CPSA CPIA 3

Question 1

Which term describes the maximum amount an insurer will pay for all covered losses during the policy period, regardless of the number of occurrences?

Accepted Answer

Aggregate limit

Answer

The aggregate limit caps the insurer's total payout for all claims combined within the policy period.

Question 2

A client's homeowners policy excludes flood damage. The agent fails to recommend a separate flood policy and the client suffers a flood loss. The agent may face liability for:

Accepted Answer

Errors and omissions (E&O)

Answer

Failing to advise a client about coverage gaps or recommend appropriate coverage exposes an agent to errors and omissions (E&O) liability.

Question 3

The 'coinsurance clause' in commercial property insurance penalizes the insured when:

Accepted Answer

The property is insured for less than a specified percentage of its value

Answer

The coinsurance clause requires the insured to carry coverage equal to a stated percentage (commonly 80%) of the property's value or face a penalty at claims time.

Question 4

Which valuation method pays the cost to replace damaged property with new property of like kind and quality, without deducting depreciation?

Accepted Answer

Replacement cost value (RCV)

Answer

Replacement cost value pays the full cost to replace damaged property with new, equivalent property without applying a depreciation deduction.

Question 5

Under a claims-made liability policy, what is a 'retroactive date'?

Accepted Answer

The earliest date from which a covered incident can arise for the claim to be covered

Answer

The retroactive date sets the earliest point in time from which an occurrence must originate for the resulting claim to be eligible for coverage under the claims-made policy.

CPSA Exam Practice Test

CPSA Exam Practice Test

CPSA CPIA 3