CAIB 2 Practice Exam Questions with Answers
Scheduled Coverage - ✔✔refers to policy on which coverage is provided only on that property
which is specifically identified or scheduled.
All Property - ✔✔refers to policy used to insure building, stock and equipment under a single
limit of insurance.
Tenants Improvements - ✔✔building improvements, alterations and 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 actual owner of such building
Actual cash value - ✔✔the replacement or repair cost less depreciation
Replacement value - ✔✔represents the costs to repair, replace or rebuild the lost or damaged
property without deduction for depreciation
Reinsurance - ✔✔involves an Insurer ceding part of the risk it has assumed to one or more
other insurers.
Subscription - ✔✔an insurance policy under which a group of Insurers has agreed to participate
in providing policy insurance coverages.
Condition - ✔✔is something imposed by the Insurer which requires the Insured to do or not to
do something.
Subrogation - ✔✔refers to the right of the Insurer to "step into the shoes" of the party whom it
has compensated and sue any party whom the compensated party could have sued.
, Warranty - ✔✔is a promise that certain facts are as they are represented to be and that they
will remain so.
Material fact - ✔✔a fact which if communicated to the Insurer would induce it either to decline
the insurance altogether, or not accept it unless a higher premium is paid.
Fraudulent - ✔✔to act wilfully, and with the specific intent to deceive or cheat
Void contract - ✔✔a void contract is one which has no "legal or binding force" and as such, "is
incapable of being enforced by law."
Fire resistive - ✔✔building which has met minimum standards in terms of hours it will
withstand a specific, carefully controlled test fire.
Non-combustible - ✔✔all structural members including floors, roofs and their supports are
constructed of steel, iron, concrete or other non-combustible materials. Exterior also required
to be of non-combustible construction. Falls just short of classifying as fire resistive.
Common hazards - ✔✔conditions common to all buildings which influence their potential for
loss.
Detachment - ✔✔refers to the proximity of the building insured 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 established
criteria which, in large part, is based on their probability for loss as a class.
Scheduled Coverage - ✔✔refers to policy on which coverage is provided only on that property
which is specifically identified or scheduled.
All Property - ✔✔refers to policy used to insure building, stock and equipment under a single
limit of insurance.
Tenants Improvements - ✔✔building improvements, alterations and 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 actual owner of such building
Actual cash value - ✔✔the replacement or repair cost less depreciation
Replacement value - ✔✔represents the costs to repair, replace or rebuild the lost or damaged
property without deduction for depreciation
Reinsurance - ✔✔involves an Insurer ceding part of the risk it has assumed to one or more
other insurers.
Subscription - ✔✔an insurance policy under which a group of Insurers has agreed to participate
in providing policy insurance coverages.
Condition - ✔✔is something imposed by the Insurer which requires the Insured to do or not to
do something.
Subrogation - ✔✔refers to the right of the Insurer to "step into the shoes" of the party whom it
has compensated and sue any party whom the compensated party could have sued.
, Warranty - ✔✔is a promise that certain facts are as they are represented to be and that they
will remain so.
Material fact - ✔✔a fact which if communicated to the Insurer would induce it either to decline
the insurance altogether, or not accept it unless a higher premium is paid.
Fraudulent - ✔✔to act wilfully, and with the specific intent to deceive or cheat
Void contract - ✔✔a void contract is one which has no "legal or binding force" and as such, "is
incapable of being enforced by law."
Fire resistive - ✔✔building which has met minimum standards in terms of hours it will
withstand a specific, carefully controlled test fire.
Non-combustible - ✔✔all structural members including floors, roofs and their supports are
constructed of steel, iron, concrete or other non-combustible materials. Exterior also required
to be of non-combustible construction. Falls just short of classifying as fire resistive.
Common hazards - ✔✔conditions common to all buildings which influence their potential for
loss.
Detachment - ✔✔refers to the proximity of the building insured 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 established
criteria which, in large part, is based on their probability for loss as a class.
