CAIB 2 Full Study Guide Best Graded
Exam Questions (Graded A+)
The three amounts to be considered when calculating the amount of payment as
outlined in the Indemnity Agreement are: - CORRECT ANSWER-1) the value of the lost
or damaged property (ACV)
2) the interest of the insured in the property (ex. financial interest, home, mortgage)
3) the amount of insurance specified on the "Declarations Page" for the loss or
damaged property (least amount|)
Identify the four categories that buildings may fall into: - CORRECT ANSWER-
Residential (ex. home)
Non-mercantile (ex. hospitals, nursing homes)
Mercantile (ex. drycleaners, bakeries)
Manufacturing/Industrial (ex. autobody shops)
Three classes of property commercially insured are: - CORRECT ANSWER-building,
stock, equipment
Identify the two bases that coverage can be provided on: - CORRECT ANSWER-
Scheduled
All property
Property of every description
Identify and give an example of each of the five types of property contained in the
definition of Building found in the IBC Commercial Property Broad Form - CORRECT
ANSWER-1) Growing plants, trees, shrubs INSIDE the building used for decorative
purposes only when insured is the owner of the building (ex. cactus)
,2) Materials and equipment supplies ON the premises for maintenance (ex. lumbar,
glass)
3) Additions and extensions IN CONTACT with the building (enclosed walk-way
between buildings)
4) Permanent fittings and fixtures ATTACHED and FORMING part of the building. (ex.
light fixtures, carpeting)
5) Fixed structures PERTAINING to building and located on the premises (ex. fence)
[GMAPF]
Identify the three conditions pertaining to the coverage for growing plants, trees, etc. -
CORRECT ANSWER-- such property was INSIDE the building
- was being used for decorative purposes
- insured was the owner of the building
Identify and give an example of the three types of property contained in the definition of
Stock found in the IBC Commercial Property Broad Form: - CORRECT ANSWER-1)
packing, wrapping and advertising materials (ex. bubble plastic, Styrofoam)
2) merchandise of every description USUAL to insureds business (ex. goods for sale for
business)
3) similar property belonging to others which the insured is under obligation to keep
insured or for which he is legally liable for (appliance if appliance store.
[PMS]
Identify the three conditions that need to be present before 'similar property belonging to
others' will be insured under the definition of Stock: - CORRECT ANSWER-1) must be
similar to that insured by the policy
,2) the insured must have had an obligation to keep the property insured
3) the insured must be legally liable for it.
Identify and give an example of each of the three types of property contained in the
definition of Equipment found in the IBC Commercial Property Broad Form: - CORRECT
ANSWER-1) generally all contents USUAL to insureds business, other than building or
stock (ex. furniture)
2) similar property belonging to others which the insured is under obligation to keep
insured or for which he is legally liable for (ex. shaw cable box)
3) tenants improvements (ex. space rented out or leased, malls)
[GST]
Identify the three ways in which property may be valued: - CORRECT ANSWER-Actual
Cash Value (ACV)
Replacement Value
Book Value
Which way is NOT an appropriate means of valuing property for insurance purposes? -
CORRECT ANSWER-Book Value
Identify the one word that can summarize the difference between Actual Cash Value
and Replacement Cost: - CORRECT ANSWER-depreciation
Who does the onus rest upon to establish the amount of insurance required? -
CORRECT ANSWER-the Insured
Identify the five methods that may be used to determine Actual Cash Value: -
CORRECT ANSWER-1) Actual Cash Value
2) True Value to customer
3) Market Value/Direct Sales Approach
4) Income Approach
, 5) Formula/Cost Approach Method
Identify the two types of depreciation used in the Formula/Cost Approach, and give an
example of a type of property that would be appropriate using each: - CORRECT
ANSWER-Straight Line Depreciation (ex. buildings)
&
Plateau Accelerated Depreciation (ex. cars, furniture)
A licensed real estate appraiser will generally be consulted to provide an expert opinion
when establishing Market Value/Direct Sales Approach. Identify the three items he or
she may consider: - CORRECT ANSWER-Property before the loss
Property after the loss
the land
When is the Income Approach method most commonly employed? - CORRECT
ANSWER-This method of evaluating a loss is commonly used with income producing
properties
The Broad Evidence ties together the previous four methods when establishing actual
cash value, and the courts will take into account many different factors. Identify any
three such factors: - CORRECT ANSWER-Market Value -assessed valuation
Rental Value -use of building
Location -resale success, replacement value less depreciation {any of these}
Insurers can reduce their amount of exposure on large risks by the use of Reinsurance
or Subscription polies. Outline three rules, or guidelines that apply when reinsurance is
used to provide insurance coverages: - CORRECT ANSWER-1) all insurers share
premiums collected and losses incurred
2) the policy is controlled by the primary insurer and all claims are paid by it
3) the contract is between the primary insurer and the reinsurer
Exam Questions (Graded A+)
The three amounts to be considered when calculating the amount of payment as
outlined in the Indemnity Agreement are: - CORRECT ANSWER-1) the value of the lost
or damaged property (ACV)
2) the interest of the insured in the property (ex. financial interest, home, mortgage)
3) the amount of insurance specified on the "Declarations Page" for the loss or
damaged property (least amount|)
Identify the four categories that buildings may fall into: - CORRECT ANSWER-
Residential (ex. home)
Non-mercantile (ex. hospitals, nursing homes)
Mercantile (ex. drycleaners, bakeries)
Manufacturing/Industrial (ex. autobody shops)
Three classes of property commercially insured are: - CORRECT ANSWER-building,
stock, equipment
Identify the two bases that coverage can be provided on: - CORRECT ANSWER-
Scheduled
All property
Property of every description
Identify and give an example of each of the five types of property contained in the
definition of Building found in the IBC Commercial Property Broad Form - CORRECT
ANSWER-1) Growing plants, trees, shrubs INSIDE the building used for decorative
purposes only when insured is the owner of the building (ex. cactus)
,2) Materials and equipment supplies ON the premises for maintenance (ex. lumbar,
glass)
3) Additions and extensions IN CONTACT with the building (enclosed walk-way
between buildings)
4) Permanent fittings and fixtures ATTACHED and FORMING part of the building. (ex.
