CAIB 2 ACTUAL 2026 CORE EXAM TEST QUESTIONS AND
ANSWERS GUARANTEE A+
✔✔The safe burglary rider would insure one of the following losses:
A. Money taken from locked cash drawer
B. Money and securities taken from an unlocked safe
C. Money and securities taken from a locked safe by the burglar who knew its
combination
D. Removal of the safe from the premises - ✔✔D. Removal of the safe from the
premises
✔✔The insurance industry relies on the classifications developed by the following body
when determining the appropriateness of the protection provided to property by
safes,vaults and other:
A. IAO
B. ULC
C. IBC
D. Canada Safety Council - ✔✔B. ULC
✔✔All of the following statements except one are true when the insureds business has
been interrupted by order of civil authority. Pick the exception:
A. Insured's building must have suffered physical damage
B. Coverage is limited to a maximum of two weeks
C. Insured is entitled to recover lost income even through there has been no actual
damage to the insured property
D. Order must have been given as a direct result of damage to neighbouring premises
by a peril insured against on the insureds own premises - ✔✔A. Insureds business must
have suffered physical damage
✔✔Accommodation business is best described as:
A. A specialized type of insurance risk which included hotels, motels, apartment
buildings and rental property
B. A risk which can be insured only under a subscription policy
C. A risk which is substandard or marginal, but which, because of its relationship with
the broker, the insurer agrees to to underwrite
D. A risk which is normally acceptable to the insurer but which cannot be bound by the
broker without the insurers consent - ✔✔C. A risk which is substandard or marginal, but
which, because of its relationship with the broker, the insurer agrees to underwrite
✔✔The accounts receivable form would not provide payment for:
A. Penalties charged the insured by suppliers for late payment of account
B. Sum charged by insureds accountant to reconstruct lost records
C. Sums charged by collector agency to collect amounts due to insured
,D. Sums due from customers which the insured is unable to collect asa direct result of
the loss of records - ✔✔A. Penalties charged by the insured by suppliers for late
payment on the account
✔✔The coverages provided by the contractors equipment floater would insure which of
the following losses:
A. Damage caused to the front end loader due to its falling off the trailer being used to
transport it to the job site
B. Cracking of the engine block on caterpillar due to freezing
C. Fire damage to contractors plans, blueprints, designs or specs - ✔✔A. Damage
caused to the front end loader due to its falling off the trailer being used to transport it to
the job site
✔✔All of the following statements regarding commercial crime insurance policy are true
except one. Pick the exception:
A. When there is an existing policy in force, broker has the right to bind the insurer for
any interim increase in coverage limits
B. Insurer must provide the insured with 30 days notice when it intents to cancel the
policy, except when cancellation is for non-payment of premium
C. All losses under the policy will be paid in Canadian funds
D. Insured is required to maintain adequate records to substantiate the amount of the
loss under the policy - ✔✔A. When there is an existing policy in force, broker has the
right to bind the insurer for any interim increase in coverage limits
✔✔The insurance policy issued to Adanac Shoes LTD. Provides for the settlement of all
losses on an actual cash value basis. Generally, this has come to be understood as the
replacement cost or repair cost of lost or damaged property less any deprivation.
However, the Adanac's must be advised that ACV can be measured in terms of "money
value", Explain:
1. Straight Line Depreciation
2. Plateau Acceleration Depreciation
3. Income approach - ✔✔1. Straight line depreciation is based on the number of years
that the building could have reasonable been expected to be functional.
2. Plateau Acceleration Deception is commonly used in the adjustment of losses to
older property
3. Income approach is commonly used with income producing properties
✔✔Courtney Holdings Owns 36 revenue properties in various cities across Canada.
Although the company normally insured to full values of all such property there is a
concern that an increase in inflation rates could cause the amounts of insurance to fall
below the co-insurance percentage required to be maintained under the policy. To avoid
the potential of a penalty being applied at the time of loss, it is your recommendation
that the co-insurance clause be rep[laced with the stated amount co-insurance clause.
