CAIB 2 CHAPTER 1 PRACTICE EXAM 2
Identify the company which assumes the greatest portion of an account - Answers-
Lead Company
What is re-insurance - Answers- an insurance company 'ceding' part of the risk to a re-
insurer
What are three considerations used when determining amounts of indemnity? -
Answers- i) Actual Cash Value of the property as it existed immediately prior to the loss
ii) The interest of the insured in the property
iii) The amount of insurance as shown on the policy
i) Actual Cash Value of the property as it existed prior to the loss
ii) The interest of the insured in the property
iii) The amount of insurance as shown on the policy
Which of the above amounts will be paid in the event of insured losses? - Answers-
Insureds will receive whichever is the least
What is the purpose of "stated amount" co-insurance clause - Answers- to replace the
provisions of the standard co-insurance clause with the requirements of the stated
amount co-insurance clause
What requirements must be met by the insured when co-insurance clauses are replaced
by 'stated amount' co-insurance clauses? - Answers- i) Insureds must submit a
statement of values indicating 100% of all property insured
ii) Values indicated on statements of values must be verified by appraisal or other
method acceptable to insurer
iii) These values must be insured for the duration of the policy period
All policies contain exclusions. List five types of exclusions and provide 2 examples of
each - Answers- i) War - commercially uninsurable
ii) Flood & earthquake - may be catastrophic
iii) Automobile & Valuable papers - Other forms of insurance may be available
iv) Wear and Tear / Mechanical Breakdown - May be expected by the insured and/or in
the control of the insured
v) Exterior communication towers & buildings under construction - Not 'common'
exposures
What is a condition? - Answers- requires insureds to do or not do something
Insurers will not exercise their right of subrogation against certain parties. Explain. -
Answers- When persons responsible for a loss have an interest in the proceeds of the
policy, the insurer will not exercise their right of subrogation against these parties... (eg.
