CPCU® 557 Exam Questions

The CPCU® 557 exam questions are tough; these questions will focus on the minor details of each topic. The CPCU® 557 exam consists of 85 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 62 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.
  • Part B: Case questions – The second section of the exam will be approximately 23 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.

Let’s look at an example of a Part A and Part B question. Below we will breakdown two sample questions, including an answer and full explanation, from the most important chapters of the CPCU® 557 exam.

CPCU® 557 Sample Exam Questions – Part A

A vehicle skids off the road and crashes into Nick’s office building. This crash damages the water pipe of Nicks building causing water to leak into the office damaging the floor, furniture, and computers. Which of the following is true?

  1. This loss is covered only if Nick is insured using the special cause of loss form.
  2. This loss is specifically excluded under all cause of loss forms of the commercial property coverage part.
  3. This loss is covered under the commercial property coverage part.
  4. This loss is not covered under the basic cause of loss form.

 

Answer: C – This loss is covered

The answer in this case is C because this type of loss is covered under all commercial property coverage part cause of loss forms. All three forms (basic, broad, and special) would cover this loss. Although broken pipes are an excluded cause of loss under all forms, broken pipes resulting from a covered named peril is insured. In this case, since a vehicle is a covered peril, the damage from the broken pipe resulting from the covered peril (the car crash) is covered.

Broken pipes – The special form, basic form, and broad form do not provide coverage for damage resulting from a broken water pipe. The only exception to this exclusion is if the damage is a result of a leaking sprinkler, or if the pipe breaks as a result of a covered named peril. For example, a vehicle crashes into the building and breaks a water pipe. The broken pipe leaks water into the office building damaging the floor and furniture. The floor and furniture are covered because the loss resulted from a covered cause of loss.

Remember, these questions will put you in the shoes of a commercial insurance professional. These questions will not ask you to define anything, but instead will ask you to make the best recommendation by applying the definition to a real-life scenario. This means you must fully understand the definition and fully understand how this definition is applied, meaning you must know “what is the commercial coverage part”, “what are the cause of loss forms” and “what is covered under each cause of loss form”

Our Advice

The best way to approach this type of concept question is to start by first understanding what insurance coverage would apply. In this example, Nick’s building is damaged, so we know this pertains to the commercial property coverage part.

The second step to approaching this type of question is to analyze the given multiple-choice answers to see which options are false. This allows you to narrow down the answer options to choose “which of the following is true”. From your studying, you know that broken pipes are specifically excluded under all cause of loss forms, but if the pipe breaks as a result of a covered named peril then the loss is covered. So answer options B and D are not correct. You also know that motor vehicles (the cause of loss) is a covered peril under all three cause of loss forms (basic, broad, and special) so answer option A cannot be correct. This leaves you with answer option C, “This loss is covered under the commercial property coverage part” which is true because the exception to the broken pipe exclusion is if the damage is a result of a leaking sprinkler, or if the pipe breaks as a result of a covered named peril, then the loss is covered. In this case, because a motor vehicle is a covered named peril, then this loss would be covered under any cause of loss form of the commercial property coverage part.

For more concept questions, check out our free CPCU® 557 practice exam.

CPCU® 557 Sample Exam Questions – Part B

Bill is attending a charity event hosted by ABC Company at ABC Company’s residence. While attending the event, Bill is playing a game of pickup basketball with other attendees and employees of ABC Company. While playing, Bill trips and falls, breaking his nose and resulting in a $2,000 surgery to repair his nose. How much would ABC Company pay for Bill’s injury under Coverage C of the commercial general liability form?

  1. $0
  2. $2,000
  3. $250
  4. This should be covered under Coverage A

 

Answer: A – $0

In this case the answer is A. ABC Company would pay $0 under Coverage C of the CGL.

Sports or games are specifically excluded under Coverage C of the commercial general liability form. Coverage C of the commercial general liability form does not provide coverage for any bodily injury that occurs as a result of the person partaking in a game or physical exercise, such as a sport.

This gives you an example of how tricky these scenario based questions can be. In this example you are given a lot of information. You must decipher what the question is asking and determine what facts are relevant to answering the question. In this case you must know “what is the commercial general liability policy (CGL)”, “what is Coverage C”, and “what are the coverages and exclusions under CGL Coverage C”.

On your exam, you will be given a scenario like the one seen above; it is your job to understand what is being asked of you and how to solve or recommend a solution to the scenario.

Our Advice

The best way to approach the CPCU® 557 case exam questions is by first determining what facts in the given scenario are necessary to determine your answer. In this case, you know that the question is specifically asking about Coverage C of the CGL, you know that Bill is injured playing a sport, and you know Bill is injured on ABC’s property.

The second step, similar to how you answered the Part A concept question, is to analyze the given multiple-choice answers to see which options are incorrect. This allows you to narrow down the answer options to choose the correct answer. From your studying, you know that Coverage A pays for the damages or injury caused by the insured to a third party, the coverage only applies if the insured is legally liable for the bodily injury incurred by the third party. Based on this, we know that answer option D is incorrect, because Bill is injured by tripping and falling on his own, ABC is not did not cause and is not liable for Bill’s injury. You also know that $250 is an arbitrary number not relevant to Coverage C or this CGL loss, so answer option C is not the correct answer. This leaves us with answer option A and answer option B. In this case, you know the exclusions of CGL Coverage C, and you know that Coverage C does not provide coverage for any bodily injury that occurs as a result of the person partaking in a game or physical exercise. Since basketball can be categorized as a physical exercise or game, the loss is excluded and the insurer would pay $0 for this claim.

For more scenario based questions, download our free CPCU® 557 practice exam.

Free Practice Exam

Ready to get started studying? We’re here to help (for free). Download our free CPCU® 557 practice exams to get a feel for the type of questions you will see on the exam.

Download: Free CPCU® 557 Practice Exam

More Information

For more information about the CPCU® 557 exam, checkout some of our other free resources:

 

Disclaimer

Difficulty rank, importance rank, and the advice provided in this resource 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.

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April 3, 2019

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