CAIB 2 ACTUAL 2026 EXAMINATION SET QUESTIONS AND
ANSWERS GUARANTEE A+
✔✔Dewey, Cheatem and Howe provides fully automated accounting and income tax
service. The equipment used in the business represents the latest in computer
technology. You have been requested to provide an insurance quote which will address
the potential exposures to loss from such equipment.
A. Identify two sections of coverage normally provided under an electronic data
processing policy
B. The insured has specifically asked that you provide a quote for mechanical
breakdown coverage. The insurer with whom you intend to place this coverage requires
that they file a certain document with the company before such coverage will be
provided. Identify this document.
C. What advice oiled you provide to this insured which will help to eliminate the potential
for lost information? - ✔✔A. i - Loss to data processing systems, including equipment
and component parts
ii. Active data processing media, including programs
iii. Extra Expense
B. Maintenance Contract
C. The best means to avoid a loss is through implementing proper backup procedures.
✔✔The assumption should not be made that clients do not need a boiler and machinery
policy because they do not have an explosion exposure from boilers or pressure
vessels on the premises.
A. Under what circumstances should a tenant purchase such a coverage?
B. Boiler and machinery policies provide more than just explosion coverage. There are
specialized comprehensive coverage forms which can be used to insured photocopiers,
fax machines, cash registered and other machinery. What tow key coverages are
provided by such policies which makes them attractive to business having these items?
- ✔✔A. A tenant should purchase this coverage if they have any other machinery
subject to mechanical or electrical breakdown. For example, computers have to operate
an insured object, printers, copiers, fax machines, telephone systems, etc.
B. Property damage coverage andExpediting Expenses
✔✔Albert E's computer inc. uses the services of a local carrier to provide for the
transportation of stock items from the suppliers warehouse and to deliver goods sold by
it.
A. Both the owner and the carrier can have a financial interest in property while in
transit. What factors should be considered in determining who should purchase
insurance coverage on a particular shipment
B. How do common carriers limit the amount of their liability to the owner of property
C. Common carriers are liable to owners for the safe delivery of goods entrusted to
them. Provide two exceptions to this general rule. - ✔✔A. Deciding who should
purchase insurance on property in transit is determining by establishing
, i. Whether the owner and the carrier would be responsible for loss to the property and
ii. To what extent
B. Common carriers make standard use of bills of lading to reduce the amount of their
liability to the owner of the property
C. Acts of God or natural phenomena not reasonably foreseeable. Acts of public
enemies. Inherent Vice in the goods transported
✔✔Wilfred's Wood Work's Ltd. Has just received a furniture order from a major hotel
located 1200 kms away. The amount of the sale is valued at $173,000. Wilfred is to be
responsible for the delivery of the goods to the purchaser. The goods are to be shipped
via common carrier.
A. The carrier advises Wilfred that it can provide the insurance needed to insured to
insure the full value of the shipment.
State two problems that Wilfred may encounter in the event of a claim under the
insurance purchased from their carrier.
B. State an advantage to Wilfred should he choose to purchase insurance coverage
through your brokerage - ✔✔A. i - When the value of the goods is less than that
provided on the Standard Bill of Lading
ii - When the value of the goods exceeds that provide by the standard tariff
B. Prompt recovery to losses is available directly from the insurer
C. Policy will respond to provide payment of any loss in excess of the liability of the
carrier, whether limited by bill of lading, contract or otherwise
✔✔A. Under the builders risk policy coverage normally ceases when the building comes
into use. Identify two uses which are permitted by the policy.
B. When does coverage automatically cease? - ✔✔A. i - The use of the building for
other construction work or testing
ii - The use of the building for office or habitational purposes
B. Coverage automatically ceases when the project has been left unattended or when
there has been no construction activity for more than 30 consecutive days
✔✔A business's assets can be attacked in many different ways. The force entry into
protected enclosures is one such way.
A. Explain what is meant by "Protection Enclosure"
B. identify two methods of attach commonly used to gain access to property contained
in protection enclosures and provide an example for each - ✔✔A. Protected enclosures
included locked safes, chests, and vaults on the insured's premises
B. i - Mechanical - Use of power drills, grinders and percussion tools, or prying to
remove part of the enclosure
ii - Thermal - The application of heat (oxygen torches, or thermal lance)
iii Explosion.- Dynamite and Nitro-glycerine
✔✔Otto Rek's Auto Body Shop Ltd. is equipped with a "ULC" approved local alarm
system
, A. Otto Rek doesn't feel he is receiving a big enough discount on his insurance premium
so compensate for the costs of installing the above system on his premises. Identify two
weaknesses common to local alarm systems which might explain the reluctance of
insurers to allow substantial reductions in crime insurance rates.
