CAIB 2 - Chapter 1 Questions and Answers Already Passed

CAIB 2 - Chapter 1 Questions and Answers Already Passed Explain "Scheduled Basis" Only the items listed on the policy will be insured Explain "Property of Every Description" Basis Building, stock and equipment are insured under a single limit of insurance Explain "All Property (Blanket)" Basis All property owned by the insured is insured under a single limit of insurance - this can include property at different locations and may be subject to co insurance Identify 5 components found in the definition of "Building" 1) fixed structures pertaining to the building 2) additions and extensions in contact with the building 3) permanent fitting and fixtures attached to and forming part of the building 4) materials, equipment and supplies on the premises for maintenance and normal repairs or minor alterations 5) trees, shrubs, plants and flowers inside the building and used for decorative purposes Identify 3 components found in the definition of "Stock" 1) merchandise of every description usual to the insureds' business 2) packing, wrapping and advertising materials 3) similar property belonging to others which the insured is under obligation to keep insured or for which they are legally liable for Identify components found in the definition of "Equipment" 1) generally all contents usual to the insureds business other than stock and building 2) similar property belonging to others which the insured is under obligation to keep insured or for which they are legally liable for 3) tenants improvements which are defined as building improvements and are made at the expense of the insured List 3 ways property can be valued 1) Actual Cash Value 2) Replacement Value 3) Book Value Explain the traditional meaning of "ACV" repair or replacement cost of the lost or damaged property less the application of depreciation Describe the 2 Formula/Cost Approach Methods Straight Line Depreciation; applies depreciation based on normal life expectancy of buildings. Plateau Accelerated Depreciation; applies large amounts of depreciation during the first few years then plateaus or levels out Describe the difference between ACV and Replacement Value Replacement Value is different than ACV because there is no deduction for depreciation Which method used to value property is the least appropriate for insurance & why? Book Value - because it's based on accounting functions only. What is "Re-Insurance" Involves an insurer "ceding" part of the risk to one or more other insurers Identify the company which assumes the greatest portion of the account The Lead Company 3 considerations used when determining