Identify the underwriting conditions that must be satisfied by the insureds before the
, insurer will agree to replace the standard co-insurance clause with the stated amount
co-insurance clause. - ✔✔1. Files a statement of values with the insurer representing
100% of the value of all property insured, as verified by appraisal or other means
acceptable to the insurers
2. Maintains those values throughout the term of the policy
3. Should be insured NOT maintain insurance to 100% of the stated amount during the
entire policy period the policy will revert a 100% co-insurance basis.
✔✔The valuations clause contained in commercial property insurance policies
establishes how certain property is to be valued by the policy after a loss. In the event of
a loss to the following property belonging to Happy Harry's Appliance Store LTD.
Indicate how each would be valued under the policy.
A. Refrigerator which has been sold but not yet delivered
B. Unsold stock
C. Customers appliances brought onto the premises for repair and upon which repair
has already been completed - ✔✔A. The selling price charged the purchaser, less any
discounts allowed, is the basis of settlement. Discounts could include credit for cash
purchases, pick up by purchaser, trade-ins and any reduction in selling price because of
negotiations between the seller and buyer
B. Restricted to its actual cash value at the time of loss
C. When the loss occurs, the insured may have already spent a significant amount on
materials and labour. These costs are insured by the policy
✔✔The Adanac's Shoes LTD account is new to your brokerage. In preparing for your
insurance quotation to the Adanac's, your office manager suggested that a fact finding
of survey by conducted.
A. Identify two advantages to be gained from conducting such a fact or survey
B. Insureds who do not have their own inspectors on staff rely on their own
organizations to inspect certain commercial risks and to recommend rates to be
charged. Identify the organization used by most insurers to gather the info needed by
them to property underwrite commercial risks. - ✔✔A. It assists in identification of loss
exposures. Helps to eliminate purchase of coverages the business doesn't need.
Develops underwriting information needed by the insurer
B. Informco Inc
✔✔Explain:
A. The primary role of the underwriter in the risk selection process
B. What is meant by the term "risk classification"?
C. What is the chief advantage of risk classification in the underwriting process? - ✔✔A.
The underwriter will spend considerable amount of time and resources to determine if
there is any condition respecting the risk or the applicant which could cause a loss to
occur.
B. Risk classification refers to the grouping or classifying of risks according to
established criteria, which, in large part, is based on their profitability of loss as a class
ANSWERS GUARANTEE A+
✔✔The safe burglary rider would insure one of the following losses:
A. Money taken from locked cash drawer
B. Money and securities taken from an unlocked safe
C. Money and securities taken from a locked safe by the burglar who knew its
combination
D. Removal of the safe from the premises - ✔✔D. Removal of the safe from the
premises
✔✔The insurance industry relies on the classifications developed by the following body
when determining the appropriateness of the protection provided to property by
safes,vaults and other:
A. IAO
B. ULC
C. IBC
D. Canada Safety Council - ✔✔B. ULC
✔✔All of the following statements except one are true when the insureds business has
been interrupted by order of civil authority. Pick the exception:
A. Insured's building must have suffered physical damage
B. Coverage is limited to a maximum of two weeks
C. Insured is entitled to recover lost income even through there has been no actual
damage to the insured property
D. Order must have been given as a direct result of damage to neighbouring premises
by a peril insured against on the insureds own premises - ✔✔A. Insureds business must
have suffered physical damage
✔✔Accommodation business is best described as:
A. A specialized type of insurance risk which included hotels, motels, apartment
buildings and rental property
B. A risk which can be insured only under a subscription policy
C. A risk which is substandard or marginal, but which, because of its relationship with
the broker, the insurer agrees to to underwrite
D. A risk which is normally acceptable to the insurer but which cannot be bound by the
broker without the insurers consent - ✔✔C. A risk which is substandard or marginal, but
which, because of its relationship with the broker, the insurer agrees to underwrite
✔✔The accounts receivable form would not provide payment for:
A. Penalties charged the insured by suppliers for late payment of account
B. Sum charged by insureds accountant to reconstruct lost records
C. Sums charged by collector agency to collect amounts due to insured
,D. Sums due from customers which the insured is unable to collect asa direct result of
the loss of records - ✔✔A. Penalties charged by the insured by suppliers for late
payment on the account
✔✔The coverages provided by the contractors equipment floater would insure which of
the following losses:
A. Damage caused to the front end loader due to its falling off the trailer being used to
transport it to the job site
B. Cracking of the engine block on caterpillar due to freezing
C. Fire damage to contractors plans, blueprints, designs or specs - ✔✔A. Damage
caused to the front end loader due to its falling off the trailer being used to transport it to
the job site
✔✔All of the following statements regarding commercial crime insurance policy are true
except one. Pick the exception:
A. When there is an existing policy in force, broker has the right to bind the insurer for
any interim increase in coverage limits
B. Insurer must provide the insured with 30 days notice when it intents to cancel the
policy, except when cancellation is for non-payment of premium
C. All losses under the policy will be paid in Canadian funds
D. Insured is required to maintain adequate records to substantiate the amount of the
loss under the policy - ✔✔A. When there is an existing policy in force, broker has the
right to bind the insurer for any interim increase in coverage limits
✔✔The insurance policy issued to Adanac Shoes LTD. Provides for the settlement of all
losses on an actual cash value basis. Generally, this has come to be understood as the
replacement cost or repair cost of lost or damaged property less any deprivation.
