test

CPSA CPIA 2