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CAIB 2 PRACTICE EXAM OFFICIAL QUESTIONS AND ANSWERS ., Exams of Insurance Economics

Chamberlain College of NursingInsurance Economics

CAIB 2 PRACTICE EXAM OFFICIAL QUESTIONS AND ANSWERS .

Typology: Exams

2024/2025

Available from 08/15/2025

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CAIB 2 PRACTICE EXAM OFFICIAL QUESTIONS
AND ANSWERS .
In addition to Jewellers Block or Furriers Block Policies, identify
three other Dealer forms:
-coins (and stamp dealers)
-fine art delaers
-automobile dealers
-musical instrument dealers
Identify eight methods used by criminals which can result in loss
to real and personal property
-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 malicious acts
-espionage
-shoplifting
-employee theft
Identify three key areas which make 'forcible entry' into a building
vulnerable to attack:
-windows and door
-roof and walls
-heating and air conditioning vents
Identify three types of 'protected enclosures':
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Download CAIB 2 PRACTICE EXAM OFFICIAL QUESTIONS AND ANSWERS . and more Exams Insurance Economics in PDF only on Docsity!

CAIB 2 PRACTICE EXAM OFFICIAL QUESTIONS

AND ANSWERS.

In addition to Jewellers Block or Furriers Block Policies, identify three other Dealer forms:

  • coins (and stamp dealers)
  • fine art delaers
  • automobile dealers
  • musical instrument dealers Identify eight methods used by criminals which can result in loss to real and personal property
  • 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 malicious acts
  • espionage
  • shoplifting
  • employee theft Identify three key areas which make 'forcible entry' into a building vulnerable to attack:
  • windows and door
  • roof and walls
  • heating and air conditioning vents Identify three types of 'protected enclosures':
  • safes
  • vaults
  • display cases (chests) Identify three ways in which access can be obtained into protected enclosures':
  • bars on windows (Steel doors and bars)
  • deadbolt locks on doors (High security Locks)
  • electric fences (window locks, bars and screens)
  • (tempered glass, safes and vaults, showcases) Identify any three types of electronic barriers that may restrict unauthorized access to property:
  • magnetic window locks (magnetic door and window contacts)
  • infrared sensors (detectors)
  • motion detectors
  • (pressure sensors under mats or stair treads, hold up alarms, vibration detectors, shock sensors, glass breakage alarms, closed circuit television cameras) Identify the three components of the most effective security system to protect valuable property:
  • Perimeter protection
  • Area protection
  • Point protection Identify the two types of Perimeter Protection.
  • Complete protection
  • Partial protection

Identify the major weakness of 'locally supervised' alarm controls: People often forget to arm the system. People forget to turn them on when leaving for the day) Identify two weaknesses of local alarm?

  • only sounds locally - relying on neighbors or passers-by to report
  • easily tampered with Identify the four key areas addressed by crime riders:
  • Property covered
  • Perils insured
  • Location of property insured
  • Persons causing the loss The definitions in crime policies are not always the same as those used in criminal law. Explain this statement in the context of Burglary: The insurance definition requires visible evidence of forcible entry whereas the criminal law definition does not. Identify the two areas contained in the definition of Safe Burglary :
  • The unlawful taking of insured property from a vault or safe
  • The unlawful taking of a safe from within the premises Identify the two requirements to be present before a loss would be covered to the contents of a 'safe' while located on the insured premises:
  • All doors of the vault or safe are closed and locked with combination lock
  • The unlawful entry is evidenced by visible marks of forcible entry Identify the three types of property insured under a Safe Burglary policy:
  • Money, securities and property
  • Securities only
  • Stock only State three coverage provided by the safe burglary rider.
  • The unlawful taking of insured property from a locked vault or safe
  • The unlawful taking of the safe from the premises they occupy
  • Resultant damage to the premises and property insure the premises insured Identify a key exclusion in the Damage to Building by Burglary or Robbery policy: Damage to glass or damage to lettering, ornamentation, tapes or foils on the glass Under the Inside/Outside Robbery Policy, identify three instances when property taken from a 'custodian' would be covered inside the premises:
  • Actual or attempted robbery of a custodian on the premises, including damage caused to the premises by such actual or attempted robbery
  • Kidnapping
  • Theft from window display area inside the premises while the premises are open for business by a thief or an accomplice having broken the window at the time of theft. Identify three instances when the Inside/Outside Robbery Policy would respond to losses outside the premises:
  • Theft from a safe drop box at the bank (theft from a night depository safe provided by a bank or trust company for use of its customers)

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?

  4. Vehicle containing the property insured be equipped with a fully enclosed body or compartment

  5. The doors are securely locked and the widow closed

  6. 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?

  7. Pair and Set - the undamaged property still has value will be deducted from claim payment

  8. No benefit to Bailee - bailee must take care of the property of the other with ordinary Care

  9. Sue and Labour - insured must take all reasonable action to recover stolen property Identify three things that a Survey does?

  10. Assist in identification of losses or exposures

  11. Helps to determine the coverages needed

  12. Develops other underwriting information need by the insurer.

What benefits would a checklist have in relation to the survey?

