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CAIB 1 Practice Exam (Multiple
Choice)
Define Unidentified Automobile one which causes bodily injury or death to an insured person arising out of actual contact of that automobile with the automobile in which the insured is an occupant. Define Endorsement an extra sheet(s) or slip(s) of paper attached to the policy indicating in writing that the insurer and the insured have agreed to a change in the terms of the insurance contract Define Pure Risk involves the chance of financial loss which does not, at the same time, offer a chance of financial gain. Define Deductible
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 Define Civil Law concerned with settling disputes between individuals or other legal entities in matters not involving a criminal act All of the following factors except one are used to determine the ACV of insured property. Pick the exception. a) condition of the object. b) sentimental value. c) re-sale value. d) normal life expectancy b) sentimental value The Indemnity Agreement in property insurance policies states that in the event of a loss, the insurer will pay the lesser of three amounts in the event of a claim. One factor which does not enter into this calculation is: a) the actual cash value of the property. b) the original cost of the property. c) the insured's interest in the property. d) the policy limit.
All of the following examples of uses of the automobile except one are not considered to fall within the "carrying passengers for compensation or hire" even if money is exchanged. Pick the exception: a) carpools b) taxicabs c) carrying domestic servants d) carrying of clients or customers b) taxicabs Your clients suffered a fire loss totalling $87,555. When making the proof of loss, they claimed $1,500 for a stereo unit which they never owned. In the event that the fraud is discovered by the insurer, what portion of the claim, if any, is required to be paid under policy? When the insurer is able to prove fraud, it is entitled to deny the entire claim, and not just that part which was fraudulent. The insurer always has the right to decide on how the claim will be settled. It may make payment in the form of cash or rebuild,
repair or replace the lost or damaged property. When must the insurer provide the insured with its notice of intention to rebuild, repair or replace? If the insurer decides to repair, rebuild or replace the lost or damaged property, it must advise the insured in writing within 30 days of the receipt of the proof of loss Your client filed a proof of loss 15 days ago. In this case, how much time does the insurer have remaining before the claim must be paid? The loss is payable within 60 days after completion of the proof of loss, unless the contract provides for a shorter period. In this case, as the proof of loss was filed 15 days ago, the claim must be paid within the next 45 days. Your client's home is insured under an IBC Comprehensive Homeowners Form (IBC 1155). The dwelling is insured on a Guaranteed Replacement Cost basis. Briefly state the guarantee provided by this endorsement
improvements, extensions or additions have been made to the dwelling building? When any changes are made to the dwelling building, the insured must notify the insurer within 90 days of the start of work Your client lives in a condominium in a local suburb. Indicate whose responsibility it is to insure the following property items: (i) the building; (ii) unit improvements and betterments; (iii) the common elements; (iv) contents contained in each condominium unit. (i) the building - the Condominium Corporation; (ii) unit improvements and betterments - unit owner; (iii) the common elements - the Condominium Corporation; (iv) contents contained in each condominium unit - unit owner. Loss assessment coverage is designed to pay for those special assessments against unit owners when coverage provided under the Corporation's policy is inadequate. Provide two (2) examples of
inadequate coverage which might occur under the Condominium Corporation's policy. Inadequacies which might occur in a Condominium Corporation policy are:
- under insurance;
- application of co-insurance penalty;
- cause of loss is not an insured peril or is specifically excluded; and
- breach of policy condition. There are three (3) elements required to be present in every tort action. If any one element is lacking, no tort has occurred. Identify the three (3) elements required to be present in every tort action and provide a brief explanation of each. (i) Legal Duty Owed This element pre-supposes that one party has the right not to be harmed unreasonably and the other party has a duty to refrain from causing harm.
insured's policy as a temporary substitute automobile? An automobile belonging to others qualifies for coverage as a temporary substitute automobile only if the described automobile cannot be used because of its breakdown, repair, servicing, loss, destruction or sale Normally, the insurer will not subrogate against any person using the automobile with the insured's consent. However, there are certain exceptions. Identify two (2) circumstances in which the insurer will subrogate against the party having possession of the insured's automobile for damage they might cause to it. b) When damage is caused to the insured automobile by the following persons, the insurer will initiate subrogation proceedings against them:
- those having possession for the purpose of garaging;
- those who have breached a policy condition; and
- those drivers or operators convicted of an alcohol-related offence at the time the damage was caused.
