CAIB 2 Chapter 1 Practice exam 2 With Complete Solution
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Course
CAIB 2 Chapter 1
Institution
CAIB 2 Chapter 1
Identify the company which assumes the greatest portion of an account - ANSWER-Lead Company
What is re-insurance - ANSWER-an insurance company 'ceding' part of the risk to a re-insurer
What are three considerations used when determining amounts of indemnity? - ANSWER-i) Actual Cash Value of t...
CAIB 2 Chapter 1 Practice exam 2 With Complete
Solution
Identify the company which assumes the greatest portion of an account - ANSWER-
Lead Company
What is re-insurance - ANSWER-an insurance company 'ceding' part of the risk to a re-
insurer
What are three considerations used when determining amounts of indemnity? -
ANSWER-i) Actual Cash Value of the property as it existed immediately prior to the loss
ii) The interest of the insured in the property
iii) The amount of insurance as shown on the policy
i) Actual Cash Value of the property as it existed prior to the loss
ii) The interest of the insured in the property
iii) The amount of insurance as shown on the policy
Which of the above amounts will be paid in the event of insured losses? - ANSWER-
Insureds will receive whichever is the least
Why do co-insurance clauses contain waiver provisions? - ANSWER-To waive
application of the co-insurance clause when the loss is less than the amounts indicated
in the waiver. These waivers are applied because to determine amounts in the co-
insurance clause would cause too much work and expense for the insured given the
size of the loss
What are the provisions of "waiver of co-insurance" clauses? - ANSWER-When losses
are less than 2% of the amount of insurance and less than $5,000 the provision of co-
insurance clauses will not be applied
Will the "waiver of co-insurance clause" apply to the following loss?
Loss - $1,200
Policy Limit - $150,000
ACV of Property - $250,000 - ANSWER-Yes
What is the purpose of "stated amount" co-insurance clause - ANSWER-to replace the
provisions of the standard co-insurance clause with the requirements of the stated
amount co-insurance clause
What requirements must be met by the insured when co-insurance clauses are replaced
by 'stated amount' co-insurance clauses? - ANSWER-i) Insureds must submit a
statement of values indicating 100% of all property insured
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