CAIB 2 Final Exam Practice Test Questions With Detailed Answers
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Course
CAIB 2
Institution
CAIB 2
Your client, a retail fashion store, has just rented a business premises in a mall. Before opening your business, she plans to install new wall to wall carpeting and install wall paneling. These values would be insured under the amount provided for:
A. Stock
B. Equipment
C. Building
D. Busine...
Caib 2 Best Rated Exam Questions
Latest Version 2024
Explain what an submission is and identify three types of information - CORRECT
ANSWER-A proposal for insurance which is presented to an underwriter for
consideration. It can include an application, additional verbal info, additional written info.
Identify three purposes served by survey forms - CORRECT ANSWER-Assists to
indenting loss exposures, helps eliminate the purchases of coverages the business
doesn't need, assists in the development of underwriting information needed by
insurers.
State three advantages of using a property checklist with your client - CORRECT
ANSWER-Alerts brokers to possible loss exposures, ensures that needed coverages
are not forgotten/ignored, helps reduce the potential for an errors or omissions claims
When determining eligibility for coverage, the insurer will request certain information.
There are 5 types of building construction used in buildings having commercial
occupancy. Which is the likely to produce the highest rate? Which is likely to produce
the lowest rate? - CORRECT ANSWER-Frame-highest rate
Fire resistive-lowest rate
When the building to be insured exceeds a certain age, the insurer will request
information concerning recent renovations or upgrading
A) approximately how old does a building have to be for the insurer to request this
additional information?
B) identify 5 kinds of upgrades to the building likely to be of most interest to insurers? -
CORRECT ANSWER-A) 25 years old
B) roof, wiring, plumbing, cover current protection, heating
Identify 5 hazards common to the majority of commercial risks. - CORRECT ANSWER-
Heating, electrical services, detachment, protection, occupancy
, Why is the distance or detachment from other commercial risks an important rating
consideration for insurers? - CORRECT ANSWER-Detachment is important to note
because the proximity to other commercial buildings can increase the risk (ex bakery)
Identify the 2 kinds of protection which insurers consider when establishing the rate or
premium charged. - CORRECT ANSWER-Private protection- what the insured has
done internally to prevent or reduce loss
Public protection- refers to the external protection provided to insured property (ex
availability of fire fighting services)
Fire resistive - CORRECT ANSWER-Building which has met minimum standards in
terms of hours it will withstand a specific, carefully controlled test fire.
Non-combustible - CORRECT ANSWER-All structural members including floors, roofs,
and their supports are constructed of steel, iron, concrete or other non-combustible
constructible materials. Exterior also required to be of non combustible construction.
Falls just short of classifying as a fire resistive
Common hazards - CORRECT ANSWER-Conditions common to all buildings which
influence their potential for loss
Detachment - CORRECT ANSWER-Refers to the proximity of the building insurers or
containing the property insured to other commercially rated buildings
One of the duties as an underwriter is to select as many good risks as possible for the
insurer. All underwriters are concerned against the potential for being selected against.
Explain what is meant by adverse selection and how it can impact upon an insurers loss
experience. - CORRECT ANSWER-Adverse selection is the ones who are most likely to
suffer a loss and are most likely to purchase the insurance. (In the us people having a
baby are more likely to purchase health insurance) Too many of these insureds will
increase the overall claims of the insurer.
Explain what is meant by risk classification and individual risk underwriting - CORRECT
ANSWER-Risk classification is the grouping or classification of risks according to
established criteria based largely on their probability for loss as a class
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