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CAIB 2 Practice Exam 11282019, Exams of Insurance Economics

Walden UniversityInsurance Economics

CAIB 2 Practice Exam 11282019 latest

Typology: Exams

2025/2026

Available from 05/29/2026

Prof.-Robert-Atkins
Prof.-Robert-Atkins 🇺🇸

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CAIB 2 Practice Exam 11282019
Waivers of Co-insurance clause are common on commercial property
policies. What types of losses are applicable to this waiver of co-
insurance? - ANSWER -Is less than $5000 or Is less than 2% of the
amount of insurance. (72,00 x 2%=1440)
Identify 3 reasons why exclusions exist on commercial property policy. -
ANSWER -losses which are generally considered by insurers to be
commercially insurable:
1. Deliberate acts of violence -war, rebellion
2. losses which are considered catastrophic, Earthquake, snow slides,
landslides
3. more specialized policy forms exist - Auto, aircraft
Commercial property policies may provide coverage from theft while
property is an automobiles. What warranty will be included in
commercial property policies when theft coverage is provided for
property in automobiles? - ANSWER -1. Vehicle containing the property
insured be equipped with a fully enclosed body or compartment
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CAIB 2 Practice Exam 11282019

Waivers of Co-insurance clause are common on commercial property policies. What types of losses are applicable to this waiver of co- insurance? - ANSWER - Is less than $5000 or Is less than 2% of the amount of insurance. (72,00 x 2%=1440) Identify 3 reasons why exclusions exist on commercial property policy. - ANSWER - losses which are generally considered by insurers to be commercially insurable:

  1. Deliberate acts of violence - war, rebellion
  2. losses which are considered catastrophic, Earthquake, snow slides, landslides
  3. more specialized policy forms exist - Auto, aircraft Commercial property policies may provide coverage from theft while property is an automobiles. What warranty will be included in commercial property policies when theft coverage is provided for property in automobiles? - ANSWER - 1. Vehicle containing the property insured be equipped with a fully enclosed body or compartment
  1. The doors are securely locked and the widow closed
  2. Access or entry to the vehicle mu have been gained through the use of force Statutory Conditions or Commercial Property conditions Policy conditions. What are 3 additional conditions contained in a number of commercial property for and explain the effect of each? - ANSWER - 1. Pair and Set - the undamaged property still has value will be deducted from claim payment
  3. No benefit to Bailee - bailee must take care of the property of the other with ordinary Care
  4. Sue and Labour - insured must take all reasonable action to recover stolen property Identify three things that a Survey does? - ANSWER - 1. Assist in identification of losses or exposures
  5. Helps to determine the coverages needed
  6. Develops other underwriting information need by the insurer. What benefits would a checklist have in relation to the survey? - ANSWER - 1. Alerts broker to possible losses or exposures
  7. Ensures that needed coverages are not forgotten or ignored
  8. Helps to reduce the potential for errors and omissions claim
  1. The limits do not exceed the insurer's net retention limits but are beyond what it is prepared to pay in a single claim Identify the three amounts to be considered when calculating the amount of payment as outlined in the Indemnity agreement and of the three amounts which one is payable? - ANSWER - 1. Actual Cash Value
  2. Insured's financial interest
  3. Amount of insurance Which ever amount is lowest. Insurers agree to 'waive' any co-insurance requirement when a loss meets either of the following conditions (2): - ANSWER - is under 2% of insured amount or is under $ Insurers have many reasons for excluding coverage for certain perils and property items. Indicate the reason the insurer might have for excluding each of the following losses: - ANSWER - Loss due to war or arising out of the nuclear energy hazard
  • Considered uninsurable Loss due to flood or earthquake
  • has the potential to be catastrophic Automobiles and aircraft
  • more specialized policies exist for these items Identify three types of Property Protection Systems: Identify three obligations placed upon Insureds who have installed any such systems: - ANSWER --Sprinkler systems or other fire extinguishing systems
  • Alarm systems fire detection systems
  • intrusion detection systems must notify insurer if contact lapsed or expired or cancelled must notify insurer if policy service/response has been suspended must notify insurer if any fault/defect with system
  • Assists in the developments of underwriting information needed by the insurer Identify five areas of information that may be required when a building is over 25 years of age: - ANSWER - heating wiring Over-current protection Plumbing roof Identify five hazards common to all commercial buildings which may influence their potential for loss: - ANSWER - Geography (electrical service ) Occupancy protection construction Heathing Identify three businesses that may contain 'special hazards': - ANSWER - churches Bakerier Service stations

Identify six types of Physical Hazards: - ANSWER --Type of building construction

  • Occupancy
  • house keeping
  • External exposures
  • geography
  • protection Identify three types of Moral Hazard: - ANSWER --associated
  • financial condition
  • moral character Identify two types of Morale Hazard? - ANSWER - indifference to loss Poor management Identify four types of the seven 'internal sources of information' available to an underwriter: - ANSWER --claims reports
  • inspection reports
  • field representative
  • underwriting guides and manuals

Premium Identify two extensions of coverage required by law to be in a Fire policy: - ANSWER - lighting Explosion of coal or, natural or manufactured gas Why would Building Damage by Theft extension be of value to a tenant?

