CAIB 1-Chapter 1 Exam With 100% Correct Answers 2023-2024, Exams of Advanced Education

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CAIB 1-Chapter 1 Exam With 100%

Correct Answers 2023-

RISK - Correct Answer-Chance of financial loss to which an object of insurance is exposed SPECULATIVE RISK - Correct Answer-the chance of financial loss or gain PURE RISK - Correct Answer-the chance of financial loss but no chance of financial gain INSURANCE - Correct Answer-the undertaking by one person to indemnify another person against loss or liability for loss in respect of a certain risk or peril to which the object of the insurance may be exposed...or to pay a sum of money or other thing of value upon the happening of a certain event CONTRACT - Correct Answer-an agreement between two or more persons which creates an obligation to do or not to do a particular thing CONSIDERATION - Correct Answer-an exchange or something of value between parties INSURABLE INTEREST - Correct Answer-onr has an insurable interest in the subject matter of the insurance when they will suffer financially by a loss UTMOST GOOD FAITH - Correct Answer-the law requires insurance contracts maintain a higher standard of honesty than is needed of other contracts. The duty applies to the insured, the insurer and the broker INDEMNITY - Correct Answer-application of the principle of indemnity ensures people receive the actual amount of their loss no more and no less INSURANCE BINDER - Correct Answer-a temporary agreement in which the insurer agrees to provide certain coverages pending the issuance of the policy AGENCY AGREEMENT - Correct Answer-a written agreeement or contract between the insurer and the brokerage which acknowledges their relationship VOID CONTRACT - Correct Answer-one which is unable in law to support the purpose for which it was intended. Such contracts are deemed never to have existed VOIDABLE CONTRACT - Correct Answer-a contract that may be voided at the option of the wronged party only and not the wrongdoer

PERIL - Correct Answer-the cause of loss DIRECT LOSS - Correct Answer-occurs when the peril insured actualy attacks the object of insurance INDIRECT LOSS - Correct Answer-losses which arise as a consequence of a direct loss ACTUAL CASH VALUE - Correct Answer-new or replacement cost of the property at the time of the loss, less depreciation REPLACEMENT COST - Correct Answer-the cost to repair or replace the lost or damaged property with new property of like kind and quality, without deduction for depreciation VALUED POLICY - Correct Answer-both the insured and insruer agree at the time the policy is issued as to the cash value of the property. In the event of a loss, the agreed amount would be paid BLANKET COVERAGE - Correct Answer-policy which provides a single limit of insurance for all property falling within a specific class SCHEDULED COVERAGE - Correct Answer-covered property is itemized on the policy FIDICUARY - Correct Answer-one who occupies a special position of trust or confidence in the handling or supervising of the affairs or funds of another UNEARNED PREMIUMS - Correct Answer-premiums not yet earned by the insurer. Such premiums are deemed to be held in trust in order to refund the insureds in the event the policy is cancelled prior to the expiry date FIRE - Correct Answer-involves the presence of a visible flame or glow, actual ignition or burning is required FRIENDLY FIRE - Correct Answer-a fire that is contained in its proper receptacle HOSTILE FIRE - Correct Answer-a fire that passes outside of the limits assigned to it (eg. spark thrown from a fireplace that that burns a carpet) PROXIMATE RESULT - Correct Answer-damage which arises from a natural or continous sequence of the peril causing the loss MATERIAL CHANGE - Correct Answer-is any change within the control and knowledge of the insured and which arises after the policy has been issued and serves to increase the chance of loss

PRO RATA - Correct Answer-basis of return premium calculation when the insurer cancels a policy. The amount of the return premium is arrived at by dividing the amount of premium paid by the number of days in the policy period. The number so obtained is then multiplied by the number of days remaining in the policy period SHORT RATE - Correct Answer-the basis of return calculation when the insured cancels the policy. The amount of the return premium is equivalent to that provided on a pro-rata basis, less any administrative charge or cancellation penalty NOTICE OF LOSS - Correct Answer-immediate report of loss to insurer by the insured or his representative (agent) in writing PROOF OF LOSS - Correct Answer-a formal verification, under oath, of the details and amounts being claimed under the policy FRAUD - Correct Answer-is a deliberate attempt to deceive, with a view to securing some profit DEDUCTIBLE - Correct Answer-represents the amount the insured is required to absorb for each loss for which insurance coverage is provided before receiving any payment from the insurer SUBROGATION - Correct Answer-when the insurer has paid a claim for loss caused by a third party, the Insurance Act allows the insurer to place itself 'in the insureds shoes' in respect of their right to recover the amount of the loss from responsible party PROPRIETARY INSURERS - Correct Answer-insurance companies which exist to make a profit or return on their investment NON-PROPRIETARY INSURERS - Correct Answer-insurance companies which are organized for reasons other than profit. They are owned and controlled by their policyholders and their mandate is to secure insurance at as low a cost as possible