CAIB 1 - CHAPTER 1:
INTRODUCTION TO GENERAL
INSURANCE EXAM 100% SOLVED
Define in pure insurance terms "risk" - correct answers -Chance of financial loss to
an object of insurance
List 3 categories of risk generally faced by people - correct answers -1. Property
2. Personal
3. Liability
State 4 possible options people can choose to deal with risk and give a brief
explanation and example of each - correct answers -1. Avoid the risk - rent rather
than buy
2. Retain the risk - self insurance or share risk through deductibles
3. Control the risk - loss control measures
4. Transfer the risk - purchase insurance
TIP: Avoid to retain control
Give 2 examples of loss control measures that can be taken to reduce the frequency
and severity of losses - correct answers -1. Install intrusion detection equipment
, 2. Install fire detection equipment
State 2 reasons why loss control measures are not a total solution in eliminating
financial loss - correct answers -1. Equipment are not guaranteed to work 100% of
the time
2. Some losses cannot be controlled like hail or lightning
Explain, using an example, "speculative risk" - correct answers -Chance of financial
loss or gain like gambling
Explain, using an example, "pure risk" - correct answers -Chance of financial loss
only like owning a building that could burn down
Which of the following types of risk insurers will not provide an insurance policy for?
1. Speculative Risk
2. Pure Risk - correct answers -Speculative Risk
A contract is an agreement between two or more persons which creates an
obligation to do or not to do a particular thing. All contracts contain 5 elements.
Identify and explain these 5 elements. - correct answers -1. Acceptance
- a meeting of minds on the subject of matter and terms of the contract
2. Consideration
- one party gives something of value and the other returns a promise, performs an
act or agrees not to perform an act
3. Legality of Object
- contract's purpose which is contrary to public policy is not enforceable at law
4. Legal Capacity of Parties
- contract is only enforceable if the parties are competent or have legal capacity
5. Genuine Intention
- contract is only enforceable only when it can be shown that the parties actually
intended to enter into a contract
TIP: We must ACCEPT after CONSIDERING the LEGALITY OF OBJECT and the
LEGAL CAPACITY OF PARTIES with GENUINE INTENTION.
List 2 items that are required for a proper agreement, or meeting of the minds, to be
valid - correct answers -1. Offer made
2. Acceptance of offer
Is it necessary to put in writing that the client has agreed to the offer of an agreement
- correct answers -No
What obligation and/or time constraint is upon the applicant for insurance when a
policy is issued differently than requested? - correct answers -2 weeks
INTRODUCTION TO GENERAL
INSURANCE EXAM 100% SOLVED
Define in pure insurance terms "risk" - correct answers -Chance of financial loss to
an object of insurance
List 3 categories of risk generally faced by people - correct answers -1. Property
2. Personal
3. Liability
State 4 possible options people can choose to deal with risk and give a brief
explanation and example of each - correct answers -1. Avoid the risk - rent rather
than buy
2. Retain the risk - self insurance or share risk through deductibles
3. Control the risk - loss control measures
4. Transfer the risk - purchase insurance
TIP: Avoid to retain control
Give 2 examples of loss control measures that can be taken to reduce the frequency
and severity of losses - correct answers -1. Install intrusion detection equipment
, 2. Install fire detection equipment
State 2 reasons why loss control measures are not a total solution in eliminating
financial loss - correct answers -1. Equipment are not guaranteed to work 100% of
the time
2. Some losses cannot be controlled like hail or lightning
Explain, using an example, "speculative risk" - correct answers -Chance of financial
loss or gain like gambling
Explain, using an example, "pure risk" - correct answers -Chance of financial loss
only like owning a building that could burn down
Which of the following types of risk insurers will not provide an insurance policy for?
1. Speculative Risk
2. Pure Risk - correct answers -Speculative Risk
A contract is an agreement between two or more persons which creates an
obligation to do or not to do a particular thing. All contracts contain 5 elements.
Identify and explain these 5 elements. - correct answers -1. Acceptance
- a meeting of minds on the subject of matter and terms of the contract
2. Consideration
- one party gives something of value and the other returns a promise, performs an
act or agrees not to perform an act
3. Legality of Object
- contract's purpose which is contrary to public policy is not enforceable at law
4. Legal Capacity of Parties
- contract is only enforceable if the parties are competent or have legal capacity
5. Genuine Intention
- contract is only enforceable only when it can be shown that the parties actually
intended to enter into a contract
TIP: We must ACCEPT after CONSIDERING the LEGALITY OF OBJECT and the
LEGAL CAPACITY OF PARTIES with GENUINE INTENTION.
List 2 items that are required for a proper agreement, or meeting of the minds, to be
valid - correct answers -1. Offer made
2. Acceptance of offer
Is it necessary to put in writing that the client has agreed to the offer of an agreement
- correct answers -No
What obligation and/or time constraint is upon the applicant for insurance when a
policy is issued differently than requested? - correct answers -2 weeks
