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CAIB 2 PRACTICE EXAM QUESTIONS, Exams of Social Sciences

United States International UniversitySocial Sciences

CAIB 2 PRACTICE EXAM QUESTIONS

Typology: Exams

2025/2026

Available from 09/02/2025

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CAIB 2 PRACTICE EXAM QUESTIONS
Waivers of Co-insurance clause are common on commercial property policies. What
types of losses are applicable to this waiver of co-insurance?
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.
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?
1. Vehicle containing the property insured be equipped with a fully enclosed body or
compartment
2. The doors are securely locked and the widow closed
3. 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?
1. Pair and Set - the undamaged property still has value will be deducted from claim
payment
2. No benefit to Bailee - bailee must take care of the property of the other with ordinary
Care
3. Sue and Labour - insured must take all reasonable action to recover stolen property
Identify three things that a Survey does?
1. Assist in identification of losses or exposures
2. Helps to determine the coverages needed
3. Develops other underwriting information need by the insurer.
What benefits would a checklist have in relation to the survey?
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CAIB 2 PRACTICE EXAM QUESTIONS

Waivers of Co-insurance clause are common on commercial property policies. What types of losses are applicable to this waiver of co-insurance? 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. 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 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?
  7. Actual Cash Value
  8. Insured's financial interest
  9. 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):

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:
  • associated
  • financial condition
  • moral character Identify two types of Morale Hazard? indifference to loss Poor management Identify four types of the seven 'internal sources of information' available to an underwriter:
  • claims reports
  • inspection reports
  • field representative
  • underwriting guides and manuals Identify the four parameters within which an underwriter makes a decision about a particular risk: to accept the risk (on the base presented) to decline the risk To accept but with higher deductible to accept the risk with an increased rate Identify what information is required by law to appear on all insurance policies: (6)

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 Identify the four components of the Accounts Receivable Form :
  • Collection expense in excess of normal collection cost and make necessary by such loss or damage.
  • Other expenses reasonably incurred by the insured in re-establishing records or accounts receivable following such loss or damage
  • Accounts which cannot be collected as a direct result of loss or damage to accounts receivable records from an insured peril
  1. Identify two other locations, other than those listed on the form, where coverage is extended by the Valuable Papers and Records Insurance?
  2. Identify the limit available for the two locations listed above:
  • Being conveyed outside the premises
  • 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: 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):
  • 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?
  • 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 three reasons why a bailee may have temporary custody of the personal property of another:

  • 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: 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: 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:
  • 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)**
  • when part of building used as office space while construction continues (the use of the building for other construction work which must be done to satisfy the contract)
  • when building becomes occupied as residence before construction complete (when building is occupied for office or residential purposes before construction is complete) Identify the instance when the coverage 'automatically' ceases under the form When building is vacant and unattended with no construction work completed for over 30 consecutive days ( project left unattended or when there has been no construction activity for more than 30 consecutive days) Identify three locations where coverage applies for the Installation Floater Rider:
  • while in transit by most forms of land transportation, including the insured's vehicles
  • while awaiting installation on site
  • during installation until accepted or the interest of the insured ceases, whichever occurs first 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.

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)
  • Theft from the custodians private residence (theft from within the home of a custodian not exceeding the limit of insurance or $500, whichever is less)
  • Robbery from the custodian (actual or attempted robbery of a custodian away from the premises while engaged in his/her duties in connection with insured property within Canada or the US. Identify the five Insuring Agreements of the 3D Policy
  • Employee dishonesty
  • Loss inside the premises coverage
  • Loss outside the premises coverage
  • Money orders and counterfeit paper
  • Depositors forgery coverage Identify the three General Policy Features of the 3D Policy:
  • Insured can select any, or all, of the coverage provided under this policy
  • Crime exposures which are not insured by the policy can often be added by endorsement
  • Policy issued on a continuous until cancelled basis.