CAIB 3 Practice Exam Questions with Complete
Solutions
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
Solutions
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
