CPCU® 500 Exam Questions

If you have not previously taken an institute’s administered exam, you will be in for quite the surprise. The questions on these CPCU® exams will be much different than what you may be used to on a typical exam that you took in high school or college.

These questions require you to fully understand every aspect of the main topics and require you to actually apply the knowledge, rather than just repeating a definition.

I cannot stress this importance enough, the content of the CPCU® 500 exam is not difficult, but the format is tricky. You must fully understand a topic, DO NOT simply memorize definitions and think you will be able to pass (trust me, I’ve been there!)

The CPCU® 500 exam consists of 60 multiple choice questions broken up into two sections, part A and part B.

  • Part A: Concept questions – The first section of the exam will be approximately 40 concept questions; these questions will test your understanding of a definition or topic. The multiple-choice answers will generally provide 2 or 3 partially correct answers and one “best” answer. See below for an example
  • Part B: Case questions – The second section of the exam will be approximately 20 case questions; these questions will require you to apply your knowledge to a specific scenario or event. You will be given a real-life scenario; your job will be to select the best recommendation to solve the given scenario. See below for an example

In this resource

In this blog we will breakdown two example questions, one from part A and one from part B. For more practice exam questions, download our free CPCU® 500 practice exam.

CPCU® 500 Sample Exam Questions – Part A

Which of the following describes an efficient risk control measure?

  1. By choosing to install a new automated manufacturing system, ABC firm has effectively reduced the number of workers compensation claims from 5 per year to 1 per year
  2. XYZ Corporation has decided to enter into a pooling insurance agreement with a neighboring organization
  3. Shannon purchases property insurance to help pay for potential property and liability losses
  4. David chooses to install deadbolt locks in his home because it is less expensive than a security system

 

Answer: D – David chooses to install deadbolt locks in his home because it is less expensive than a security system

As you can see, a concept question will not ask for you to define anything as is common in a college exam, but it will ask you a question in regard to that definition. This means you must fully understand the definition and fully understand how this definition is applied, meaning you must know “what are the risk control measures”, “what is efficient risk control” and “how might an individual or organization apply efficient risk control”

The answer is D in this case because an efficient risk control measure is the risk control technique which is least expensive. Efficiency does not consider the actual effectiveness of the risk control measure. In a typical college exam, you might expect this question to ask “What is efficient risk control?”, with the answer being “The least expensive risk control measure”. The CPCU® exams will rarely format a question in this manner. You should always expect for the question and answers to be formatted using real life scenarios, often providing 2 or 3 partially correct answers and one BEST answer

For more concept questions, download our free CPCU® 500 practice exam.

CPCU® 500 Sample Exam Questions – Part B

David’s HO-3 policy contains a provision stating that he must insure his property to at least 80% of his property value in order to receive full insurance coverage in the event of a loss. David’s HO-3 policy insures his dwelling for $230,000.  At this time, the insurer determined David’s property value to be $300,000. Five years later, David suffers a tragic fire loss which completely destroys his home. At the time of loss, it is determined that David’s property value is $280,000. How much will David’s insurer pay for this loss?

  1. $280,000
  2. $220,416
  3. $300,000
  4. $230,000

 

Answer: D $230,000

A case question will give you a scenario like the one seen above; you will be required to select the correct answer based on the given scenario. For a scenario question, you must fully understand what is being asked in this scenario and fully understand how to apply the information you have learned from studying.

In this example, you are given a lot of information, some of which is useful to the scenario and some of which is only there to confuse you. In this case you must know “what is insurance to value”, “what are the insurance to value requirement for David to receive full coverage”, “which property value, current value or value at the policy purchase date, is used in determining insurance to value” and “how to determine amount payable in a claim”.

In this case, the answer is D because David’s home meets the provision of being insured to at least 80% of the property value. Insurance to value considers property value to be the value of property at the time of loss. David’s home was valued at $280,000 at the time of loss, meaning it was indeed insured to at least 80% of the property value ($230,000 ÷ $280,000 = 82%). BUT… remember that an insurer will pay no more than the policy limits stated in the policy contract. Since David’s dwelling is insured with a $230,000 limit, the insurer is only required to pay a maximum of $230,000 in the event of a loss

These questions are tricky and will require a LOT of critical thinking and question analysis. For more case questions, download our free CPCU® 500 practice exam.

Free Practice Exam

Ready to get started studying? We’re here to help (for free). Download our free CPCU® 500 practice exams to get a feel for the type of questions you will see on the exam.

Download: Free CPCU® 500 Practice Exam

More Information

For more information about the CPCU® 500 exam, checkout some of our other free resources:

Disclaimer

Remember, every CPCU® exam is different. No single exam is the same. Be sure to study ALL topics (not just our recommendation). This resource is intended to provide you with a general idea of where your focus should be. Make sure to thoroughly study every topic of this exam.

Difficulty rank and importance rank are solely the opinion of AssociatePI. This resource is intended to provide you with a general idea of where your focus should be. Each exam administered by The Institutes is different. AssociatePI is not affiliated with The Institutes or involved in the exam writing process. Please be sure to thoroughly study every chapter and every topic of this course.

CPCU® exams are administered by the American Institute for Chartered Property Casualty Underwriters (“The Institutes”). AssociatePI does not administer the actual exams, we are an independent resource of free content, advice, and study material for professional insurance education. This blog is intended for informational purposes only, to inform prospective students of the benefit of the CPCU® designation.

CPCU® and API are trademarks of the American Institute for Chartered Property Casualty Underwriters (“The Institutes”). AssociatePI LLC is not affiliated with, associated with, endorsed by or otherwise supported or recognized by The Institutes in any way. AssociatePI LLC is not authorized by The Institutes to offer courses, practice examinations, or any other resources related to the Institutes’ designations or other programs.

For further information, please email contact@associatepi.com.

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