CAIB 1 PRACTICE EXAM 2026 UPDATE
QUESTIONS AND CORRECT VERIFIED
ANSWERS ALREADY GRADED A+
(BRAND NEW VISION)
What is the difference between a direct loss and an indirect loss? - ans-A
direct loss occurs when a peril directly attacks the object of
insurance. Indirect losses are losses that arise as a consequence
of a direct loss
What is a valued policy? - ans-This is where the insured and insurer
agree on the cash value of the property. If a loss occurs, this is
the amount that would be paid
What is insurable interest? - ans-One has insurable interest if they
would suffer financially from a loss
What is utmost good faith? - ans-With insurance contracts, you must
maintain a higher standard of honesty than with other contracts.
This applies to the insured, insurer and the broker
What is a fiduciary? - ans-Someone who has a special position of
trust when handing the affairs or funds of another
What is the difference between a friendly fire and a hostile fire? - ans-A
friendly fire is a fire contained in its proper receptacle. Once that
fire passes outside its boundaries, it becomes a hostile fire. (ie. a
spark escapes the fireplace and burns the carpet)
What is the difference between pro-rata and short rate forms of premium
return calculation? - ans-Pro-rata means calculating the premium
refund by dividing the amount of premium paid by the number of
,days left remaining on the policy. Short rate is pro-rata minus any
administrative charges or cancellation penalty
What is the insured's responsibility when it comes to providing notice of
loss? - ans-The insured or his representative must immediately
report the loss to the insurer in writing
What is proof of loss? - ans-A formal verification, under oath, of the
details and amounts claimed
What is fraud? - ans-A deliberate attempt to deceive with the aim
of financial gain
What is a deductible and why does it exist? - ans-The amount the
insured is required to absorb for each loss before insurer pays
out. A deductible exists to reduce the number of petty claims
Explain the idea of subrogation - ans-When an insurer pays a claim for
a loss caused by a 3rd party, the insurer is allowed to place itself
"into the insured's shoes" and take on their legal rights (ie. to sue
the responsible party)
What is considered "personal property? - ans-Contents of the dwelling,
personal property used by insured while on premises and
contents usual to the ownership/maintenance of the dwelling
What is the definition of a vacant property? - ans-All occupants have
moved out with no intention of returning and no new occupants
What is theft? - ans-All means of taking property without owner's
consent
, What is an endorsement? - ans-A written agreement between the
insured and the insurer to change some terms of the insurance
contract
What is the difference between criminal law and civil law? - ans-Criminal
law deals with wrongs against society. Civil law is for disputes between
individuals/legal entities
What is a tort? - ans-A wrong done by another person's breach of
legal duty
Provide 3 examples of tort - ans-Trespass,
nuisance,
defamation,
false arrest,
invasion of privacy,
or
negligence
3 elements of a tort - ans-Duty owed,
duty breached
& damages resulted (proximately)
Which type of tort is insurable? - ans-Unintentional torts
What is strict liability and when does it apply? - ans-Strict liability
assumes a person is guilty until proven innocent. This typically
applies to cases where the person is doing something inherently
dangerous
QUESTIONS AND CORRECT VERIFIED
ANSWERS ALREADY GRADED A+
(BRAND NEW VISION)
What is the difference between a direct loss and an indirect loss? - ans-A
direct loss occurs when a peril directly attacks the object of
insurance. Indirect losses are losses that arise as a consequence
of a direct loss
What is a valued policy? - ans-This is where the insured and insurer
agree on the cash value of the property. If a loss occurs, this is
the amount that would be paid
What is insurable interest? - ans-One has insurable interest if they
would suffer financially from a loss
What is utmost good faith? - ans-With insurance contracts, you must
maintain a higher standard of honesty than with other contracts.
This applies to the insured, insurer and the broker
What is a fiduciary? - ans-Someone who has a special position of
trust when handing the affairs or funds of another
What is the difference between a friendly fire and a hostile fire? - ans-A
friendly fire is a fire contained in its proper receptacle. Once that
fire passes outside its boundaries, it becomes a hostile fire. (ie. a
spark escapes the fireplace and burns the carpet)
What is the difference between pro-rata and short rate forms of premium
return calculation? - ans-Pro-rata means calculating the premium
refund by dividing the amount of premium paid by the number of
,days left remaining on the policy. Short rate is pro-rata minus any
administrative charges or cancellation penalty
What is the insured's responsibility when it comes to providing notice of
loss? - ans-The insured or his representative must immediately
report the loss to the insurer in writing
What is proof of loss? - ans-A formal verification, under oath, of the
details and amounts claimed
What is fraud? - ans-A deliberate attempt to deceive with the aim
of financial gain
What is a deductible and why does it exist? - ans-The amount the
insured is required to absorb for each loss before insurer pays
out. A deductible exists to reduce the number of petty claims
Explain the idea of subrogation - ans-When an insurer pays a claim for
a loss caused by a 3rd party, the insurer is allowed to place itself
"into the insured's shoes" and take on their legal rights (ie. to sue
the responsible party)
What is considered "personal property? - ans-Contents of the dwelling,
personal property used by insured while on premises and
contents usual to the ownership/maintenance of the dwelling
What is the definition of a vacant property? - ans-All occupants have
moved out with no intention of returning and no new occupants
What is theft? - ans-All means of taking property without owner's
consent
, What is an endorsement? - ans-A written agreement between the
insured and the insurer to change some terms of the insurance
contract
What is the difference between criminal law and civil law? - ans-Criminal
law deals with wrongs against society. Civil law is for disputes between
individuals/legal entities
What is a tort? - ans-A wrong done by another person's breach of
legal duty
Provide 3 examples of tort - ans-Trespass,
nuisance,
defamation,
false arrest,
invasion of privacy,
or
negligence
3 elements of a tort - ans-Duty owed,
duty breached
& damages resulted (proximately)
Which type of tort is insurable? - ans-Unintentional torts
What is strict liability and when does it apply? - ans-Strict liability
assumes a person is guilty until proven innocent. This typically
applies to cases where the person is doing something inherently
dangerous
