CAIB 3 LATEST 2026 TEST PAPER QUESTIONS AND
ANSWERS GUARANTEE A+
✔✔The Sale of Goods Act also addresses a buyer's responsibility to exercise care as to
the suitability and quality of the products purchased.
State the exception to this general rule. - ✔✔When a buyer makes known the particular
purpose for which the goods are required, and relies on the seller's skill or judgment,
there is an implied condition that the goods will be reasonably fit for such purpose. If
they are not, the seller will be liable for damages should injury or property damage
result from their use.
✔✔Your client, the proprietor of pub, is insured under the Commercial General Liability
Policy. Indicate whether or not the policy would respond in the following instances. State
COVERED or NOT COVERED
The insured entered a claim for the recovery of a $1,000 payment made as a goodwill
gesture to a customer, a well-known entertainer, who injured himself during a fall from a
bar stool - ✔✔NOT COVERED - REFERENCE: Ch. 2, pg. 4
✔✔Your client, the proprietor of pub, is insured under the Commercial General Liability
Policy. Indicate whether or not the policy would respond in the following instances. State
COVERED or NOT COVERED
The insured had to cancel the booking of the pub for a large private event because a
ruptured pipe had caused serious water damage to the premises and the restoration
would not be completed in time. The insured was sued for breach of contract by the
band that was hired to perform at this event. - ✔✔NOT COVERED - REFERENCE: Ch.
2, pg. 10
✔✔Your client, the proprietor of pub, is insured under the Commercial General Liability
Policy. Indicate whether or not the policy would respond in the following instances. State
COVERED or NOT COVERED
The insured received a $3,000 bill for a dental procedure from a customer who broke a
tooth when she bit on a piece of bone in the pizza she had consumed at the pub. The
customer had informed the server of the incident - ✔✔COVERED - REFERENCE: Ch.
2, pg. 3, 5
✔✔The Commercial General Liability Policy does not respond to claims against the
insured for bodily injuries sustained by employees while performing the duties of their
job.
, State the underlying reason for this exclusion. - ✔✔Because most employees are
covered under the provincial Workers' Compensation Plan. Coverage is provided on a
no fault basis.
✔✔What options are available to the insured to cover this exposure? - ✔✔To purchase
Employer's Liability coverage or voluntarily enrol all employees under the provincial
Workers' Compensation Plan.
✔✔The insured hired a roofing contractor to replace the old tar and gravel roof on the
insured's building, which is flanked by two other buildings not owned by the insured. The
insured agreed to assume the contractor's liability, which resulted in the reduction of the
contract price for the insured. During the work a spark from the fire that heated the tar
ignited setting the roof on fire which spread within minutes to one of the adjacent
buildings causing serious damage to it. The court held the insured liable for the
damage. State COVERED or NOT COVERED - ✔✔COVERED
✔✔One winter day a pedestrian slipped and fell on the icy sidewalk right in front of the
insured's business premises located at a small strip mall and fractured a leg. The mall
owner maintained the premises and cleared the entire sidewalk of snow and ice during
the winter months. The insured had signed a lease agreement which contained a clause
that held the landlord harmless for bodily injury or property damage. State COVERED or
NOT COVERED - ✔✔COVERED
✔✔The insured's friend, an electrician, was installing new light fixtures in the insured's
beauty salon. During the installation a glass lamp shade shattered and a falling piece
cut a customer who required medical attention. It turned out that the electrician did not
have liability insurance. As friends often help each other out, the insured agreed to take
the blame for the injury to the customer. State COVERED or NOT COVERED - ✔✔NOT
COVERED
✔✔The Commercial General Liability policy includes Coverage C. Medical Payments for
expenses incurred by a third party. Explain the reasons why this coverage is provided
on a "no fault" basis. - ✔✔Reasons for providing this coverage is on a "no fault" basis
include:
a) The chances of a permanent disability to the injured party are greatly reduced when
immediate medical attention is obtained.
b) Potential for claims alleging negligence is reduced.
c) A legal confrontation with the injured party over such expenses is avoided.
✔✔Your client is an architectural firm owned by two partners that employs six architects
and ten additional staff. Their liability is covered under the Commercial General Liability
Policy (Claims Made Form) IBC 2200. The policy has been in effect with the same
insurer since August 31, 2008.
