CAIB 1 UPDATED EXAM SCRIPT QUESTIONS AND
ANSWERS SURE A+
✔✔In Canada, the insurance industry is regulated on both a federal and provincial level.
The provincial government performs which of the following functions:
a. Supervising the terms and conditions of insurance contracts
b. Licensing insurance companies to allow them to do business in the province
c. Monitor the financial stability of insurers that are not federally licensed
d. All of the above
e. Only a and b - ✔✔d. All of the above
✔✔The financial solvency of insurers is critical. Solvency means... - ✔✔The ability of an
insurer to pay all insured losses
✔✔Both insurance companies and brokers act as fiduciaries. What is the fiduciary
responsibility of a broker in regards to commissions? - ✔✔Unearned commissions are
to be held in trust and paid back if the policy is cancelled before expiry
✔✔When does the Insurance Act dictate a contract of insurance takes effect?
a. 12:01 am standard time at the address of the named insured
b. 12:01 am standard time at the address of the risk location
c. 12:01 am local time at the address of the named insured
d. 12:01 am local time at the address of the insurance company - ✔✔a. 12:01 am
standard time at the address of the named insured
✔✔The removal clause is a common policy clause that requires insurers extend
coverage to another location where the insured's property is kept when...
a. The insured moved to a new residence 2 days ago and has not notified the insurer
b. The insured moved personal property to protect it from an incoming forest fire
c. Insured keeps some property at her vacation home during the summer
d. Insured keeps furniture and other items in a rented storage locker because she does
not have enough room at home - ✔✔b. The insured moved personal property to protect
it from an incoming forest fire
✔✔After the insurer had indemnified the insured for loss, the insurer has the legal right
to recover from the at fault party. This right is known as... - ✔✔The right of subrogation
, ✔✔The most basic form of coverage is coverage from fire losses. The Insurance Act in
Canada also ensures there is coverage for... - ✔✔Explosion (of natural, coal or
manufactured gas) and lightning (excluding damage to electrical devices)
✔✔You might have read that one of your statutory conditions is regarding
misrepresentation, which of the following statements is correct?
a. Withholding information about previous cancellations or refusals of insurance is OK
b. Statements made by the applicant which leads the insurer to believe a risk is better
than it actually is not OK
c. Any description of the property that is incorrect as long as it is small will not change
coverage
d. Statements made by the applicant which leads the insurer to believe a risk is worse
than it actually is not OK - ✔✔b. Statements made by the applicant which leads the
insurer to believe a risk is better than it actually is not OK
✔✔What is the definition of misrepresentation? - ✔✔A misstatement or fraudulent
omission of a material fact
✔✔Regarding the statutory condition around termination, which of the 4 provisions is
wrong?
a. Your client does not have to give the insurer any notice to cancel
b. On termination, the insured is not entitled to a premium refund
c. The insurer has the right to change the policy administration costs so refunds are
calculated on a short-rate basis
d. Written request for termination, signed by all parties named on the policy must be
provided to insurer - ✔✔b. On termination, the insured is not entitled to a premium
refund
✔✔Which statutory condition below is untrue?
a. Insurers only have an obligation to those parties named on the declaration page and
have insurable interest
b. A material change is a change that alters the risk in a way that increases potential for
loss
ANSWERS SURE A+
✔✔In Canada, the insurance industry is regulated on both a federal and provincial level.
The provincial government performs which of the following functions:
a. Supervising the terms and conditions of insurance contracts
b. Licensing insurance companies to allow them to do business in the province
c. Monitor the financial stability of insurers that are not federally licensed
d. All of the above
e. Only a and b - ✔✔d. All of the above
✔✔The financial solvency of insurers is critical. Solvency means... - ✔✔The ability of an
insurer to pay all insured losses
✔✔Both insurance companies and brokers act as fiduciaries. What is the fiduciary
responsibility of a broker in regards to commissions? - ✔✔Unearned commissions are
to be held in trust and paid back if the policy is cancelled before expiry
✔✔When does the Insurance Act dictate a contract of insurance takes effect?
a. 12:01 am standard time at the address of the named insured
b. 12:01 am standard time at the address of the risk location
c. 12:01 am local time at the address of the named insured
d. 12:01 am local time at the address of the insurance company - ✔✔a. 12:01 am
standard time at the address of the named insured
✔✔The removal clause is a common policy clause that requires insurers extend
coverage to another location where the insured's property is kept when...
a. The insured moved to a new residence 2 days ago and has not notified the insurer
b. The insured moved personal property to protect it from an incoming forest fire
c. Insured keeps some property at her vacation home during the summer
d. Insured keeps furniture and other items in a rented storage locker because she does
not have enough room at home - ✔✔b. The insured moved personal property to protect
it from an incoming forest fire
✔✔After the insurer had indemnified the insured for loss, the insurer has the legal right
to recover from the at fault party. This right is known as... - ✔✔The right of subrogation
, ✔✔The most basic form of coverage is coverage from fire losses. The Insurance Act in
Canada also ensures there is coverage for... - ✔✔Explosion (of natural, coal or
manufactured gas) and lightning (excluding damage to electrical devices)
✔✔You might have read that one of your statutory conditions is regarding
misrepresentation, which of the following statements is correct?
a. Withholding information about previous cancellations or refusals of insurance is OK
b. Statements made by the applicant which leads the insurer to believe a risk is better
than it actually is not OK
c. Any description of the property that is incorrect as long as it is small will not change
coverage
d. Statements made by the applicant which leads the insurer to believe a risk is worse
than it actually is not OK - ✔✔b. Statements made by the applicant which leads the
insurer to believe a risk is better than it actually is not OK
✔✔What is the definition of misrepresentation? - ✔✔A misstatement or fraudulent
omission of a material fact
✔✔Regarding the statutory condition around termination, which of the 4 provisions is
wrong?
a. Your client does not have to give the insurer any notice to cancel
b. On termination, the insured is not entitled to a premium refund
c. The insurer has the right to change the policy administration costs so refunds are
calculated on a short-rate basis
d. Written request for termination, signed by all parties named on the policy must be
provided to insurer - ✔✔b. On termination, the insured is not entitled to a premium
refund
✔✔Which statutory condition below is untrue?
a. Insurers only have an obligation to those parties named on the declaration page and
have insurable interest
b. A material change is a change that alters the risk in a way that increases potential for
loss
