Pass Your The Institutes CPCU CPCU-500 Exam on Sep 28, 2026 with 60 Questions [Q24-Q44]

NO.24 Manufacturing Company applied for general liability insurance from Insurance Company. Underwriter Raul reviewed Manufacturing Company’s application and was favorably impressed with what he saw. No claims, lawsuits, or potential claims were disclosed. He spoke by phone to Manufacturing Company’s management and was equally impressed with their qualifications and attitude, so he approved the application. If Raul had conducted a web search, he would have found many complaints about the quality of the company’s products and several products liability court cases against it. Which one of the following statements concerning Raul’s approach to handling Manufacturing Company’s application is correct?

NO.25 Company 1 sells Company 2 a piece of farm equipment. The sales contract specifies that Company 2 buys the equipment in an “as is” condition, with no promises made regarding the durability or performance of the equipment. This language in the warranty is known as

NO.26 An earthquake destroyed the facilities of the main supplier of mufflers for an auto manufacturer. This is an example of which one of the following types of operational risk for the auto manufacturer?

NO.27 Foster Plumbing dug a hole in the street to run a water pipe from the main line to a new home. Foster planned to fill in the hole the next day. No barriers were erected, and Joe drove his car into the hole. Joe was injured and his car was destroyed. Joe sued Foster for damages. Foster’s liability to Joe arises out of Foster’s

NO.28 Which one of the following best summarizes the forces that drive competition in the insurance industry, as analyzed under the Five Forces Model?

NO.29 An individual who purchases an apartment building to rent to tenants faces both pure risk and speculative risk.
Which one of the following is a pure risk?

NO.30 Best Builders is considering acquiring another contractor in order to expand its operations into another state.
The uncertainties involved with this decision should be analyzed under which one of the following quadrants of risk?

NO.31 Jane grew up in New Hampshire. She recently graduated from college, moved into an apartment in Pennsylvania, and started a new job. Jane would like her own personal property and liability insurance protection. Which one of the following Insurance Services Office homeowners forms is most appropriate for Jane?

NO.32 Carla has been preparing for a presentation to the operations managers. The presentation includes a number of slides and a video. Some of the managers have sent her an email saying that they will be joining remotely.
Carla’s supervisor tells her to make sure that the technology works correctly. She has also received emails requesting the length of the meeting. Which one of the following is a way for Carla to get the information she needs to satisfy both of these requests?

NO.33 Improving assessment and underwriting for concentrations of risk, recalibrating predictive models to add more weight to recent events, and advocating for building code updates to enhance property resiliency are some of the insurance industry’s responses to which one of the following major challenges?

NO.34 John works for J & J Plumbing. One day while driving a company truck from one customer’s house to another customer, he went through a stop sign and struck another vehicle. John only suffered a minor injury, but the driver of the other vehicle was seriously injured and the car was totaled. Which one of the following J
& J Plumbing commercial liability coverages would cover the other driver’s medical expenses and the damage to the vehicle?

NO.35 Thomas is the commercial lines underwriter for Shelton Manufacturing. Critical thinking helped him suggest that the insured consider a blanket business personal property limit for its three locations. This critical thinking will help Thomas to

NO.36 Paradox Contractors has been invited to bid on a major bridge project in Maryland. Senior management believes that the successful completion of this project could place the organization in the position to meet its strategic goal of being a premier bridge contractor in the Mid-Atlantic region. They also know that there will be a lot of competition for the project, and their bid will have to be aggressive. Before bidding on the project, senior management met with project managers and suppliers to understand their perspectives on the most pressing risks. Paradox Contractors is completing which one of the following essential activities of the risk management process?

NO.37 Risks that can result in either a loss, no loss, or a gain are known as

NO.38 Under the Commercial General Liability Coverage Form written on an occurrence basis, the insuring agreement imposes several conditions on the insurer’s duty to pay damages. Which one of the following is such a condition?

NO.39 Daniel was asked to give a presentation to employees on the topic of cyber risk. While preparing for the presentation, he thought about the most important thing that he wanted employees to take away from the presentation. Which one of the following steps in the communication process has Daniel completed?

NO.40 Foster Plumbing dug a hole in the street to run a water pipe from the main line to a new home. Foster planned to fill in the hole the next day. No barriers were erected, and Joe drove his car into the hole. Joe was injured and his car was destroyed. Joe sued Foster for damages. Foster’s liability to Joe arises out of Foster’s

NO.41 John was injured when a fire started because of faulty work recently completed by a contractor. From the commercial liability standpoint of the contractor, this is an example of

NO.42 George is CFO of XYZ Medical and has just learned that the company is about to announce a major breach into its customer database. Two days before the proposed announcement date, George sells a 10,000 share block of his stock in XYZ Medical. After the hacking is announced, the share price falls by 27%. George’s actions likely constitute

NO.43 The spouse of an employee sues the employer for loss of companionship and care resulting from the employee’s work-related injury. What coverage, if any, is provided by the Workers Compensation and Employers Liability Insurance Policy for this claim?

NO.44 James must sell his house quickly to take advantage of a career opportunity and purchase a new house in another state. Which one of the following types of financial risk is James exposed to in this situation?