CAIB 3 Practice Exam Questions with Answers
Products Liability Loss - ✔✔Must occur away from the premises
Seller must have relinquished control of defective product
Negligence must be proven - ✔✔Duty of care was owed to plaintiff
Duty was breached through defendants negligence
Damages suffered as a proximate result of the defendants negligence
Strict Liability - ✔✔Doctrine based on the assumption that certain activities are so hazardous
that, in the event injury or damage arising out of them, the person conducting the activity shall
be presumed to be legally liable
Consent of Surety - ✔✔A letter assuring the owner that if the principal is the successful bidder,
the surety will issue such other bonds as are specified to ensure the performance of the
contract
Retention - ✔✔Includes all means of generating funds from within the business to pay for
losses
Malicious Prosecution - ✔✔Occurs when:
The complainant was arrested and later released and
Evidence provided revealed that the person making the complaint did not have an honest belief
that a crime had been committed, but was guided by other improper motives such as a desire
to harass or humiliate the victim
Surety - ✔✔State of being sure, certain and secure
Particular Average - ✔✔Involves a partial loss to a specific shipment, other than a general
average
, Risk Management - ✔✔Is the process of making and carrying out decisions that will minimize
the adverse effects of accidental losses upon an organization
Civil Law - ✔✔The body of law concerned with civil or private rights and remedies, as
contrasted with criminal law which deals with wrongs against society
Constructive Total Loss - ✔✔Occurs when the cost of salvaging the cargo is too high relative to
the value saved
Doctrine of Negligence - ✔✔Based on the duty of all persons to exercise due care in their
conduct towards others from which injury may result
License - ✔✔Issued by a regulatory body such as government in order to set rules and
regulations to safeguard the public
Duplication - ✔✔Involves complete reproduction of an organization's own "standby" asset or
facility to be kept in service
Permit - ✔✔Fulfils the same general functions as a license, except that they are usually required
as prerequisites to performing special functions incidental to the operation of the business
Nuisance - ✔✔Everything that endangers life or health, gives offence to senses, violates the law
of decency, or obstructs reasonable and comfortable use of the property
Defective Product - ✔✔Contained something it should not have, or something was omitted that
should have been there
Compensatory Damages - ✔✔Are damages intended to compensate the injured party for the
bodily injury or property damage sustained
Products Liability Loss - ✔✔Must occur away from the premises
Seller must have relinquished control of defective product
Negligence must be proven - ✔✔Duty of care was owed to plaintiff
Duty was breached through defendants negligence
Damages suffered as a proximate result of the defendants negligence
Strict Liability - ✔✔Doctrine based on the assumption that certain activities are so hazardous
that, in the event injury or damage arising out of them, the person conducting the activity shall
be presumed to be legally liable
Consent of Surety - ✔✔A letter assuring the owner that if the principal is the successful bidder,
the surety will issue such other bonds as are specified to ensure the performance of the
contract
Retention - ✔✔Includes all means of generating funds from within the business to pay for
losses
Malicious Prosecution - ✔✔Occurs when:
The complainant was arrested and later released and
Evidence provided revealed that the person making the complaint did not have an honest belief
that a crime had been committed, but was guided by other improper motives such as a desire
to harass or humiliate the victim
Surety - ✔✔State of being sure, certain and secure
Particular Average - ✔✔Involves a partial loss to a specific shipment, other than a general
average
, Risk Management - ✔✔Is the process of making and carrying out decisions that will minimize
the adverse effects of accidental losses upon an organization
Civil Law - ✔✔The body of law concerned with civil or private rights and remedies, as
contrasted with criminal law which deals with wrongs against society
Constructive Total Loss - ✔✔Occurs when the cost of salvaging the cargo is too high relative to
the value saved
Doctrine of Negligence - ✔✔Based on the duty of all persons to exercise due care in their
conduct towards others from which injury may result
License - ✔✔Issued by a regulatory body such as government in order to set rules and
regulations to safeguard the public
Duplication - ✔✔Involves complete reproduction of an organization's own "standby" asset or
facility to be kept in service
Permit - ✔✔Fulfils the same general functions as a license, except that they are usually required
as prerequisites to performing special functions incidental to the operation of the business
Nuisance - ✔✔Everything that endangers life or health, gives offence to senses, violates the law
of decency, or obstructs reasonable and comfortable use of the property
Defective Product - ✔✔Contained something it should not have, or something was omitted that
should have been there
Compensatory Damages - ✔✔Are damages intended to compensate the injured party for the
bodily injury or property damage sustained
