CAIB 1 FINAL EXAM ACTUAL QUESTIONS AND
ANSWERS SURE A+
✔✔Which of the following does not apply to the Statutory Conditions?
a. If the insured has a reasonable chance to protect property from loss but failed to do
so, it would not affect the claim settlement
b. When the insurer chooses to repair property, it must give written notice within 30
days of receiving the Proof of Loss
c. An agent of the insured can give notice or proof of loss if the insured is unable
d. After a loss has been reported, the insurer has the right of access to investigate the
loss - ✔✔a. If the insured has a reasonable chance to protect property from loss but
failed to do so, it would not affect the claim settlement
✔✔A contract is only legally enforceable when it has all of these 3 elements -
✔✔Insurable interest,
utmost good faith,
indemnity
✔✔Which of the following best reflects the duties of the broker?
a. A broker acts only in the best interest of the client
b. A broker must always place insurance with the cheapest insurer
c. A broker does not owe any duty to the insurer he/she represents
d. A broker must always be truthful and disclose all material facts about the client's risk
to the insurer - ✔✔d. A broker must always be truthful and disclose all material facts
about the client's risk to the insurer
✔✔What is the role of the broker in the insurance process? - ✔✔An intermediary
between the client and the insurer
✔✔The law requires that brokers exercise "reasonable skill, care and diligence",
otherwise errors and omissions claims may arise. The main reason for E&O claims is...
- ✔✔Failing to identify client's loss exposures and offering adequate coverage
✔✔The primary function of an underwriter is to... - ✔✔Select risks that are most likely to
be profitable for the insurer
, ✔✔When an underwriter looks at the financial and claims history of the applicant, they
are looking for...
a. Morale hazard
b. Moral hazard
c. Physical hazard
d. Risks - ✔✔b. Moral hazard
✔✔It is often said that property insurance policies are designed to insure against "direct
damage" only. Yesterday, a fire destroyed 65% of your client's apartment building. What
is the likely not covered in this situation? - ✔✔Loss of rental income
✔✔All property policies contain some conditions & warranties. Which of the following is
not true?
a. A condition is a requirement that the insured do or not do something
b. A claim is still valid despite a breach of condition if the loss was not caused by the
breach
c. A claim is still valid despite a breach of warranty by the insured as long as the breach
did not directly cause the loss
d. A warranty is a promise that certain facts are true and shall remain true for the
duration of the policy period - ✔✔c. A claim is still valid despite a breach of warranty by
the insured as long as the breach did not directly cause the loss
✔✔What is the definition of insurance? - ✔✔The undertaking by one person to
indemnify another against loss or liability in respect to a certain risk or peril
✔✔What is the definition of contract? - ✔✔An agreement between people to do or not
do something
✔✔What is the definition of risk? - ✔✔Chance of financial loss
✔✔What is the principle of indemnity? - ✔✔The principle of indemnity ensures that
people receive the actual amount of their loss - no more, no less.
✔✔What is an insurance binder? - ✔✔A temporary agreement where the insurer agrees
to provide certain coverages pending the issuance of a policy
✔✔What is an agency agreement? - ✔✔A contract between the insurer and the
brokerage
ANSWERS SURE A+
✔✔Which of the following does not apply to the Statutory Conditions?
a. If the insured has a reasonable chance to protect property from loss but failed to do
so, it would not affect the claim settlement
b. When the insurer chooses to repair property, it must give written notice within 30
days of receiving the Proof of Loss
c. An agent of the insured can give notice or proof of loss if the insured is unable
d. After a loss has been reported, the insurer has the right of access to investigate the
loss - ✔✔a. If the insured has a reasonable chance to protect property from loss but
failed to do so, it would not affect the claim settlement
✔✔A contract is only legally enforceable when it has all of these 3 elements -
✔✔Insurable interest,
utmost good faith,
indemnity
✔✔Which of the following best reflects the duties of the broker?
a. A broker acts only in the best interest of the client
b. A broker must always place insurance with the cheapest insurer
c. A broker does not owe any duty to the insurer he/she represents
d. A broker must always be truthful and disclose all material facts about the client's risk
to the insurer - ✔✔d. A broker must always be truthful and disclose all material facts
about the client's risk to the insurer
✔✔What is the role of the broker in the insurance process? - ✔✔An intermediary
between the client and the insurer
✔✔The law requires that brokers exercise "reasonable skill, care and diligence",
otherwise errors and omissions claims may arise. The main reason for E&O claims is...
- ✔✔Failing to identify client's loss exposures and offering adequate coverage
✔✔The primary function of an underwriter is to... - ✔✔Select risks that are most likely to
be profitable for the insurer
, ✔✔When an underwriter looks at the financial and claims history of the applicant, they
are looking for...
a. Morale hazard
b. Moral hazard
c. Physical hazard
d. Risks - ✔✔b. Moral hazard
✔✔It is often said that property insurance policies are designed to insure against "direct
damage" only. Yesterday, a fire destroyed 65% of your client's apartment building. What
is the likely not covered in this situation? - ✔✔Loss of rental income
✔✔All property policies contain some conditions & warranties. Which of the following is
not true?
a. A condition is a requirement that the insured do or not do something
b. A claim is still valid despite a breach of condition if the loss was not caused by the
breach
c. A claim is still valid despite a breach of warranty by the insured as long as the breach
did not directly cause the loss
d. A warranty is a promise that certain facts are true and shall remain true for the
duration of the policy period - ✔✔c. A claim is still valid despite a breach of warranty by
the insured as long as the breach did not directly cause the loss
✔✔What is the definition of insurance? - ✔✔The undertaking by one person to
indemnify another against loss or liability in respect to a certain risk or peril
✔✔What is the definition of contract? - ✔✔An agreement between people to do or not
do something
✔✔What is the definition of risk? - ✔✔Chance of financial loss
✔✔What is the principle of indemnity? - ✔✔The principle of indemnity ensures that
people receive the actual amount of their loss - no more, no less.
✔✔What is an insurance binder? - ✔✔A temporary agreement where the insurer agrees
to provide certain coverages pending the issuance of a policy
✔✔What is an agency agreement? - ✔✔A contract between the insurer and the
brokerage
