CAIB 2 EXAM ESSENTIAL STUDY QUESTIONS
AND ANSWERS
◉ Reinsurance.
Answer: involves an insurer ceding part of the risk it has assumed to
one or more other insurers
◉ Supporting Business.
Answer: refers to the existence of other insurance policies the
applicant has with the same insurer
◉ Hard Market.
Answer: occurs when low profit margins force out some of the
competition; remaining insurers usually have enough business to
enable them to be selective about the kinds of property they insure
◉ Loading.
Answer: additional charge for extra coverage above the fire rate
◉ Temporary Location.
Answer: equipment/stock is at a temporary location when it is not
at any location specified on the policy, not in transit and not at any
,location owned, rented or controlled in whole or in part by the
insured
◉ Private Carriers.
Answer: those who haul their own goods, or goods entrusted to
them as bailees or lessees, and includes shippers who own or lease
their vehicles and carry their own goods
◉ Area Protection.
Answer: used to guard the interior of buildings; main purpose is to
restrict unauthorized entry into areas where valuable property is
being stored
◉ Line Security.
Answer: the ability of the telephone line to withstand tampering
◉ Fixed Expenses.
Answer: expenses that continue during the period of the
interruption (mortgage interest, property taxes, etc.)
◉ Adverse Selection.
Answer: occurs when the applicants for insurance are largely those
most likely to suffer a loss
, ◉ Contributing Properties.
Answer: a business on whom the insured relies on for their
continued operation as a manufacturer or supplier for materials or
goods
◉ Removal Clause.
Answer: An extension of coverage in the Fire Policy that responds
when property was necessarily removed to protect insured property
from loss or further loss.
◉ Broad Form Policy.
Answer: The most extensive standard coverage form available that
excludes all losses that are partially or totally in the Insured's
control and includes losses directly caused by a Named Peril.
◉ Expediting Expenses.
Answer: Payments to the Insured to help them return to business as
quickly as possible, paid out under the Boiler and Machinery policies
for reasonable expenses incurred in making necessary temporary
repairs and expediting permanent repairs.
◉ Consequential Loss Assumption Clause.
Answer: Covers loss to stock due to a change in temperature, which
was a result of damage to the cooling apparatus.
AND ANSWERS
◉ Reinsurance.
Answer: involves an insurer ceding part of the risk it has assumed to
one or more other insurers
◉ Supporting Business.
Answer: refers to the existence of other insurance policies the
applicant has with the same insurer
◉ Hard Market.
Answer: occurs when low profit margins force out some of the
competition; remaining insurers usually have enough business to
enable them to be selective about the kinds of property they insure
◉ Loading.
Answer: additional charge for extra coverage above the fire rate
◉ Temporary Location.
Answer: equipment/stock is at a temporary location when it is not
at any location specified on the policy, not in transit and not at any
,location owned, rented or controlled in whole or in part by the
insured
◉ Private Carriers.
Answer: those who haul their own goods, or goods entrusted to
them as bailees or lessees, and includes shippers who own or lease
their vehicles and carry their own goods
◉ Area Protection.
Answer: used to guard the interior of buildings; main purpose is to
restrict unauthorized entry into areas where valuable property is
being stored
◉ Line Security.
Answer: the ability of the telephone line to withstand tampering
◉ Fixed Expenses.
Answer: expenses that continue during the period of the
interruption (mortgage interest, property taxes, etc.)
◉ Adverse Selection.
Answer: occurs when the applicants for insurance are largely those
most likely to suffer a loss
, ◉ Contributing Properties.
Answer: a business on whom the insured relies on for their
continued operation as a manufacturer or supplier for materials or
goods
◉ Removal Clause.
Answer: An extension of coverage in the Fire Policy that responds
when property was necessarily removed to protect insured property
from loss or further loss.
◉ Broad Form Policy.
Answer: The most extensive standard coverage form available that
excludes all losses that are partially or totally in the Insured's
control and includes losses directly caused by a Named Peril.
◉ Expediting Expenses.
Answer: Payments to the Insured to help them return to business as
quickly as possible, paid out under the Boiler and Machinery policies
for reasonable expenses incurred in making necessary temporary
repairs and expediting permanent repairs.
◉ Consequential Loss Assumption Clause.
Answer: Covers loss to stock due to a change in temperature, which
was a result of damage to the cooling apparatus.