light fixtures, carpeting)
5) Fixed structures PERTAINING to building and located on the premises (ex. fence)
[GMAPF]
Identify the three conditions pertaining to the coverage for growing plants, trees, etc. -
CORRECT ANSWER-- such property was INSIDE the building
- was being used for decorative purposes
- insured was the owner of the building
Identify and give an example of the three types of property contained in the definition of
Stock found in the IBC Commercial Property Broad Form: - CORRECT ANSWER-1)
packing, wrapping and advertising materials (ex. bubble plastic, Styrofoam)
2) merchandise of every description USUAL to insureds business (ex. goods for sale for
business)
3) similar property belonging to others which the insured is under obligation to keep
insured or for which he is legally liable for (appliance if appliance store.
[PMS]
Identify the three conditions that need to be present before 'similar property belonging to
others' will be insured under the definition of Stock: - CORRECT ANSWER-1) must be
similar to that insured by the policy
,2) the insured must have had an obligation to keep the property insured
3) the insured must be legally liable for it.
Identify and give an example of each of the three types of property contained in the
definition of Equipment found in the IBC Commercial Property Broad Form: - CORRECT
ANSWER-1) generally all contents USUAL to insureds business, other than building or
stock (ex. furniture)
2) similar property belonging to others which the insured is under obligation to keep
insured or for which he is legally liable for (ex. shaw cable box)
3) tenants improvements (ex. space rented out or leased, malls)
[GST]
Identify the three ways in which property may be valued: - CORRECT ANSWER-Actual
Cash Value (ACV)
Replacement Value
Book Value
Which way is NOT an appropriate means of valuing property for insurance purposes? -
CORRECT ANSWER-Book Value
Identify the one word that can summarize the difference between Actual Cash Value
and Replacement Cost: - CORRECT ANSWER-depreciation
Who does the onus rest upon to establish the amount of insurance required? -
CORRECT ANSWER-the Insured
Identify the five methods that may be used to determine Actual Cash Value: -
CORRECT ANSWER-1) Actual Cash Value
2) True Value to customer
3) Market Value/Direct Sales Approach
4) Income Approach
, 5) Formula/Cost Approach Method
Identify the two types of depreciation used in the Formula/Cost Approach, and give an
example of a type of property that would be appropriate using each: - CORRECT
ANSWER-Straight Line Depreciation (ex. buildings)
&
Plateau Accelerated Depreciation (ex. cars, furniture)
A licensed real estate appraiser will generally be consulted to provide an expert opinion
when establishing Market Value/Direct Sales Approach. Identify the three items he or
she may consider: - CORRECT ANSWER-Property before the loss
Property after the loss
the land
When is the Income Approach method most commonly employed? - CORRECT
ANSWER-This method of evaluating a loss is commonly used with income producing
properties
The Broad Evidence ties together the previous four methods when establishing actual
cash value, and the courts will take into account many different factors. Identify any
three such factors: - CORRECT ANSWER-Market Value -assessed valuation
Rental Value -use of building
Location -resale success, replacement value less depreciation {any of these}
Insurers can reduce their amount of exposure on large risks by the use of Reinsurance
or Subscription polies. Outline three rules, or guidelines that apply when reinsurance is
used to provide insurance coverages: - CORRECT ANSWER-1) all insurers share
premiums collected and losses incurred
2) the policy is controlled by the primary insurer and all claims are paid by it
3) the contract is between the primary insurer and the reinsurer
