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CAIB 2 - CHAPTER 6 IBABC
questions with 100% correct
answers(latest update)
- Convertibility;
- Value;
- Portability. - answer Three factors of personal property that can help business owners determine loss potential from a criminal act.
- Forced entry into building;
- Forced entry into protected enclosures;
- Unforced entry into building or protected enclosures;
- Forced opening of building and protected enclosures;
- Vandalism and mailicious acts;
- Espionage;
- Shoplifting;
- Employee theft. - answer Methods criminals use that can result in loss to real and personal property. To restrict unauthorized access to property. - answer Main function of physical and electronic protection devices. To control access to premises when the business is closed. - answer The purpose of a perimeter protection system. Only the openings to the building are protected. - answer "Partial perimeter protection."
- Forced entry through walls or ceilings not detected;
- Stay-behind thieves not detected until they leave premises. - answer Disadvantages of partial perimeter protection. Protects all openings into the building, including enclosing walls, ceilings and floors. - answer "Complete perimeter protection." Physical barriers to restrict unauthorized access to property. - answer "Physical protection."
- Locks;
- Bars or screens. - answer Two kinds of physical protection. Electronic barriers to restrict unauthorized access to property. - answer "Electronic protection."
- Magnetic contact switches;
- Glass breakage alarms. - answer Two kinds of electronic protection. To restrict unauthorized entry into areas where valuable property is stored. - answer The main purpose of area protection devices. Frequency of false alarms - movement of drapes, banners, signs, etc. - answer Key disadvantage of motion detector systems. Senses the body heat of intruder as s/he moves through the area under surveillance; the change in the normal heat profile causes alarm to trigger.
- answer How infrared intrusion detection systems work.
- Can be installed to provide several patterns of coverage;
- Several units can be operated from one master device;
- Good for use in areas where moving fans, drapes of falling objects would cause nuisance alarms. - answer Advantages of infrared intrusion detection systems.
- Hold-up and fraud deterrent;
- Assist police in identifying and convicting criminals;
- Reduce shoplifting. - answer Advantages of cameras and CCTV for area protection. Provides direct security for individual items. - answer The purpose of point protection.
- Safes;
- Vaults;
- Chests;
- Filing cabinets;
- Display cases;
- Expensive equipment. - answer Items that require point protection.
- Locally supervised;
- Central station (the most effective). - answer Two ways alarm systems can be controlled. To detect any breach or attempted breach to the physical security of the premises, and to provide warning signal so effective and immediate response can be instituted. - answer Purpose of an alarm system. Through leased telephone lines. - answer The way alarm systems are usually transmitted. Ability of the phone line to withstand tampering. - answer "Line security."
- Highest level of service as it monitors all opening and closing times of the premises;
- Automatically activates alarm at closing time, screens after-hours users and provides reports;
- Provides immediate notice to police when alarm is received, and dispatches a company rep to premises after police are informed. - answer "Central station service." Same as Central Station Service, but instead of a company rep the owner is called to open the premises. - answer "Monitoring station service."
- Owner turns system on and off;
- Once on, the system is centrally monitored;
- Police alerted when alarm sounds. - answer "Emergency station service."
- Owner turns system on and off;
- When alarm sounds, it's sent along subscriber's standard phone system to the alarm control centre;
- Alarm control centre contacts police. - answer "Digital communicator service."
- Alarm rings on premises only -- neighbours or passers-by relied upon to contact police;
- Can be easily tampered with. - answer Two disadvantages of local alarm systems. Means the device meets minimum ULC standards for such devices. - answer "ULC-approved rating." Because items like money, furs, jewellery and property in the custody of a sales rep are excluded from coverage under the Broad Form commercial property form. - answer Why crime insurance is needed.
