CAIB 1 ACTUAL TEST QUESTIONS WITH
COMPLETE ANSWER KEY
●● SPECULATIVE RISK
Answer: the chance of financial loss or gain
●● PURE RISK
Answer: the chance of financial loss but no chance of financial gain
●● INSURANCE
Answer: the undertaking by one person to indemnify another person
against loss or liability for loss in respect of a certain risk or peril to
which the object of the insurance may be exposed...or to pay a sum of
money or other thing of value upon the happening of a certain event
●● CONTRACT
Answer: an agreement between two or more persons which creates an
obligation to do or not to do a particular thing
●● CONSIDERATION
Answer: an exchange or something of value between parties
●● INSURABLE INTEREST
, Answer: onr has an insurable interest in the subject matter of the
insurance when they will suffer financially by a loss
●● UTMOST GOOD FAITH
Answer: the law requires insurance contracts maintain a higher standard
of honesty than is needed of other contracts. The duty applies to the
insured, the insurer and the broker
●● INDEMNITY
Answer: application of the principle of indemnity ensures people receive
the actual amount of their loss no more and no less
●● INSURANCE BINDER
Answer: a temporary agreement in which the insurer agrees to provide
certain coverages pending the issuance of the policy
●● AGENCY AGREEMENT
Answer: a written agreeement or contract between the insurer and the
brokerage which acknowledges their relationship
●● VOID CONTRACT
Answer: one which is unable in law to support the purpose for which it
was intended. Such contracts are deemed never to have existed
COMPLETE ANSWER KEY
●● SPECULATIVE RISK
Answer: the chance of financial loss or gain
●● PURE RISK
Answer: the chance of financial loss but no chance of financial gain
●● INSURANCE
Answer: the undertaking by one person to indemnify another person
against loss or liability for loss in respect of a certain risk or peril to
which the object of the insurance may be exposed...or to pay a sum of
money or other thing of value upon the happening of a certain event
●● CONTRACT
Answer: an agreement between two or more persons which creates an
obligation to do or not to do a particular thing
●● CONSIDERATION
Answer: an exchange or something of value between parties
●● INSURABLE INTEREST
, Answer: onr has an insurable interest in the subject matter of the
insurance when they will suffer financially by a loss
●● UTMOST GOOD FAITH
Answer: the law requires insurance contracts maintain a higher standard
of honesty than is needed of other contracts. The duty applies to the
insured, the insurer and the broker
●● INDEMNITY
Answer: application of the principle of indemnity ensures people receive
the actual amount of their loss no more and no less
●● INSURANCE BINDER
Answer: a temporary agreement in which the insurer agrees to provide
certain coverages pending the issuance of the policy
●● AGENCY AGREEMENT
Answer: a written agreeement or contract between the insurer and the
brokerage which acknowledges their relationship
●● VOID CONTRACT
Answer: one which is unable in law to support the purpose for which it
was intended. Such contracts are deemed never to have existed