B. When Otto was shopping around for estimates, all suppliers informed him that their
systems were "ULC" approved. What does such rating mean? - ✔✔A. i - Alarm Ring's
on premises only
ii - Can easily be tampered with
B. ULC - Underwriters laboratories of Canada - means that certain devices have met
the minimum standard by ULC for such devices
✔✔Art Wall is the owner of hammer's hardware store Ltd. In addition to tools and other
hardware stock items, the store also stocks home electronics equipment such as
televisions, VCRs and Compact Disc players. In your discussion of crime insurance with
art, you indicate that the electronics stock items carried by the store are considered to
be target items for thieves.
A. Identify two factors relating to the class of property at risk which make them target
items and therefore more susceptible to loss from a criminal act
B. What class of property insured by criminal policies is referred to by the following
definition: "All negotiable and non-negotiable instruments or contracts representing
money or other property"? - ✔✔A. High resale value
B. Securities
✔✔Rick O'Shea is the owner of the Blarney Store Inn. Last night the sale containing the
business's daily receipts was broken into Andover $8500 in cash was taken.
The general conditions contained in the commercial crime insurance policy outlining the
duties to be undertaken by the insured in the event of loss. identify three duties imposed
upon the insured under condition 6 - Duties in the event of loss. - ✔✔The insured is
required to notify the insured of any loss as soon as possible
Within 120 days of discovery, a sworn proof of loss must be provided to the insurer.
If securities involved the insured must take all responsible means to prevent their
negotiation, resale of conversation
✔✔Two employees of Otto Rek's Auto Body Shop Ltd recently admitted to stealing
$8,000 from the cash register over the previous 8 month period. One employee
indicated that he had pocketed $4,500 while the other confessed to having stolen
$3,500.. The employee dishonesty coverage purchased by Otto is provided under a
blanket position bond (Form B). The limit of the bond is $5,000.
A. How much would the insurer pay for the above loss?
B. What would the amount of payment have been had coverage been purchased under
the Commercial Blanket Form Bond (Form A)? Explain. - ✔✔A. $8,000 ($5,000 per
employee)
B. $5,000
ANSWERS GUARANTEE A+
✔✔Dewey, Cheatem and Howe provides fully automated accounting and income tax
service. The equipment used in the business represents the latest in computer
technology. You have been requested to provide an insurance quote which will address
the potential exposures to loss from such equipment.
A. Identify two sections of coverage normally provided under an electronic data
processing policy
B. The insured has specifically asked that you provide a quote for mechanical
breakdown coverage. The insurer with whom you intend to place this coverage requires
that they file a certain document with the company before such coverage will be
provided. Identify this document.
C. What advice oiled you provide to this insured which will help to eliminate the potential
for lost information? - ✔✔A. i - Loss to data processing systems, including equipment
and component parts
ii. Active data processing media, including programs
iii. Extra Expense
B. Maintenance Contract
C. The best means to avoid a loss is through implementing proper backup procedures.
✔✔The assumption should not be made that clients do not need a boiler and machinery
policy because they do not have an explosion exposure from boilers or pressure
vessels on the premises.
A. Under what circumstances should a tenant purchase such a coverage?
B. Boiler and machinery policies provide more than just explosion coverage. There are
specialized comprehensive coverage forms which can be used to insured photocopiers,
fax machines, cash registered and other machinery. What tow key coverages are
provided by such policies which makes them attractive to business having these items?
- ✔✔A. A tenant should purchase this coverage if they have any other machinery
subject to mechanical or electrical breakdown. For example, computers have to operate
an insured object, printers, copiers, fax machines, telephone systems, etc.
B. Property damage coverage andExpediting Expenses
✔✔Albert E's computer inc. uses the services of a local carrier to provide for the
transportation of stock items from the suppliers warehouse and to deliver goods sold by
it.
A. Both the owner and the carrier can have a financial interest in property while in
transit. What factors should be considered in determining who should purchase
insurance coverage on a particular shipment
B. How do common carriers limit the amount of their liability to the owner of property
C. Common carriers are liable to owners for the safe delivery of goods entrusted to
them. Provide two exceptions to this general rule. - ✔✔A. Deciding who should
purchase insurance on property in transit is determining by establishing
, i. Whether the owner and the carrier would be responsible for loss to the property and
ii. To what extent
B. Common carriers make standard use of bills of lading to reduce the amount of their
liability to the owner of the property
C. Acts of God or natural phenomena not reasonably foreseeable. Acts of public
enemies. Inherent Vice in the goods transported
✔✔Wilfred's Wood Work's Ltd. Has just received a furniture order from a major hotel
located 1200 kms away. The amount of the sale is valued at $173,000. Wilfred is to be
responsible for the delivery of the goods to the purchaser. The goods are to be shipped
via common carrier.