- Property covered;
- Perils insured;
- Location of property covered;
- Persons causing the loss. - answer Four key coverage areas of all crime insurance riders. All means of taking property without the owner's consent. - answer Insurance definition of "theft." The wrongful taking of property from within the premises by a person who has unlawfully entered or exited such premises, evidenced by marks of force. - answer "Burglary." Insures stock and equipment against actual or attempted burglary, robbery of a watchman, vandalism or malicious acts committed at the same location. Damage to interior of the premises, showcases or show windows is also insured for these perils. - answer Coverages provided by the Stock and Equipment Burglary rider.
- Unlawful taking of insured property from a locked vault or safe;
- Unlawful taking of the safe from within the premises;
- Resultant damage to premises and property inside the insured premises. - answer Three coverages provided by the Safe Burglary rider. Tenant who has assumed responsibility for burglary or robbery damage to the portion of the premises they occupy. - answer Good prospect for the Damage to Building by Burglary rider.
- Actual or attempted burglary or robbery;
- Vandalism or malicious acts committed on the same occasion. - answer Two coverages provided by the Damage to Building by Burglary rider.
- Actual or attempted robbery of a custodian on the premises, including damage caused to the premises by actual or attempted robbery;
- Kidnapping;
- Theft from window display area inside the premises while the premises are open for business, by a thief or accomplice having broken the window
at the time of the theft. - answer Three Inside Robbery coverages in the Inside/Outside Robbery rider.
- Actual or attempted robbery of a custodian away from the premises while engaged in his/her regular duties in connection with insured property within Canada or the U.S.;
- Theft from within the home of a custodian not exceeding the limit of insurance or $500, whichever is less;
- Theft from a night depository safe provided by a bank or trust company for its customers' use. - answer Three Outside Robbery coverages in the Inside/Outside Robbery rider. The wrongful taking of property from the possession of another against their will, accomplished by force or fear. - answer Criminal law definition of "robbery." The taking of insured property from a custodian by a person or persons who have:
- caused or threatened to cause the custodian bodily harm;
- committed an overt unlawful act witnessed by the custodian; or
- taken such property from a custodian who has been killed or rendered unconscious. - answer Insurance definition of "robbery." The insured(s), their partner(s) or any employee authorized by them to have care and custody of insured property. - answer Qualifies as a "custodian" under robbery policies. Guard, janitor, porter or watchman. - answer Does not qualify as a "custodian" under robbery policies. All losses under the policy paid in Canadian funds. - answer "Canadian Currency Clause" condition. Insured entitled to 30-days notice when insurer elects to cancel policy.
In the event of non-payment of premium, insurer can cancel after 15-days notice. - answer "Cancellation" condition. Any changes requested by insured are effective only when consented to by insurer. - answer "Changes" condition.
- Insured must notify insurer of any loss as soon as possible;
- Within 120 days of its discovery, sworn proof of loss must be provided to insurer;
- If loss of securities, insured must take all reasonable means to prevent their negotiation, sale or conversion;
- If loss is in violation of law, must be reported to police;
- If required by insurer, insureds must submit to examination under oath, and provide insurer with signed statement of their answers. - answer "Duties in the Event of Loss" condition. Coverage provided only for losses that occur during the policy period and within Canada or the U.S. - answer "Policy period" condition. Insured's records must be maintained to verify the amount of any loss. A claim that cannot be substantiated as to amount won't be paid. - answer "Records" provision. Valuation of securities limited to ACV at the close of business on the business day immediately preceding discovery of loss. Other property subject to ACV settlement. Any disputes about valuation are settled by arbitration. - answer "Valuation" provision. Currency and coins in current use and having face value. - answer "Money." All negotiable and non-negotiable instruments or contracts representing money or other property, includes revenue and other stamps in current use, tokens and tickets, but not money. - answer "Securities."
