CAIB 1 COMPREHENSIVE EXAM QUESTIONS
AND CORRECT ANSWERS STUDY GUIDE
●● 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
●● Fiduciary
Answer: one who occupies a position of special trust in the handling or
supervising of the affairs or funds of another
●● Unearned Premiums
Answer: are deemed to be held in trust in order to refund the insured's in
event the policy is cancelled prior to the expiry date
●● Fire
Answer: involves the presence of a visible flame or glow
●● Friendly Fire
Answer: one that is contained in its proper receptacle
●● Hostile Fire
Answer: once a fire passes out the limits assigned to it
●● Proximate Result
AND CORRECT ANSWERS STUDY GUIDE
●● 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
●● Fiduciary
Answer: one who occupies a position of special trust in the handling or
supervising of the affairs or funds of another
●● Unearned Premiums
Answer: are deemed to be held in trust in order to refund the insured's in
event the policy is cancelled prior to the expiry date
●● Fire
Answer: involves the presence of a visible flame or glow
●● Friendly Fire
Answer: one that is contained in its proper receptacle
●● Hostile Fire
Answer: once a fire passes out the limits assigned to it
●● Proximate Result
