CFP 512 CERTIFICATION EXAM
TESTBANK QUESTIONS AND DETAILED
CORRECT ANSWERS (VERIFIED
ANSWERS) WITH RATIONALES| 2024-
2025
Your client, Margarita, had an upstairs window of her
home broken by hail. She reported the claim, and for the
two weeks following the storm, the weather had been quite
nice. She rarely went into the room with the broken
window and did nothing to cover the opening. During the
third week following the incident, there was a severe
rainstorm, and water came into the opening, damaging the
floor of the room with the broken window and the ceiling of
the room beneath it. On what grounds could the insurance
company refuse to pay for the damaged floor and ceiling?
A)
Margarita failed to provide assistance and to cooperate
with the insurance company.
B)
Margarita failed to protect the property when she had
adequate time to do so.
C)
Margarita is estopped from collecting for damages.
D)
Margarita waived her right to collect for damages. Correct
Answer The insurance company will pay for the broken
,window and any other damage from the hail storm,
but could deny the claim for the damaged floor and
ceiling since Margarita failed to protect the property
when she had ample time to do so.
Debbie recently lost one of her diamond earrings, and she
filed an insurance claim. Which of the following is NOT an
option for the insurer?
A)
Pay the difference between the actual cash value of the
earrings before and after the loss
B)
Replace the lost earring
C) Require Debbie to surrender the remaining earring
before receiving a check
D)
Replace both earrings Correct Answer The answer is
require Debbie to surrender the remaining earring
before receiving a check. Options available to the
insurer to settle a claim like this include replacing
both earrings, replacing just the lost earring, or simpy
issuing a check for an amount equal to the value of
the lost earring. The insurance company can ask but
cannot require Debbie to surrender the other earring.
It can reduce the settlement amount by the salvage
value of the single earring if she does not surrender it.
Which of the following is the CORRECT definition of the
term adverse selection?
A)
,The tendency of persons with the highest risk of loss to
also be the most likely to purchase insurance, thereby
causing the insurer the greatest profit
B)
The tendency of persons with the lowest risk of loss to
also be the most likely to purchase insurance, thereby
causing the insurer the greatest cost in terms of claims
C)
The tendency of persons with the highest risk of loss to
also be the most likely to purchase insurance, thereby
causing the insurer the greatest cost in terms of claims
D)
The tendency of persons with the lowest risk of loss to
also be the most likely to purchase insurance, thereby
causing the insurer the greatest profit Correct Answer The
answer is the tendency of persons with the highest
risk of loss to also be the most likely to purchase
insurance, thereby causing the insurer the greatest
cost in terms of claims. Adverse selection is the
tendency for those most likely to incur losses to seek
insurance.
Which of the following are important when selecting an
insurance producer?
Experience
Training
Education
Production awards earned
A)
I, II, III, and IV
B)
, IV only
C)
I, II, and III
D)
II and III Correct Answer 1 2 and 3
The answer is I, II, and III. Options I, II, and III, along
with competence, inclination to service,
specialization, and a good reputation, are important
when selecting an insurance producer. The
production awards earned are an indication of sales
ability, but not necessarily what should be sought in
an insurance producer.
Which of the following policy sections do homeowners and
auto policies share?
Liability coverage
Comprehensive coverage
Medical payments coverage
Duties after a loss Correct Answer Everything except
Comprehensive. With the exception of comprehensive
coverage (auto policies only), all of these are sections
are shared by homeowners and auto policies.
Which of the following is true for property coverage in a
commercial package policy (CPP)?
A CPP provides broader coverage but is a bit more
expensive than a collection of monoline forms.
No customization is allowed, as all potential risks are
covered in the standard CPP.
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