Loss resulting directly from one or more fraudulent or dishonest acts committed by an employee, acting alone or in collusion with others. - answer "Employee Dishonesty." Time permitted by an insurer, commencing with the expiry date of the policy, in which a claim must be discovered by the insured if it's to be covered. - answer "Discovery period." The insured or partner of the insured who is authorized by insured to have the care and custody of property outside the premises. - answer "Messenger." Fraudulent alternation of any writing of another without authority, or making, completing, executing, authenticating, issuing or transferring of any writing so it purports to be the act of another who didn't authorize the act. - answer "Forgery." Ensures there are no gaps in coverage. - answer The "continuous until cancelled" provision of the Comprehensive Dishonesty, Disappearance and Destruction (3-D) policy..
- Amount of loss hard to predict;
- Losses may be undiscovered, or discovered only after a long time. - answer Two characteristics of the 3-D policy that differentiates it from other property insurance.
- There was clear intent to cause the insured to sustain a loss;
- There was clear intent to obtain financial benefit, other than earned during the course of employment, for the employee or any other person or organization. - answer Two conditions needed to constitute a Fraudulent or Dishonest Act.
- Natural persons hired by the insured in the ordinary course of business affairs;
- Directors or trustees of the business who are actively involved as officers or employees;
- Persons hired by an employment agency or employer, whose activities are directed and compensated by the insured;
- Persons who become employees through consolidations or mergers. - answer Persons who qualify as an "employee" under Agreement I of the 3-D policy. All employees. Coverage automatically extends to new employees, and terminates on those leaving the insured's services. - answer Employees covered under Form A: Commercial Blanket Bond. Coverage does not have to be purchased for all employees. Different limits can be purchased for different classes of employees. - answer Employees covered under Form A: Blanket Position Bond. Limit is the maximum payable regardless of the number of employees involved in the loss. - answer Insurance limit under Form A: Commercial Blanket Bond. Limit available for each employee involved in the loss. - answer Insurance limit under Form A: Blanket Position Bond. One year from date of expiry. - answer Discovery period under Form A: Commercial Blanket Bond. Two years from date of expiry. - answer Discovery period under Form A: Blanket Position Bond. The new policy will pay if the loss...
- would have been covered under the previous policy;
- can't be claimed under previous bond due to expiry of discovery period. The amount paid is a part of the previous limits, and isn't higher than the previous limit. - answer How Agreement I of the 3-D policy responds when a loss under a previous bond is discovered.
- Pre-employment phase
- written application
- personal interview
- verify all references.
- Post-employment phase
- cheques require 2 signatures
- ensure employees take holidays
- if possible, rotate employee job positions and responsibilities
- surprise audits
- rotate bank accounts periodically and prepare special reconciliations. - answer Two phases of risk management program to eliminate or reduce employee dishonesty losses. Actual destruction, disappearance or wrongful abstraction of money and securities. - answer Coverages provided for Money and Securities under Agreement II of the 3-D policy.
- Money in a vending machine, unless the machine is equipped with a continuous recording instrument;
- Loss by fire to property other than money, securities, a safe or vault. - answer Two exclusions of the Money and Securities coverage under Agreement II of the 3-D policy. Actual destruction, disappearance or wrongful abstraction of money and securities while conveyed by a messenger, any armoured motor vehicle company or in the living quarters in the home or any messenger. - answer Coverages provided for Money and Securities under Agreement III of the 3-D policy. When a money order is not paid upon presentation to the post office, or if money taken in the regular course of insured's business is counterfeit. - answer When coverage under Agreement IV of the 3-D policy responds. When a large number of cheques or other negotiable instruments are written. - answer Under what conditions would you recommend that an insured purchase Depositors Forgery Coverage.
For the forgery or alteration of insured's cheques, drafts and similar instruments. - answer Coverage provided by Depositors Forgery Coverage. The business's potential exposure to loss, which is usually the same limit for the Employee Dishonest coverage. - answer The limit generally selected by those who purchase Depositors Forgery Coverage.
- Use safety paper for cheques;
- Protect blank cheques;
- Control use of fax machines and plates. - answer Risk management techniques to eliminate or reduce depositors forgery losses.