CPSA CPIA 4

Question 1

Which type of reinsurance agreement covers all risks within a defined category automatically, without the ceding company needing to submit individual risks for approval?

Accepted Answer

Treaty reinsurance

Answer

Treaty reinsurance is a standing agreement under which the reinsurer automatically accepts all risks meeting the treaty criteria without case-by-case negotiation.

Question 2

An insured's $1 million CGL policy has a $1,000 per-occurrence SIR. How does a self-insured retention (SIR) differ from a deductible?

Accepted Answer

With an SIR, the insured handles and pays claims up to the retention amount before the insurer's duty to defend arises

Answer

Under an SIR, the insured bears the full cost and responsibility for claims below the retention threshold, including defense costs, before the insurer's obligations begin.

Question 3

Which inland marine coverage would protect a contractor's tools and equipment while being transported between job sites?

Accepted Answer

Contractors equipment floater

Answer

A contractors equipment floater provides mobile coverage for tools, machinery, and equipment used by contractors at various locations and in transit.

Question 4

Under a personal auto policy (PAP), which coverage pays for damage to the insured's own vehicle caused by collision with another object?

Accepted Answer

Collision coverage

Answer

Collision coverage pays for damage to the insured vehicle resulting from its collision with another vehicle or object, subject to the deductible.

Question 5

Which of the following best describes 'moral hazard' in the insurance context?

Accepted Answer

A dishonest tendency or character flaw that increases the probability of loss or exaggerated claims

Answer

Moral hazard arises from character-based tendencies — such as dishonesty or carelessness — that increase the likelihood or severity of a loss.

CPSA Exam Practice Test

CPSA Exam Practice Test

CPSA CPIA 4