  • ANSWER - If the insured is a tenant and liable for damage caused to the building The insured is not the owner of the building and the broad policy covers Beside theft of attempted theft, identify other damage covered by the extensions: - ANSWER - Vandalism and malicious acts committed on the same occasion Identify the four coverages provided by most package policies: - ANSWER --commercial property
  • commercial liability
  • Business interruption
  • Crime insurance

Identify six features of a risk that will generally qualify it for rate credit - ANSWER --Monitored alarm

  • Fire resistive construction
  • fire protection rating
  • constructed after 1945
  • no basement
  • sole occupant Briefly explain the functions of: A. Endorsements B. Riders C. Separate policy - ANSWER --Endorsements - change to the terms of the policy
  • Riders-Adds coverage to the existing policy
  • Separate policies-insures speciality items Identify the two bases on which glass can be insured under a Glass Rider? - ANSWER --blanket
  • scheduled List the three details required to be itemized by the broker when the glass is on a scheduled basis: - ANSWER --location of the glass
  • while temporarily at other locations. 10% of the insurance or $5,000 whichever is less Identify the common exclusion to the Valuable Papers and Records Insurance and the Accounts receivable form and why: - ANSWER - loss due to electrical or magnetic injury, or disturbance or reinsure of electronic recording, except by lightning, coverage is available under electric sate processing policy Identify the three areas of coverage under an Electronic Data Processing Policy (EDP): - ANSWER --loss to data processing system, including equipment and component part
  • active data processing media, include programs
  • extra expense Identify three exclusions in Equipment Breakdown Policies? - ANSWER -- fire and smoke
  • war related losses
  • delay or interruption of business or operation
  • flood
  • earth movement Identify three features unique to Equipment Breakdown Policies: - ANSWER --inspection services
  • claims investigation
  • suspension clause Identify the type of property covered under the Consequential Loss Assumption Clause: - ANSWER - Property that is temperature sensitive (Stock items which are temperature sensitive when loss is caused by loss to equipment which is owned by the insured and used for refrigerating or cooling due to an insured peril Identify the three types of property that must be directly attacked for coverage to respond: - ANSWER --the refrigerating or cooling apparatus,
  • its connections or supply pipes,
  • any apparatus furnishing power on the premises Identify the three types of expenses covered by the By-Law Endorsement: - ANSWER --increased cost to rebuild
  • loss of value of undamaged portion
  • cost of demolition of undamaged portion of the building

Identify the three conditions that the Insured must meet before any loss will be paid on a Replacement Cost Basis: - ANSWER - Property must be replaced (payment will be made on a replacement cost basis only after replacement has been effected) (Replacement must be made) on same or adjacent site Replacement must be done with due diligence and dispatch Briefly explain the function of the Fire Department Charges Endorsement: - ANSWER - Will be paid if a local fire department requires the assistance from neighbouring fire departments - some insurers will only provide coverage if insured is liable for such payment Identify three reasons why a bailee may have temporary custody of the personal property of another: - ANSWER --Repairs (or performance of work)

  • Storage (or safekeeping)
  • For delivery to others Briefly explain the level of 'ordinary care' to be exercised by a bailee: - ANSWER - Ordinary care is that of which any reasonable and prudent person would provide to property of others. (same care of the good of

others as would be taken by a prudent and diligent owners of such goods) Identify three ways bailees can insure their legal and contractual responsibility for damages to customer goods: - ANSWER - They can include the property of others in their limits of insurance (customer's property in the amount of stock insurance provided by their comm prop ins pol) They can get a liability extension/policy for the property of others (purchase a separate policy insuring the legal liability of the bailee for loss Purchasing a specialized bailees customers' policy insuring direct loss of or damage to customer's property regardless of fault Identify the two parties who may have an insurable interest in Property while in the course of transit for Inland Transportation Insurance: - ANSWER --The Insured (the owner)

  • The Carrier Identify how the decision of who should purchase insurance on property in transit is determined: (2) - ANSWER --Who would be
  • As established by a contract (with owner of property) Private carriers
  • Amount of the loss of goods carried by them Identify when coverage is effective and ends under the Truckman's Liability Cargo Riders: - ANSWER - From the time the goods have been loaded for shipment until they reach their destination Identify four reasons why an owner of goods should not depend upon a carriers insurance: - ANSWER --The carriers insurance may have lapsed or been cancelled
  • The carriers insurance may not have broad enough coverage (broad enough in perils insured against)
  • The carrier may not have high enough limits of insurance (adequate amounts of insurance)
  • The carrier may have been invalidated as a result of breach of policy conditions - voided) Identify five advantages for owners for owners of goods to carry their own insurance: - ANSWER --Broader perils insured against
  • Adequate amount of insurance (amount of insurance payable is generally greater than that provided by carrier's policy - carriers pol may be ACV)
  • Prompt recovery of losses directly from the insurer
  • Reduced costs of insurance
  • Reporting provision feature provides for automatic coverage for all of the insured's shipments Identify another name by which a Builders Risk Policy is known: - ANSWER - Course of Construction policy Identify the three types of property which can be covered by the Builder's Risk Policy: - ANSWER --Materials/supplies that will form part of the completed structure (completed project - materials owned by the insured or others)
  • Landscaping, growing trees, plants, shrubs, or flowers all to enter into and form part of the project provided that the value of such property is included in the amount of insurance