CAIB 2 EXAM KEY CONCEPTS AND PRACTICE
QUESTIONS
◉ All Property.
Answer: refers to policy used to insure building, stock and
equipment under a single limit of insurance.
◉ Tenants Improvements.
Answer: 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.
Answer: the replacement or repair cost less depreciation
◉ Replacement value.
Answer: represents the costs to repair, replace or rebuild the lost or
damaged property without deduction for depreciation
◉ Reinsurance.
Answer: involves an Insurer ceding part of the risk it has assumed to
one or more other insurers.
,◉ Subscription.
Answer: an insurance policy under which a group of Insurers has
agreed to participate in providing policy insurance coverages.
◉ Condition.
Answer: is something imposed by the Insurer which requires the
Insured to do or not to do something.
◉ Subrogation.
Answer: 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.
Answer: is a promise that certain facts are as they are represented to
be and that they will remain so.
◉ Material fact.
Answer: 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.
, Answer: to act wilfully, and with the specific intent to deceive or
cheat
◉ Void contract.
Answer: a void contract is one which has no "legal or binding force"
and as such, "is incapable of being enforced by law."
◉ Fire resistive.
Answer: building which has met minimum standards in terms of
hours it will withstand a specific, carefully controlled test fire.
◉ Non-combustible.
Answer: 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.
Answer: conditions common to all buildings which influence their
potential for loss.
◉ Detachment.
QUESTIONS
◉ All Property.
Answer: refers to policy used to insure building, stock and
equipment under a single limit of insurance.
◉ Tenants Improvements.
Answer: 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.
Answer: the replacement or repair cost less depreciation
◉ Replacement value.
Answer: represents the costs to repair, replace or rebuild the lost or
damaged property without deduction for depreciation
◉ Reinsurance.
Answer: involves an Insurer ceding part of the risk it has assumed to
one or more other insurers.
,◉ Subscription.
Answer: an insurance policy under which a group of Insurers has
agreed to participate in providing policy insurance coverages.
◉ Condition.
Answer: is something imposed by the Insurer which requires the
Insured to do or not to do something.
◉ Subrogation.
Answer: 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.
Answer: is a promise that certain facts are as they are represented to
be and that they will remain so.
◉ Material fact.
Answer: 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.
, Answer: to act wilfully, and with the specific intent to deceive or
cheat
◉ Void contract.
Answer: a void contract is one which has no "legal or binding force"
and as such, "is incapable of being enforced by law."
◉ Fire resistive.
Answer: building which has met minimum standards in terms of
hours it will withstand a specific, carefully controlled test fire.
◉ Non-combustible.
Answer: 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.
Answer: conditions common to all buildings which influence their
potential for loss.
◉ Detachment.
