CAIB 2 Practice Exam Questions with Answers
Detachment - ✔✔refers to the proximity of the building or containing the property insured to
other commercially rated buildings
Adverse Selection - ✔✔occurs when the applicants for insurance are largely those most likely to
suffer a loss
Risk Classification - ✔✔refers to the grouping or classifying of risks according to the established
criteria which, in large part, is based on their probability for a loss as a class.
soft market - ✔✔characterized by intense competition between insurers. as a result, rates tend
to be low.
hard market - ✔✔occurs when low profit margins force out some of the competition. as a
result, insurers use more disciplined underwriting approach. the insured normally receives little
or nothing in the way of discounts
hazard - ✔✔a condition which may cause a peril to occur
physical hazard - ✔✔condition relating to the use of tangible property which could cause a peril
to occur
moral hazard - ✔✔subjective characteristics of the applicant that could cause a peril to occur
Morale Hazard - ✔✔deal with the attitude of the client
accommodation business - ✔✔business which is marginal or substandard but which the insurer
agree to accept as a favour to the broker
, supporting business - ✔✔the existence of other insurance policies the applicant has with the
same insurer
Vacant - ✔✔Empty or when the normal occupant is absent and the contents have been
removed.
unoccupied - ✔✔lack of habitual presence of human beings; or
when the premises are complete with it's contents, except that such person who normally
occupies the premises is temporarily away.
loading - ✔✔an additional rate charged over and above the fire rate
centrifugal - ✔✔the inertia of a body that tends to move it away from the centre around which
it revolves
mechanical breakdown - ✔✔'a failure in the working mechanism of the machinery.. a functional
defect in the moving parts of the equipment which causes the latter to cease functioning or to
function improperly
scheduled coverage - ✔✔refers to policy on which coverage is provided only on that property
which is specifically identified or scheduled
all property - ✔✔policy used to insure building, stock and equipment under a single limit of
insurance
tenants improvements - ✔✔building improvements, alterations or betterments made at the
expense of, or purchased by the insured to a building occupied by the insured and which are
not otherwise insured, provided the insured is not the owner of such building
Detachment - ✔✔refers to the proximity of the building or containing the property insured to
other commercially rated buildings
Adverse Selection - ✔✔occurs when the applicants for insurance are largely those most likely to
suffer a loss
Risk Classification - ✔✔refers to the grouping or classifying of risks according to the established
criteria which, in large part, is based on their probability for a loss as a class.
soft market - ✔✔characterized by intense competition between insurers. as a result, rates tend
to be low.
hard market - ✔✔occurs when low profit margins force out some of the competition. as a
result, insurers use more disciplined underwriting approach. the insured normally receives little
or nothing in the way of discounts
hazard - ✔✔a condition which may cause a peril to occur
physical hazard - ✔✔condition relating to the use of tangible property which could cause a peril
to occur
moral hazard - ✔✔subjective characteristics of the applicant that could cause a peril to occur
Morale Hazard - ✔✔deal with the attitude of the client
accommodation business - ✔✔business which is marginal or substandard but which the insurer
agree to accept as a favour to the broker
, supporting business - ✔✔the existence of other insurance policies the applicant has with the
same insurer
Vacant - ✔✔Empty or when the normal occupant is absent and the contents have been
removed.
unoccupied - ✔✔lack of habitual presence of human beings; or
when the premises are complete with it's contents, except that such person who normally
occupies the premises is temporarily away.
loading - ✔✔an additional rate charged over and above the fire rate
centrifugal - ✔✔the inertia of a body that tends to move it away from the centre around which
it revolves
mechanical breakdown - ✔✔'a failure in the working mechanism of the machinery.. a functional
defect in the moving parts of the equipment which causes the latter to cease functioning or to
function improperly
scheduled coverage - ✔✔refers to policy on which coverage is provided only on that property
which is specifically identified or scheduled
all property - ✔✔policy used to insure building, stock and equipment under a single limit of
insurance
tenants improvements - ✔✔building improvements, alterations or betterments made at the
expense of, or purchased by the insured to a building occupied by the insured and which are
not otherwise insured, provided the insured is not the owner of such building