However, the Adanac's must be advised that ACV can be measured in terms of "money
value", Explain:
1. Straight Line Depreciation
2. Plateau Acceleration Depreciation
3. Income approach - ✔✔1. Straight line depreciation is based on the number of years
that the building could have reasonable been expected to be functional.
2. Plateau Acceleration Deception is commonly used in the adjustment of losses to
older property
3. Income approach is commonly used with income producing properties
✔✔Courtney Holdings Owns 36 revenue properties in various cities across Canada.
Although the company normally insured to full values of all such property there is a
concern that an increase in inflation rates could cause the amounts of insurance to fall
below the co-insurance percentage required to be maintained under the policy. To avoid
the potential of a penalty being applied at the time of loss, it is your recommendation
that the co-insurance clause be rep[laced with the stated amount co-insurance clause.
Identify the underwriting conditions that must be satisfied by the insureds before the
, insurer will agree to replace the standard co-insurance clause with the stated amount
co-insurance clause. - ✔✔1. Files a statement of values with the insurer representing
100% of the value of all property insured, as verified by appraisal or other means
acceptable to the insurers
2. Maintains those values throughout the term of the policy
3. Should be insured NOT maintain insurance to 100% of the stated amount during the
entire policy period the policy will revert a 100% co-insurance basis.
✔✔The valuations clause contained in commercial property insurance policies
establishes how certain property is to be valued by the policy after a loss. In the event of
a loss to the following property belonging to Happy Harry's Appliance Store LTD.
Indicate how each would be valued under the policy.
A. Refrigerator which has been sold but not yet delivered
B. Unsold stock
C. Customers appliances brought onto the premises for repair and upon which repair
has already been completed - ✔✔A. The selling price charged the purchaser, less any
discounts allowed, is the basis of settlement. Discounts could include credit for cash
purchases, pick up by purchaser, trade-ins and any reduction in selling price because of
negotiations between the seller and buyer
B. Restricted to its actual cash value at the time of loss
C. When the loss occurs, the insured may have already spent a significant amount on
materials and labour. These costs are insured by the policy
✔✔The Adanac's Shoes LTD account is new to your brokerage. In preparing for your
insurance quotation to the Adanac's, your office manager suggested that a fact finding
of survey by conducted.
A. Identify two advantages to be gained from conducting such a fact or survey
B. Insureds who do not have their own inspectors on staff rely on their own
organizations to inspect certain commercial risks and to recommend rates to be
charged. Identify the organization used by most insurers to gather the info needed by
them to property underwrite commercial risks. - ✔✔A. It assists in identification of loss
exposures. Helps to eliminate purchase of coverages the business doesn't need.
Develops underwriting information needed by the insurer
B. Informco Inc
✔✔Explain:
A. The primary role of the underwriter in the risk selection process
B. What is meant by the term "risk classification"?
C. What is the chief advantage of risk classification in the underwriting process? - ✔✔A.
The underwriter will spend considerable amount of time and resources to determine if
there is any condition respecting the risk or the applicant which could cause a loss to
occur.
B. Risk classification refers to the grouping or classifying of risks according to
established criteria, which, in large part, is based on their profitability of loss as a class
