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CAIB 3 EXAM FINAL SCRIPT 2026 COMPLETE
SOLUTION SET
โ Speculative Risk. Answer: possibility of financial loss or gain โ Pure Risk. Answer: Chance of financial loss, no gain โ Insurance. Answer: undertaking by one person to indemnify another person against loss or liability for loss in respect of a certain risk or peril to which the object of insurance may be exposed or to pay a sum of money or other ting of value upon the happening of a certain event โ Contract. Answer: an agreement between two or more persons which creates an obligation to do or not to do a particular thing โ Insurable Interest. Answer: showing you would suffer financially by a loss โ Utmost good faith. Answer: caveat emptor, buyer beware. Exercise a higher standard of honesty
โ Indemnity. Answer: putting the insured back into the same position as they were in as immediately prior to loss โ Binder. Answer: Contract of insurace โ Agency Agreement. Answer: source of a brokers authority โ Void. Answer: Unable to support its intended purpose, treated as though it never existed โ Voidable. Answer: void to the wrongdoer but not to the wronged party unless they elect to treat it so โ Peril. Answer: The cause of a loss โ Direct Loss. Answer: When the object of insurance is the loss โ Indirect loss. Answer: Losses which arise as a consequence of a direct loss โ Actual cash value. Answer: New or replacement cost of the insured property less depreciation
โ Hostile fire. Answer: a fire that passes outside the limits assigned to it โ Proximate result. Answer: The event that actually caused the loss โ Material change. Answer: Any change within the control and knowledge of the insured that happened after the policy was issued and increases the chance of loss. โ Pro Rata. Answer: insurer divides the amount of premium paid by the number of days in the policy period. Multiply that amount by the number of days remaining in the policy โ Short Rate. Answer: Includes the costs of staff and computer time that would not have been incurred had the policy remained in force for the full policy term โ Notice of loss. Answer: notification given to the insurer informing them of a loss โ Proof of loss. Answer: a formal verification, under oath, of the details and amounts being claimed under the policy
โ Fraud. Answer: A deliberate attempt to deceive, with a view to securing some profit โ Deductible. Answer: the amount the insured is required to pay for each loss which insurance coverage is provided before receiving any payment from insurer โ Subrogation. Answer: to put into another's shoes โ Proprietary insurer. Answer: Joint stock companies owned by shareholders and seeking a profit or return on investment โ Non-proprietary insurer. Answer: organized for a reason other than profit, owned by policyholders โ Personal property. Answer: contents of the insured(s) dwelling and other personal property owned, worn, or used by the insured while on the premises which is usual to the ownership or maintenance of the dwelling โ Additional living expenses. Answer: costs "over and above" what it would normally have cost the insureds to live had the loss not occurred
โ Fine arts. Answer: paintings, pictures, valuable rugs, rare books, manuscripts โ Criminal law. Answer: deals with wrongs against society โ Civil law. Answer: deals with disputes between individuals or other legal entities, not involving criminal act โ Plaintiff. Answer: someone who brings a case against another โ Defendant. Answer: an individual sued by another โ Tort. Answer: a wrong done to another in breach of a duty laid out by law โ Strict Liability. Answer: Involves situations in which harm to others would result should a mishap occur. Guilty until proven guilty โ Negligence. Answer: the omission to do something a resonable person would do, or doing something which a reasonable person would not do
โ General damages. Answer: made for pain and suffering โ Special Damages. Answer: Out of pocket expenses โ Trespasser. Answer: people who are on another's premises for their own purposes without the permission of its occupier โ Licensee. Answer: one who comes on to the premises for his own purposes but with the occupiers consent. Postal worker, meter reader โ Invitee. Answer: someone who enters by invitation or with the connection to the owners business or activity the owner conducts โ Visitor. Answer: licensee and invitee are sometimes labeled as this โ Joint Liability. Answer: when two or more people act together so as to cause injury or damage โ Farming. Answer: the ownership, maintenance or use of premises for the production of crops or the raising or care of livestock including all necessary operations
โ Unsatisfied judgement fund. Answer: indemnifies the insured when involved in an accident with an uninsured or unidentified automobile โ Unidentified automobile. Answer: cannot be found or identified, fled the scene and cannot be located โ Uninsured automobile. Answer: neither the driver or actual owner has applicable and collectibe bodily injury liability insurance โ General average. Answer: general averaging of the amount of loss among all insurers of automobiles being transferred at the time of such loss โ Customs duties. Answer: covers repairs done to automobiles in the US that are subject to customs โ Temporary substitute vehicle. Answer: a vehicle which is temporarily being used as a substitute for the automobile described on the policy โ Occupant. Answer: someone holding, in control or inside a motor vehicle or rented premises
โ Newly acquired automobile. Answer: newly purchased vehicle by the insured. โ Step licensing. Answer: Three levels used for studying the CAIB program โ Ethics. Answer: the principles of conduct governing an individual or a group โ Professionalism. Answer: commits to a high ethical standard. A high standard of educational preparedness and training, with mandatory continuous education โ Self-regulation. Answer: the right of brokers to regulate their own affairs, the goal of all provincial brokers' associations โ Insured. Answer: insured applicant, their spouse, and any dependent children โ Insured Applicant. Answer: Canadian resident under 65, insured under the government health insurance plan of their province/territory of residence, who has been named on an invoice/application issued by their broker