ANSWERS GUARANTEE A+
✔✔The Sale of Goods Act also addresses a buyer's responsibility to exercise care as to
the suitability and quality of the products purchased.
State the exception to this general rule. - ✔✔When a buyer makes known the particular
purpose for which the goods are required, and relies on the seller's skill or judgment,
there is an implied condition that the goods will be reasonably fit for such purpose. If
they are not, the seller will be liable for damages should injury or property damage
result from their use.
✔✔Your client, the proprietor of pub, is insured under the Commercial General Liability
Policy. Indicate whether or not the policy would respond in the following instances. State
COVERED or NOT COVERED
The insured entered a claim for the recovery of a $1,000 payment made as a goodwill
gesture to a customer, a well-known entertainer, who injured himself during a fall from a
bar stool - ✔✔NOT COVERED - REFERENCE: Ch. 2, pg. 4
✔✔Your client, the proprietor of pub, is insured under the Commercial General Liability
Policy. Indicate whether or not the policy would respond in the following instances. State
COVERED or NOT COVERED
The insured had to cancel the booking of the pub for a large private event because a
ruptured pipe had caused serious water damage to the premises and the restoration
would not be completed in time. The insured was sued for breach of contract by the
band that was hired to perform at this event. - ✔✔NOT COVERED - REFERENCE: Ch.
2, pg. 10
✔✔Your client, the proprietor of pub, is insured under the Commercial General Liability
Policy. Indicate whether or not the policy would respond in the following instances. State
COVERED or NOT COVERED
The insured received a $3,000 bill for a dental procedure from a customer who broke a
tooth when she bit on a piece of bone in the pizza she had consumed at the pub. The
customer had informed the server of the incident - ✔✔COVERED - REFERENCE: Ch.
2, pg. 3, 5
✔✔The Commercial General Liability Policy does not respond to claims against the
insured for bodily injuries sustained by employees while performing the duties of their
job.
, State the underlying reason for this exclusion. - ✔✔Because most employees are
covered under the provincial Workers' Compensation Plan. Coverage is provided on a
no fault basis.
✔✔What options are available to the insured to cover this exposure? - ✔✔To purchase
Employer's Liability coverage or voluntarily enrol all employees under the provincial
Workers' Compensation Plan.
✔✔The insured hired a roofing contractor to replace the old tar and gravel roof on the
insured's building, which is flanked by two other buildings not owned by the insured. The
insured agreed to assume the contractor's liability, which resulted in the reduction of the
contract price for the insured. During the work a spark from the fire that heated the tar
ignited setting the roof on fire which spread within minutes to one of the adjacent
buildings causing serious damage to it. The court held the insured liable for the
damage. State COVERED or NOT COVERED - ✔✔COVERED
✔✔One winter day a pedestrian slipped and fell on the icy sidewalk right in front of the
insured's business premises located at a small strip mall and fractured a leg. The mall
owner maintained the premises and cleared the entire sidewalk of snow and ice during
the winter months. The insured had signed a lease agreement which contained a clause
that held the landlord harmless for bodily injury or property damage. State COVERED or
NOT COVERED - ✔✔COVERED
✔✔The insured's friend, an electrician, was installing new light fixtures in the insured's
beauty salon. During the installation a glass lamp shade shattered and a falling piece
cut a customer who required medical attention. It turned out that the electrician did not
have liability insurance. As friends often help each other out, the insured agreed to take
the blame for the injury to the customer. State COVERED or NOT COVERED - ✔✔NOT
COVERED
✔✔The Commercial General Liability policy includes Coverage C. Medical Payments for
expenses incurred by a third party. Explain the reasons why this coverage is provided
on a "no fault" basis. - ✔✔Reasons for providing this coverage is on a "no fault" basis
include:
a) The chances of a permanent disability to the injured party are greatly reduced when
immediate medical attention is obtained.
b) Potential for claims alleging negligence is reduced.
c) A legal confrontation with the injured party over such expenses is avoided.
✔✔Your client is an architectural firm owned by two partners that employs six architects
and ten additional staff. Their liability is covered under the Commercial General Liability
Policy (Claims Made Form) IBC 2200. The policy has been in effect with the same
insurer since August 31, 2008.
