CAIB 1 – Fundamentals of Insurance – Practice Exam with Questions and Answers
Insureds that are engaged in farming and derive an income from such operations must
purchase a farm insurance policy. Does the policy include a co-insurance clause? If so, what
type of property does the co-insurance apply to and the minimum requirements imposed under
the policy. Yes, co-insurance applies to major outbuildings and contents. The minimum
requirement is 80%, or 90% when coverage is on an "all risks" basis. Partial loss: Did/Should x
Loss = Settlement
Coverage for farm outbuildings is subject to the Deferred Loss Settlement Clause. Explain why
insurers have included this clause in the policy Designed by insurers to avoid paying the full
amount of insurance on outbuildings when they are not replaced after a loss.
The General Liability covered under the farm insurance policy includes a number of different
features. What is the coverage territory under the General Liability coverage? Coverage is
provided for losses occurring in Canada and the USA for:
i. Goods or products made or sold by the insured in the coverage territory;
ii. The activities of an insured person whose home is in the territory described but is away for a
short time on business relating to their operation;
iii. Personal and advertising injury offences that take place through the internet or similar
electronic means of communication.
The definition of "Persons Insured" is extended to include employees of the Named Insured.
Explain the meaning of "employee", and the types of employees insured. A person "while
acting within the scope of their (his) duties" and includes residence employees, farm employees
and volunteers.
Under the provisions of the Deferred Loss Settlement Clause how does the insurer proceed in
the event of a loss to an insured farm outbuilding? The Insurer will pay at the time of the
loss an initial amount of no more than 50% of the amount insured; the remaining 50% is
payable, plus interest, if:
i. The building is repaired or replaced with a building designed for the same purpose;
, ii. Repair or replacement is completed within nine months of the date of the loss or damage;
iii. The building is repaired or replaced within 200 feet of the building which was destroyed.
Identify the coverages provided under a farm insurance policy. Dwelling Building and
Personal Property, Major Outbuildings and Contents, Machinery and Equipment, General
Liability
Identify the legal principle upon which the entitlement is based and how the analysis is
conducted: The Principle of Indemnity. The analysis is based on lowest value after
calculating: ACV, interest of the insured in the property, the limit of insurance provided
Automobile insurance is compulsory in all provinces, which imposes a legal duty on every
person who operates a vehicle on public roadways to purchase the minimum coverages
required by law.
How automobile insurance is distributed varies by province. Identify where in Canada
compulsory automobile insurance is provided by private insurers under a Standard Policy Form
No. 1 - Owner's Form. The Standard Policy Form No. 1 - Owner's Form is issued by private
insurers in Alberta, the Atlantic Provinces, Yukon, and the Northwest Territories.
The S.P.F. No. 1 - Owner's Form includes Uninsured Motorist Coverage under either Accident
Benefits or Section D. Indicate the amount of coverage provided under the policy in the event
of injury or death caused by an uninsured or unidentified automobile. The amount of
coverage is the compulsory minimum limit for bodily injury applicable in the jurisdiction in
which the accident occurred, which is $200,000 except in Quebec and Nova Scotia.
Claims for bodily injury or death caused by an "unidentified automobile" are subject to a
number of conditions. State two of the conditions that apply to such a claim i. It must be
shown that the identity of either the owner or driver cannot be ascertained.
ii. The accident must be reported to authorities within 24 hours.
iii. A statement must be filed, under oath, with the insurer within 30 days.
Insureds that are engaged in farming and derive an income from such operations must
purchase a farm insurance policy. Does the policy include a co-insurance clause? If so, what
type of property does the co-insurance apply to and the minimum requirements imposed under
the policy. Yes, co-insurance applies to major outbuildings and contents. The minimum
requirement is 80%, or 90% when coverage is on an "all risks" basis. Partial loss: Did/Should x
Loss = Settlement
Coverage for farm outbuildings is subject to the Deferred Loss Settlement Clause. Explain why
insurers have included this clause in the policy Designed by insurers to avoid paying the full
amount of insurance on outbuildings when they are not replaced after a loss.
The General Liability covered under the farm insurance policy includes a number of different
features. What is the coverage territory under the General Liability coverage? Coverage is
provided for losses occurring in Canada and the USA for:
i. Goods or products made or sold by the insured in the coverage territory;
ii. The activities of an insured person whose home is in the territory described but is away for a
short time on business relating to their operation;
iii. Personal and advertising injury offences that take place through the internet or similar
electronic means of communication.
The definition of "Persons Insured" is extended to include employees of the Named Insured.
Explain the meaning of "employee", and the types of employees insured. A person "while
acting within the scope of their (his) duties" and includes residence employees, farm employees
and volunteers.
Under the provisions of the Deferred Loss Settlement Clause how does the insurer proceed in
the event of a loss to an insured farm outbuilding? The Insurer will pay at the time of the
loss an initial amount of no more than 50% of the amount insured; the remaining 50% is
payable, plus interest, if:
i. The building is repaired or replaced with a building designed for the same purpose;
, ii. Repair or replacement is completed within nine months of the date of the loss or damage;
iii. The building is repaired or replaced within 200 feet of the building which was destroyed.
Identify the coverages provided under a farm insurance policy. Dwelling Building and
Personal Property, Major Outbuildings and Contents, Machinery and Equipment, General
Liability
Identify the legal principle upon which the entitlement is based and how the analysis is
conducted: The Principle of Indemnity. The analysis is based on lowest value after
calculating: ACV, interest of the insured in the property, the limit of insurance provided
Automobile insurance is compulsory in all provinces, which imposes a legal duty on every
person who operates a vehicle on public roadways to purchase the minimum coverages
required by law.
How automobile insurance is distributed varies by province. Identify where in Canada
compulsory automobile insurance is provided by private insurers under a Standard Policy Form
No. 1 - Owner's Form. The Standard Policy Form No. 1 - Owner's Form is issued by private
insurers in Alberta, the Atlantic Provinces, Yukon, and the Northwest Territories.
The S.P.F. No. 1 - Owner's Form includes Uninsured Motorist Coverage under either Accident
Benefits or Section D. Indicate the amount of coverage provided under the policy in the event
of injury or death caused by an uninsured or unidentified automobile. The amount of
coverage is the compulsory minimum limit for bodily injury applicable in the jurisdiction in
which the accident occurred, which is $200,000 except in Quebec and Nova Scotia.
Claims for bodily injury or death caused by an "unidentified automobile" are subject to a
number of conditions. State two of the conditions that apply to such a claim i. It must be
shown that the identity of either the owner or driver cannot be ascertained.
ii. The accident must be reported to authorities within 24 hours.
iii. A statement must be filed, under oath, with the insurer within 30 days.