  1. Alerts broker to possible losses or exposures
  2. Ensures that needed coverages are not forgotten or ignored
  3. Helps to reduce the potential for errors and omissions claim Identify the two types of depreciation used in the Formula/Cost approach and give an example for each: Straight line depreciation - is based on the number of years something could have reasonably been expected to function. A building that is 30 year old but can be used for another 30 years is 50% depreciated. Plateau accelerated depreciation- A property which is mostly productive in its early years. The greats depreciation will happen in the first few years. Once that certain age is reached the depreciation plateaus, example office equipment When is the Income Approach method most commonly employed? When a run down building is used for a business which is making a profit. The net annual rental income is determined and a capitalization factor applied to it to produce actual cash value amount. Identify three reasons why a Subscription Policy may be used:
  4. The line of business is so specialized as to not be covered the insurer's treaty with its reinsurers
  5. They type of risk is on which the insurer does not want to expose to reinsurance treaties
  6. The limits do not exceed the insurer's net retention limits but are beyond what it is prepared to pay in a single claim
  • 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 Identify the four conditions of the Locked Vehicle Warranty: must be in the enclosed part of the vehicle Window closed and doors must be securely locked Access or entry to the vehicle must have been gained through used force There must be visible evidence which confirmed force was used to gain entry into the body or the compartment of the vehicle Identify three Additional Conditions contained in a number of commercial property form and explain the effect of each.
  • NO Benefit to bailee - bailee must take care of the property of others with ordinary care
  • Sue and labour- insured must take all reasonable action to recover stolen property
  • Pair and sets- the undamaged property still has value and that value will deducted form claim payment Identify three things that a Survey does:
  • Assists to identify loss exposures
  • Help eliminate the purchases of coverage the business does NOT need
  • 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: heating wiring Over-current protection Plumbing roof Identify five hazards common to all commercial buildings which may influence their potential for loss: Geography (electrical service ) Occupancy protection construction Heathing Identify three businesses that may contain 'special hazards': churches Bakerier Service stations Identify six types of Physical Hazards:
  • Type of building construction
  • Occupancy
  • house keeping
  • External exposures
  • geography
  • protection Identify three types of Moral Hazard:

Names of loss payee coverages provided (Summary of insurance coverages and amounts for which the insurer may be liable Premium Identify two extensions of coverage required by law to be in a Fire policy: lighting Explosion of coal or, natural or manufactured gas Why would Building Damage by Theft extension be of value to a tenant? 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: Vandalism and malicious acts committed on the same occasion Identify the four coverages provided by most package policies:

  • commercial property
  • commercial liability
  • Business interruption
  • Crime insurance Identify six features of a risk that will generally qualify it for rate credit
  • 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
  • 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?
  • blanket
  • scheduled List the three details required to be itemized by the broker when the glass is on a scheduled basis:
  • location of the glass
  • size - type, number, and size of the glass to be insured.
  • Value - description of the letter, ornamentation, tape or foi Identify three additional coverages some Insurers are willing to provide?
  • Cost of temporary repairs
  • Cost of making repairs
  • Cost of removing obstructions, such as metal grill, the facilitate repair
  • extra expense Identify three exclusions in Equipment Breakdown Policies?
  • fire and smoke
  • war related losses
  • delay or interruption of business or operation
  • flood
  • earth movement Identify three features unique to Equipment Breakdown Policies:
  • inspection services
  • claims investigation
  • suspension clause Identify the type of property covered under the Consequential Loss Assumption Clause: 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:
  • 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:
  • increased cost to rebuild
  • loss of value of undamaged portion
  • cost of demolition of undamaged portion of the building

Identify five common 'off premises' coverages:

  • at a newly acquired location (building)
  • at a temporary location
  • in transit
  • newly acquired location (contents)
  • sales representative Identify three instances when stock or equipment will be considered to be at a Temporary Location:
  • when the location is not owned by the insured (owned, rented or controlled)
  • when the property was removed in order to protect it against further loss not in transit
  • not at any location specified on the policy, Identify two advantages or purchasing Parcel Post insurance from a broker than Canada Post:
  • faster claims service
  • broader coverages insured against costs of coverage are reduced overall Identify the class of property to which the Peak Season Endorsement applies: 25% more Stock is required Identify the three conditions that the Insured must meet before any loss will be paid on a Replacement Cost Basis: 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

Identify the two parties who may have an insurable interest in Property while in the course of transit for Inland Transportation Insurance:

  • The Insured (the owner)
  • The Carrier Identify how the decision of who should purchase insurance on property in transit is determined: (2)
  • Who would be responsible for the property in the case of a loss (responsible for loss to the property)
  • To what extent Identify the document used to establish the liabilities of common carriers: Bill of lading Identify the three types of Bills of Lading normally used by common carriers:
  • Standard
  • Increased (Valued)
  • Released Identify two reasons to use a Released Bill of Lading:
  • The value of the property is less than the tariff value and the owner does not want to insure property (value of the STOCK...reduce transportation rate by not insuring through bills of lading)
  • The owner decides to insure the property elsewhere (value of stock higher than tariff and instead of increasing will insure the

entire shipment under private insurer and benefit from reduced rate) Identify the liability of the following: Contract carriers

  • 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: 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:
  • 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:
  • Broader perils insured against
  • Adequate amount of insurance (amount of insurance payable is generally greater than that provided by carrier's policy - carriers