A. The carrier advises Wilfred that it can provide the insurance needed to insured to
insure the full value of the shipment.
State two problems that Wilfred may encounter in the event of a claim under the
insurance purchased from their carrier.
B. State an advantage to Wilfred should he choose to purchase insurance coverage
through your brokerage - ✔✔A. i - When the value of the goods is less than that
provided on the Standard Bill of Lading
ii - When the value of the goods exceeds that provide by the standard tariff
B. Prompt recovery to losses is available directly from the insurer
C. Policy will respond to provide payment of any loss in excess of the liability of the
carrier, whether limited by bill of lading, contract or otherwise
✔✔A. Under the builders risk policy coverage normally ceases when the building comes
into use. Identify two uses which are permitted by the policy.
B. When does coverage automatically cease? - ✔✔A. i - The use of the building for
other construction work or testing
ii - The use of the building for office or habitational purposes
B. Coverage automatically ceases when the project has been left unattended or when
there has been no construction activity for more than 30 consecutive days
✔✔A business's assets can be attacked in many different ways. The force entry into
protected enclosures is one such way.
A. Explain what is meant by "Protection Enclosure"
B. identify two methods of attach commonly used to gain access to property contained
in protection enclosures and provide an example for each - ✔✔A. Protected enclosures
included locked safes, chests, and vaults on the insured's premises
B. i - Mechanical - Use of power drills, grinders and percussion tools, or prying to
remove part of the enclosure
ii - Thermal - The application of heat (oxygen torches, or thermal lance)
iii Explosion.- Dynamite and Nitro-glycerine
✔✔Otto Rek's Auto Body Shop Ltd. is equipped with a "ULC" approved local alarm
system
, A. Otto Rek doesn't feel he is receiving a big enough discount on his insurance premium
so compensate for the costs of installing the above system on his premises. Identify two
weaknesses common to local alarm systems which might explain the reluctance of
insurers to allow substantial reductions in crime insurance rates.
B. When Otto was shopping around for estimates, all suppliers informed him that their
systems were "ULC" approved. What does such rating mean? - ✔✔A. i - Alarm Ring's
on premises only
ii - Can easily be tampered with
B. ULC - Underwriters laboratories of Canada - means that certain devices have met
the minimum standard by ULC for such devices
✔✔Art Wall is the owner of hammer's hardware store Ltd. In addition to tools and other
hardware stock items, the store also stocks home electronics equipment such as
televisions, VCRs and Compact Disc players. In your discussion of crime insurance with
art, you indicate that the electronics stock items carried by the store are considered to
be target items for thieves.
A. Identify two factors relating to the class of property at risk which make them target
items and therefore more susceptible to loss from a criminal act
B. What class of property insured by criminal policies is referred to by the following
definition: "All negotiable and non-negotiable instruments or contracts representing
money or other property"? - ✔✔A. High resale value
B. Securities
✔✔Rick O'Shea is the owner of the Blarney Store Inn. Last night the sale containing the
business's daily receipts was broken into Andover $8500 in cash was taken.
The general conditions contained in the commercial crime insurance policy outlining the
duties to be undertaken by the insured in the event of loss. identify three duties imposed
upon the insured under condition 6 - Duties in the event of loss. - ✔✔The insured is
required to notify the insured of any loss as soon as possible
Within 120 days of discovery, a sworn proof of loss must be provided to the insurer.
If securities involved the insured must take all responsible means to prevent their
negotiation, resale of conversation
✔✔Two employees of Otto Rek's Auto Body Shop Ltd recently admitted to stealing
$8,000 from the cash register over the previous 8 month period. One employee
indicated that he had pocketed $4,500 while the other confessed to having stolen
$3,500.. The employee dishonesty coverage purchased by Otto is provided under a
blanket position bond (Form B). The limit of the bond is $5,000.
A. How much would the insurer pay for the above loss?
B. What would the amount of payment have been had coverage been purchased under
the Commercial Blanket Form Bond (Form A)? Explain. - ✔✔A. $8,000 ($5,000 per
employee)
B. $5,000
