CAIB 2 ACTUAL 2026 EXAM QUESTIONS AND ANSWERS
GUARANTEE A+
✔✔Hazard - ✔✔is a condition which may cause a peril to occur
✔✔Physical Hazard - ✔✔a condition relating to the use of tangible property which could
cause a peril to occur
✔✔Moral Hazard - ✔✔subjective characteristics of the applicant that could cause a peril
to occur
✔✔Morale Hazard - ✔✔deals with the attitude of the client
✔✔Accommodation Business - ✔✔business which is marginal or substandard but which
the insurers agrees to accept as a favour or accommodation to the broker
✔✔Supporting Business - ✔✔the existence of other insurance policies the applicant has
with the same insurer
✔✔Centrifugal Force - ✔✔the inertia of a body that tends to move it away from the
centre around which it revolves
✔✔Mechanical Breakdown - ✔✔a failure in the working mechanism of the machinery. A
functional defect in the moving parts of the equipment which causes the latter to cease
functioning or to function improperly.
✔✔Electrical Breakdown - ✔✔a failure in the electrical mechanism of the machinery,
appliance or device
✔✔Trade Losses - ✔✔the types of losses which might be expected as a part of the
every day operation of a business
✔✔Wear & tear - ✔✔deterioration or depreciation, i.e value by ordinary and reasonable
use of the subject matter
✔✔Gradual Deterioration - ✔✔the deterioration of an object which arises naturally over
time
✔✔Latent Defect - ✔✔a hidden or concealed defect, one which could not be discovered
by reasonable and customary inspection, one not apparent in face of goods, product,
document, etc.
✔✔Mysterious Disappearance - ✔✔disappearance under circumstances that can't be
explained
, ✔✔Endorsement - ✔✔changes the terms or conditions of the policy
✔✔Rider - ✔✔adds additional coverages to those already in place
✔✔Media - ✔✔is the CDs, DVDs, backup hard drives and cassettes upon which date is
recorded
✔✔Data - ✔✔the information stored on the media
✔✔Temporary Location - ✔✔a location not specified on the policy which is not owned,
rented or controlled in whole or in part by the insured
✔✔Newly Acquired Location - ✔✔a location owned, rented or controlled by the insured
for a period of 30 days from acquisition
✔✔Replacement Cost (same site) - ✔✔the cost to repair, replace or rebuild the property
on the same site with new property of like kind and quality and for like occupancy
without deduction for depreciation
✔✔Bailee for Hire - ✔✔is the one who has temporary custody of the personal property
of another for a purpose other than sale and who gets compensated as a condition of a
custody
✔✔Ordinary Care - ✔✔the legal duties imposed upon bailees which requires them to
take the same care of the goods of others as would be taking by a prudent and diligent
owner of such goods
✔✔Common Carrier - ✔✔includes airlines, railroads, trucking companies and others
that furnish transportation to any member of the public seeking their services
✔✔Standard (Ordinary) Bill of Landing - ✔✔reflects the amount for which the bill of
landing common carrier will be held legally liable under the tariff
✔✔Valued Bill of Landing - ✔✔serves to increase carrier's liability. normally requested
by the owner of goods when their value exceeds the value stated in the Standard Bill of
Landing
✔✔Released Bill of Landing - ✔✔releases a carrier from any liability for the goods being
transported
✔✔Contract Carrier - ✔✔one that carries, for pay, the goods of certain customers only
as contrasted to a common carrier that carries the goods of the public in general
GUARANTEE A+
✔✔Hazard - ✔✔is a condition which may cause a peril to occur
✔✔Physical Hazard - ✔✔a condition relating to the use of tangible property which could
cause a peril to occur
✔✔Moral Hazard - ✔✔subjective characteristics of the applicant that could cause a peril
to occur
✔✔Morale Hazard - ✔✔deals with the attitude of the client
✔✔Accommodation Business - ✔✔business which is marginal or substandard but which
the insurers agrees to accept as a favour or accommodation to the broker
✔✔Supporting Business - ✔✔the existence of other insurance policies the applicant has
with the same insurer
✔✔Centrifugal Force - ✔✔the inertia of a body that tends to move it away from the
centre around which it revolves
✔✔Mechanical Breakdown - ✔✔a failure in the working mechanism of the machinery. A
functional defect in the moving parts of the equipment which causes the latter to cease
functioning or to function improperly.
✔✔Electrical Breakdown - ✔✔a failure in the electrical mechanism of the machinery,
appliance or device
✔✔Trade Losses - ✔✔the types of losses which might be expected as a part of the
every day operation of a business
✔✔Wear & tear - ✔✔deterioration or depreciation, i.e value by ordinary and reasonable
use of the subject matter
✔✔Gradual Deterioration - ✔✔the deterioration of an object which arises naturally over
time
✔✔Latent Defect - ✔✔a hidden or concealed defect, one which could not be discovered
by reasonable and customary inspection, one not apparent in face of goods, product,
document, etc.
✔✔Mysterious Disappearance - ✔✔disappearance under circumstances that can't be
explained
, ✔✔Endorsement - ✔✔changes the terms or conditions of the policy
✔✔Rider - ✔✔adds additional coverages to those already in place
✔✔Media - ✔✔is the CDs, DVDs, backup hard drives and cassettes upon which date is
recorded
✔✔Data - ✔✔the information stored on the media
✔✔Temporary Location - ✔✔a location not specified on the policy which is not owned,
rented or controlled in whole or in part by the insured
✔✔Newly Acquired Location - ✔✔a location owned, rented or controlled by the insured
for a period of 30 days from acquisition
✔✔Replacement Cost (same site) - ✔✔the cost to repair, replace or rebuild the property
on the same site with new property of like kind and quality and for like occupancy
without deduction for depreciation
✔✔Bailee for Hire - ✔✔is the one who has temporary custody of the personal property
of another for a purpose other than sale and who gets compensated as a condition of a
custody
✔✔Ordinary Care - ✔✔the legal duties imposed upon bailees which requires them to
take the same care of the goods of others as would be taking by a prudent and diligent
owner of such goods
✔✔Common Carrier - ✔✔includes airlines, railroads, trucking companies and others
that furnish transportation to any member of the public seeking their services
✔✔Standard (Ordinary) Bill of Landing - ✔✔reflects the amount for which the bill of
landing common carrier will be held legally liable under the tariff
✔✔Valued Bill of Landing - ✔✔serves to increase carrier's liability. normally requested
by the owner of goods when their value exceeds the value stated in the Standard Bill of
Landing
✔✔Released Bill of Landing - ✔✔releases a carrier from any liability for the goods being
transported
✔✔Contract Carrier - ✔✔one that carries, for pay, the goods of certain customers only
as contrasted to a common carrier that carries the goods of the public in general
