5/12/25, 10:55 PM CAIB 2 - CHAPTER 1 EXAM (NEWEST VERSION) | ALL QUESTIONS AND CORRECT ANSWERS (DETAILED ANSWERS) | GR…
CAIB 2 - CHAPTER 1 EXAM (NEWEST VERSION) |
ALL QUESTIONS AND CORRECT ANSWERS
(DETAILED ANSWERS) | GRADED A+ | VERIFIED
ANSWERS | LATEST EXAM
1) Fixed structures located The five components found in the definition of
on the premises; "building" in commercial property policies.
2) Additions and
extensions communicating
and 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
of, and normal repairs and
minor alterations to the
building, or for building
services;
5) Growing plants, trees,
shrubs or flowers inside
the building used for
decorative purposes,
when the insured owns the
building.
1/16
,5/12/25, 10:55 PM CAIB 2 - CHAPTER 1 EXAM (NEWEST VERSION) | ALL QUESTIONS AND CORRECT ANSWERS (DETAILED ANSWERS) | GR…
1) All contents usual to the The three components of "equipment" found in
insured's business commercial policies.
(including furniture,
fittings, fixtures,
machinery, tools, etc.)
other than "building" or
"stock";
2) Similar property
belonging to others which
the insured is under
obligation to keep insured
or for which he is legally
liable;
3) Tenant's improvements,
which are defined as
building improvements,
alterations, and
betterments made at the
expense of the insured to
a "building" occupied but
not owned by the insured,
and which are not
otherwise insured.
1) Actual Cash Value The three ways property may be valued.
2) Replacement Value
3) Book Value.
The cost to repair or The traditional meaning of Actual Cash Value (ACV).
replace lost or damaged
property, less the
application of any
depreciation.
2/16
, 5/12/25, 10:55 PM CAIB 2 - CHAPTER 1 EXAM (NEWEST VERSION) | ALL QUESTIONS AND CORRECT ANSWERS (DETAILED ANSWERS) | GR…
1) Straight Line The two methods under the Formula/Cost Approach
Depreciation: applies Method to determine the Actual Cash Value of a
depreciation based on the building.
normal life expectancy of
the building;
2) Plateau Accelerated
Depreciation: applies a
large amount of
depreciation during the
building's early years
when its most useful, then
depreciation plateaus
(levels out).
A real estate appraiser The Market Value / Direct Sales Approach to
provides an expert determine the Actual Cash Value of a building.
opinion about the fair
market value of:
- the property before the
loss
- the property after the
loss
- the land.
The opinion is influenced
by the condition and
location of the building
compared to similar
properties recently sold in
the area.
With the help of a The Income Approach to determine the Actual Cash
qualified accountant, and Value of a building.
especially useful when
income is produced from
a dilapidated or run-down
building, a capitalization
factor is applied to the net
annual rental income.
3/16
CAIB 2 - CHAPTER 1 EXAM (NEWEST VERSION) |
ALL QUESTIONS AND CORRECT ANSWERS
(DETAILED ANSWERS) | GRADED A+ | VERIFIED
ANSWERS | LATEST EXAM
1) Fixed structures located The five components found in the definition of
on the premises; "building" in commercial property policies.
2) Additions and
extensions communicating
and 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
of, and normal repairs and
minor alterations to the
building, or for building
services;
5) Growing plants, trees,
shrubs or flowers inside
the building used for
decorative purposes,
when the insured owns the
building.
1/16
,5/12/25, 10:55 PM CAIB 2 - CHAPTER 1 EXAM (NEWEST VERSION) | ALL QUESTIONS AND CORRECT ANSWERS (DETAILED ANSWERS) | GR…
1) All contents usual to the The three components of "equipment" found in
insured's business commercial policies.
(including furniture,
fittings, fixtures,
machinery, tools, etc.)
other than "building" or
"stock";
2) Similar property
belonging to others which
the insured is under
obligation to keep insured
or for which he is legally
liable;
3) Tenant's improvements,
which are defined as
building improvements,
alterations, and
betterments made at the
expense of the insured to
a "building" occupied but
not owned by the insured,
and which are not
otherwise insured.
1) Actual Cash Value The three ways property may be valued.
2) Replacement Value
3) Book Value.
The cost to repair or The traditional meaning of Actual Cash Value (ACV).
replace lost or damaged
property, less the
application of any
depreciation.
2/16
, 5/12/25, 10:55 PM CAIB 2 - CHAPTER 1 EXAM (NEWEST VERSION) | ALL QUESTIONS AND CORRECT ANSWERS (DETAILED ANSWERS) | GR…
1) Straight Line The two methods under the Formula/Cost Approach
Depreciation: applies Method to determine the Actual Cash Value of a
depreciation based on the building.
normal life expectancy of
the building;
2) Plateau Accelerated
Depreciation: applies a
large amount of
depreciation during the
building's early years
when its most useful, then
depreciation plateaus
(levels out).
A real estate appraiser The Market Value / Direct Sales Approach to
provides an expert determine the Actual Cash Value of a building.
opinion about the fair
market value of:
- the property before the
loss
- the property after the
loss
- the land.
The opinion is influenced
by the condition and
location of the building
compared to similar
properties recently sold in
the area.
With the help of a The Income Approach to determine the Actual Cash
qualified accountant, and Value of a building.
especially useful when
income is produced from
a dilapidated or run-down
building, a capitalization
factor is applied to the net
annual rental income.
3/16
