CAIB 2 Practice Exam Questions with Verified Answers

CAIB 2 Practice Exam Questions with Verified Answers Waivers of Co-insurance clause are common on commercial property policies. What types of losses are applicable to this waiver of co-insurance? Is less than $5000 or Is less than 2% of the amount of insurance. (72,00 x 2%=1440) Identify 3 reasons why exclusions exist on commercial property policy. losses which are generally considered by insurers to be commercially insurable: 1. Deliberate acts of violence -war, rebellion 2. losses which are considered catastrophic, Earthquake, snow slides, landslides 3. more specialized policy forms exist - Auto, aircraft Commercial property policies may provide coverage from theft while property is an automobiles. What warranty will be included in commercial property policies when theft coverage is provided for property in automobiles? 1. Vehicle containing the property insured be equipped with a fully enclosed body or compartment 2. The doors are securely locked and the widow closed 3. Access or entry to the vehicle mu have been gained through the use of force Statutory Conditions or Commercial Property conditions Policy conditions. What are 3 additional conditions contained in a number of commercial property for and explain the effect of each? 1. Pair and Set - the undamaged property still has value will be deducted from claim payment 2. No benefit to Bailee - bailee must take care of the property of the other with ordinary Care 3. Sue and Labour - insured must take all reasonable action to recover stolen property Identify three things that a Survey does? 1. Assist in identification of losses or exposures 2. Helps to determine the coverages needed 3. Develops other underwriting information need by the insurer. What benefits would a checklist have in relation to the survey? 1. Alerts broker to possible losses or exposures 2. Ensures that needed coverages are not forgotten or ignored 3. Helps to reduce the potential for errors and omissions claim Identify the two types of depreciation used in the Formula/Cost approach and give an example for each: Straight line depreciation - is based on the number of years something could have reasonably been expected to function. A building that is 30 year old but can be used for another 30 years is 50% depreciated. Plateau accelerated depreciation- A property which is mostly productive in its early years. The greats depreciation will happen in the first few years. Once that certain age is reached the depreciation plateaus, example office equipment When is the Income Approach method most commonly employed? When a run down building is used for a business which is making a profit. The net annual rental income is determined and a capitalization factor applied to it to produce actual cash value amount. Identify three reasons why a Subscription Policy may be used: 1. The line of business is so specialized as to not be covered the insurer's treaty with its reinsurers 2. They type of risk is on which the insurer does not want to expose to reinsurance treaties 3. The limits do not exceed the insurer's net retention limits but are beyond what it is prepared to pay in a single claim Identify the three amounts to be considered when calculating the amount of payment as outlined in the Indemnity agreement and of the three amounts which one is payable? 1. Actual Cash Value 2. Insured's financial interest 3. Amount of insurance Which ever amount is lowest.