Page 1 of 145
CAIB 2 EXAM AND PRACTICE EXAM NEWEST 2025
TEST BANK| COMPLETE 450 REAL EXAM QUESTIONS
AND CORRECT DETAILED ANSWERS (VERIFIED
ANSWERS) GRADED A+| CAIB 2 ACTUAL EXAM TEST
BANK (BRAND NEW!!)
The insurance industry relies on the classifications developed by the
following body when determining the appropriateness of the protection
provided to property by safes,vaults and other:
A. IAO
B. ULC
C. IBC
D. Canada Safety Council - Correct Answer -B. ULC
What is a hazard and what are 3 types? define them - ANSWER -
Hazard: a condition that may cause a peril to occur
Physical hazard: a condition relating to use of tangible property that may
cause peril to occur
moral hazard: characteristics of the applicant that may cause a peril to
occur
morale hazard: attitude of the client
What are 2 general ways property can be covered? explain them. -
ANSWER -Scheduled coverage: covers only property specifically
identified
pg. 1
,Page 2 of 145
All property: insures building, stock or equipment under a single limit of
insurance
What is a supporting business? - ANSWER -good business (risks) that a
broker gives to insurer. The insurer will take this into consideration to
support a broker's bid to insure a substandard risk
What is accommodation business? - ANSWER -normally substandard
risk that the insurer decides to take because of their positive relationship
with the broker (ie they have good supporting business)
Please explain straight line depreciation in the context of ACV -
ANSWER -assumes that depreciation happens at a constant rate (linear)
What is the main difference between ACV and RC - ANSWER -
Replacement value does not take depreciation into consideration
Please explain plateau accelerated depreciation in the context of ACV -
ANSWER -this method of calculation assumes that the rate of
depreciation is greatest in the first few years before eventually tapering
off
What is the income method of calculating values and for what types of
property is it typically used? - ANSWER -income times cap rate.
typically used for dilapidated income properties
pg. 2
,Page 3 of 145
What is the main difference between reinsurance and a subscription
policy? - ANSWER -reinsurance: the insurer cedes part of the risk to
other insurers. the original insurer is the lead insurer handling policy and
claims
subscription: a group of insurers agreed to participate in an insurance
coverage
What does the extra expenses end't o and provide some examples of
what it would cover - ANSWER -the insurer will pay extra expenses
needed to continue the business after a loss. Covers: OT salaries, renting
a temp premises, installing phones
When will an insurer pay expediting expenses? - ANSWER -When the
expenses reduce the overall cost of the claim for the insurer
There are 3 ways property may be valued in the insurance context which
of the following methods entails: repair or replacement of lost or
damaged property less than the application of any depreciation? -
ANSWER -ACV
What are 3 characteristics of a reinsurance policy? - ANSWER -1. all
participants share losses and premiums
2. it is a contract between an insurer and their reinsurers
3. controlled and claims paid by primary insurer`
pg. 3
, Page 4 of 145
When is a subscription policy used? - ANSWER -1. when that line of
business isn't covered under a reinsurance treaty
2. to protect reinsurers from the risk
3. the per-claim limit is too big to absorb in 1 loss (lead insurer pays
claim first in reinsurance)
4. broker wants to spread risk among markets (keeps insurers happy:
accommodation business)
Why is a reinsurance policy typically preferable over a subscription
policy? - ANSWER -subscription policies are negotiated with each
participating insurer
What parties cannot be subrogated against? - ANSWER -A named
insured or anyone with insurable interest in the property
What are bills of lading and explain them - ANSWER -Standard bill of
lading: used to reflect the amount a common carrier would be liable for
under tariffs
Valued bill: requested by the owner when the value of the goods exceeds
the standard bill's value
Released bill: releases a carrier from any liability
What are the types of protection and describe them - ANSWER -1.
perimeter protection: methods to secure access to premises when
business is closed
pg. 4
CAIB 2 EXAM AND PRACTICE EXAM NEWEST 2025
TEST BANK| COMPLETE 450 REAL EXAM QUESTIONS
AND CORRECT DETAILED ANSWERS (VERIFIED
ANSWERS) GRADED A+| CAIB 2 ACTUAL EXAM TEST
BANK (BRAND NEW!!)
The insurance industry relies on the classifications developed by the
following body when determining the appropriateness of the protection
provided to property by safes,vaults and other:
A. IAO
B. ULC
C. IBC
D. Canada Safety Council - Correct Answer -B. ULC
What is a hazard and what are 3 types? define them - ANSWER -
Hazard: a condition that may cause a peril to occur
Physical hazard: a condition relating to use of tangible property that may
cause peril to occur
moral hazard: characteristics of the applicant that may cause a peril to
occur
morale hazard: attitude of the client
What are 2 general ways property can be covered? explain them. -
ANSWER -Scheduled coverage: covers only property specifically
identified
pg. 1
,Page 2 of 145
All property: insures building, stock or equipment under a single limit of
insurance
What is a supporting business? - ANSWER -good business (risks) that a
broker gives to insurer. The insurer will take this into consideration to
support a broker's bid to insure a substandard risk
What is accommodation business? - ANSWER -normally substandard
risk that the insurer decides to take because of their positive relationship
with the broker (ie they have good supporting business)
Please explain straight line depreciation in the context of ACV -
ANSWER -assumes that depreciation happens at a constant rate (linear)
What is the main difference between ACV and RC - ANSWER -
Replacement value does not take depreciation into consideration
Please explain plateau accelerated depreciation in the context of ACV -
ANSWER -this method of calculation assumes that the rate of
depreciation is greatest in the first few years before eventually tapering
off
What is the income method of calculating values and for what types of
property is it typically used? - ANSWER -income times cap rate.
typically used for dilapidated income properties
pg. 2
,Page 3 of 145
What is the main difference between reinsurance and a subscription
policy? - ANSWER -reinsurance: the insurer cedes part of the risk to
other insurers. the original insurer is the lead insurer handling policy and
claims
subscription: a group of insurers agreed to participate in an insurance
coverage
What does the extra expenses end't o and provide some examples of
what it would cover - ANSWER -the insurer will pay extra expenses
needed to continue the business after a loss. Covers: OT salaries, renting
a temp premises, installing phones
When will an insurer pay expediting expenses? - ANSWER -When the
expenses reduce the overall cost of the claim for the insurer
There are 3 ways property may be valued in the insurance context which
of the following methods entails: repair or replacement of lost or
damaged property less than the application of any depreciation? -
ANSWER -ACV
What are 3 characteristics of a reinsurance policy? - ANSWER -1. all
participants share losses and premiums
2. it is a contract between an insurer and their reinsurers
3. controlled and claims paid by primary insurer`
pg. 3
, Page 4 of 145
When is a subscription policy used? - ANSWER -1. when that line of
business isn't covered under a reinsurance treaty
2. to protect reinsurers from the risk
3. the per-claim limit is too big to absorb in 1 loss (lead insurer pays
claim first in reinsurance)
4. broker wants to spread risk among markets (keeps insurers happy:
accommodation business)
Why is a reinsurance policy typically preferable over a subscription
policy? - ANSWER -subscription policies are negotiated with each
participating insurer
What parties cannot be subrogated against? - ANSWER -A named
insured or anyone with insurable interest in the property
What are bills of lading and explain them - ANSWER -Standard bill of
lading: used to reflect the amount a common carrier would be liable for
under tariffs
Valued bill: requested by the owner when the value of the goods exceeds
the standard bill's value
Released bill: releases a carrier from any liability
What are the types of protection and describe them - ANSWER -1.
perimeter protection: methods to secure access to premises when
business is closed
pg. 4
