CAIB 1 Exam
Risk—ANSWER--the chance of financial loss to which an object of insurance is
exposed
Speculative Risk—ANSWER--Involves the possibility of either financial loss or gain
Pure Risk—ANSWER--involves the chance of financial loss does not, at the same time,
offer a chance of financial gain
Insurance—ANSWER--the undertaking by one person to indemnify another persons
against loss or liability for loss in respect of a certain risk or peril to which the object of
insurance may be exposed... or to pay a sum of money or other thing of value upon the
happening of a certain event
Contract—ANSWER--an agreement between two or more people which creates an
obligation to do or not to do something
Consideration—ANSWER--an exchange of something of value between the parties
Insurable Interest—ANSWER--when they are able to show that they would suffer
financially by a loss
Utmost Good Faith—ANSWER--sellers are to tell the truth about their products and that
buyers exercise care in their selection
, Insurance Binder—ANSWER--contracts of insurance; the broker has committed the
insurer to provide a contract of insurance on the subject matter under discussion
Void Contract—ANSWER--one which is unable in law to support the purpose for which
it was intended
Voidable Contract—ANSWER--one which is void as to the wrongdoer but not void as to
the wronged party, unless he elects to so treat it
Peril—ANSWER--the cause of a loss
Direct Loss—ANSWER--when the object of insurance is actually attacked by an insured
peril
Indirect Loss—ANSWER--loss which arise as a consequence of direct loss
Actual Cash Value—ANSWER--the new or replacement cost of the property at the time
of the loss, less depreciation
Replacement Cost—ANSWER--how much it would cost to replace or repair any lost or
damaged property of LIKE kind and quality, without deduction for depreciation
Valued Policy—ANSWER--Insurance for property such as old jewellery, antiques,
memorabilia, and original works of art, will generally be unable to replace them in the
event of a loss
Blanket Coverage—ANSWER--policies that allow insured's to select a single limit of
insurance for all property falling within a specific class
Scheduled Coverage—ANSWER--when property is itemized on a policy
© 2026 Copyright. All Rights Reserved. This document is
protected by copyright law, Copyrighted By Brittie Donald
Risk—ANSWER--the chance of financial loss to which an object of insurance is
exposed
Speculative Risk—ANSWER--Involves the possibility of either financial loss or gain
Pure Risk—ANSWER--involves the chance of financial loss does not, at the same time,
offer a chance of financial gain
Insurance—ANSWER--the undertaking by one person to indemnify another persons
against loss or liability for loss in respect of a certain risk or peril to which the object of
insurance may be exposed... or to pay a sum of money or other thing of value upon the
happening of a certain event
Contract—ANSWER--an agreement between two or more people which creates an
obligation to do or not to do something
Consideration—ANSWER--an exchange of something of value between the parties
Insurable Interest—ANSWER--when they are able to show that they would suffer
financially by a loss
Utmost Good Faith—ANSWER--sellers are to tell the truth about their products and that
buyers exercise care in their selection
, Insurance Binder—ANSWER--contracts of insurance; the broker has committed the
insurer to provide a contract of insurance on the subject matter under discussion
Void Contract—ANSWER--one which is unable in law to support the purpose for which
it was intended
Voidable Contract—ANSWER--one which is void as to the wrongdoer but not void as to
the wronged party, unless he elects to so treat it
Peril—ANSWER--the cause of a loss
Direct Loss—ANSWER--when the object of insurance is actually attacked by an insured
peril
Indirect Loss—ANSWER--loss which arise as a consequence of direct loss
Actual Cash Value—ANSWER--the new or replacement cost of the property at the time
of the loss, less depreciation
Replacement Cost—ANSWER--how much it would cost to replace or repair any lost or
damaged property of LIKE kind and quality, without deduction for depreciation
Valued Policy—ANSWER--Insurance for property such as old jewellery, antiques,
memorabilia, and original works of art, will generally be unable to replace them in the
event of a loss
Blanket Coverage—ANSWER--policies that allow insured's to select a single limit of
insurance for all property falling within a specific class
Scheduled Coverage—ANSWER--when property is itemized on a policy
© 2026 Copyright. All Rights Reserved. This document is
protected by copyright law, Copyrighted By Brittie Donald
