CAIB 2 STUDY NOTES; CHAPTER 7 BEST EXAM QUESTIONS & ANSWERS
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CAIB 2 STUDY NOTES; CHAPTER 7
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CAIB 2 STUDY NOTES; CHAPTER 7
1. Is perceived as being too technical
2. Reluctance of insured to reveal earnings
3. Lack of consumer knowledge - CORRECT ANSWER-Identify three reasons or obstacles to selling business interruption instance
1. Physical damage to property
2. Failure or breakdown of public utilities
3. Tran...
CAIB 2 STUDY NOTES; CHAPTER 7
BEST EXAM QUESTIONS & ANSWERS
1. Is perceived as being too technical
2. Reluctance of insured to reveal earnings
3. Lack of consumer knowledge - CORRECT ANSWER-Identify three reasons or
obstacles to selling business interruption instance
1. Physical damage to property
2. Failure or breakdown of public utilities
3. Transportation related accidents
4. Physical damage to neighbouring premises
5. Loss caused to property of major supplier or costumer
6. Actions of regulatory authorities
7. Ancillary cause (strikes, lock-outs) - CORRECT ANSWER-Identify seven sources of
business interruption losses
1. Reduction of capital reserves
2. Bank loan
3. Increasing product prices
4. Purchase of adequate limits of business interruption insurance - CORRECT
ANSWER-Identify four options for funding to pay continuing expenses during a business
interruption
1. The operating expenses which necessarily must continue during the period the
interruption
2. The net profit that is lost because of a partial or total interruption to the business -
CORRECT ANSWER-Identify the two things that all business interruption insure
, 1. Gross earnings form (American); Commences at the time of loss and ceases
immediately upon reinstatement of lost or damaged property
2. Profits form (British); Commencing at the time of loss and continues until income is
restored to the level that would have resulted had the loss not occurred - CORRECT
ANSWER-Identify the period of indemnity for the following forms; Gross earnings form
and profits form
1. Insure against same perils as are insured by the property policy
2. Are contracts of indemnity
3. Period of indemnity will continue beyond expiry of the policy
4. Indemnity provided while access prohibited by order of civil authority
5. Provide for payment of those expenses necessarily incurred for the purpose of
reducing the amount of loss - CORRECT ANSWER-Identify five characteristics common
to all business interruption forms
1. Over time salaries to building contractors
2. Advertising costs to advise new location/service arrangements
3. Rental or alteration premises - CORRECT ANSWER-Identify any types of expense
that may be necessarily incurred for the purpose of reducing the amount of loss
Only if insured can show such payment will result in an overall claim savings to the
insurer - CORRECT ANSWER-Identify the conditions when the costs noted in the
expenses necessarily incurred form will be paid
1. Broker must be an accountant to understand
2. Should be sold only to those businesses operations at a profit
3. If any loss caused by someone not insured by policy, no need to purchase business
interruption - CORRECT ANSWER-Identify three myths with business interruption
insurance
1. Income; all monies from sales/service
2. Fixed expenses; mortgage interest
3. Semi-variable expenses; advertising
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