CAIB 2 - Chapter 1 Questions And Answers Graded A+ 2024.

CAIB 2 - Chapter 1 Questions And Answers Graded A+ 2024. Explain "Scheduled Basis" - correct answer. Only the items listed on the policy will be insured Explain "Property of Every Description" Basis - correct answer. Building, stock and equipment are insured under a single limit of insurance Explain "All Property (Blanket)" Basis - correct answer. 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" - correct answer. 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" - correct answer. 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" - correct answer. 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 - correct answer. 1) Actual Cash Value 2) Replacement Value 3) Book Value Explain the traditional meaning of "ACV" - correct answer. repair or replacement cost of the lost or damaged property less the application of depreciation Describe the 2 Formula/Cost Approach Methods - correct answer. 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 - correct answer. 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? - correct answer. Book Value - because it's based on accounting functions only. What is "Re-Insurance" - correct answer. 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 - correct answer. The Lead Company 3 considerations used when determining amounts of indemnity - correct answer. 1) Actual Cash Value 2) the interest of the insured in the property 3) the amount of insurance as shown on the policy Which amount will be paid in the event of a loss? - correct answer. Whichever is the least Why do Co-Insurance Clauses contain waiver provisions? - correct answer. the application of co insurance is waived when the loss is the less than the amount indicated on the waiver - the reason for this is because the cost to determine the amounts in the co insurance clause would cause too much work and expense for the insured given the amount of the loss What are the provisions of the Waiver of Co Insurance Clauses? - correct answer. When losses are less than 2% of the amount of insurance or less than $5000, co insurance will not apply What is the purpose of "Stated Amount of Co Insurance Clauses" - correct answer. to replace the provisions of the standard co insurance clause with the requirements of the stated amount co insurance clause What are 3 requirements when the standard co insurance clause is replaced with the stated amount of co insurance clause? - correct answer. 1) Insureds must submit a statement of values indicating 100% of all property insured 2) Values indicated must be verified by an appraisal or other acceptable method 3) These values must be maintained throughout the policy term List 5 Reasons for exclusions and provide 2 examples for each - correct answer. 1) commercially uninsurable; war & nuclear accidents 2) May be catastrophic; Flood & EQ 3) Other insurance available; automobile & valuable papers 4) May be expected by the