CAIB 2 Exam Questions Verified Answers

CAIB 2 Exam – Questions & Verified Answers 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:

• Stock
• Equipment
• Building
• Business Interruption ✔️Ans - B. Equipment

While the law permits the insurer to surrogate against the party responsible for the loss, the insurer agrees not to exercise that right in respect to certain parties under the policy. Which of the following parties would be surrogates agains in the event of their responsibility?

• insureds business partner
• Mortgagee
• Parents who provide financing
• Independent contractor ✔️Ans - D. Independent contractor

The commercial building, equipment and stock (broad form policy) insures all

of the following except:

• Theft or attempted theft
• Rupture of freezing
• Collapse
• Mysterious disappearance ✔️Ans - D. Mysterious disappearance

Under a commercial property insurance policy, which of the following would be considered equipment?

• Photocopier leased from ideal copiers
• Advertising brochures promoting next months end sales
• Customers shoes kept on premises overnight for repair
• Shoes held on consignment ✔️Ans - A. Photocopier leased from ideal

copiers The consequential loss assumption clauses is defined to insured: 1 / 3

• Damage caused to refrigerator or cooling equipment
• Damage caused by freezing due to power failure
• Loss to stock due to loss of temperature
• Contamination of stock due to rupture of supply piping ✔️Ans - C. Loss

to stock due to loss of temperature The coverages provided by the coverages provided by the contractors equipment floater would insured which of the following losses?

• Damage caused to front end loader due to freezing
• Cracking of engine block on caterpillar due to freezing
• Fire damage to contractors plans, blueprints, design or specifications
• Sinking of caterpillar while operating over muskeg ✔️Ans - A. Damage

caused to front end loader due to freezing

The safe burglary rider would insure one of the following losses:

• Money taken from locked cash drawer
• Money and securities taken from an unlocked safe
• Money and securities taken from a locked safe by the burglar who knew its

combination

• Removal of the safe from the premises ✔️Ans - D. Removal of the safe

from the premises The insurance industry relies on the classifications developed by the following body when determining the appropriateness of the protection provided to

property by safes,vaults and other:

A. IAO

B. ULC

C. IBC

• Canada Safety Council ✔️Ans - B. ULC

All of the following statements except one are true when the insureds

business has been interrupted by order of civil authority. Pick the exception:

• Insured's building must have suffered physical damage
• Coverage is limited to a maximum of two weeks
• Insured is entitled to recover lost income even through there has been no

actual damage to the insured property

• Order must have been given as a direct result of damage to neighbouring

premises by a peril insured against on the insureds own premises ✔️Ans -

• Insureds business must have suffered physical damage 2 / 3

Accommodation business is best described as:

• A specialized type of insurance risk which included hotels, motels,

apartment buildings and rental property

• A risk which can be insured only under a subscription policy
• A risk which is substandard or marginal, but which, because of its

relationship with the broker, the insurer agrees to to underwrite

• A risk which is normally acceptable to the insurer but which cannot be

bound by the broker without the insurers consent ✔️Ans - C. A risk which is substandard or marginal, but which, because of its relationship with the broker, the insurer agrees to underwrite

The accounts receivable form would not provide payment for:

• Penalties charged the insured by suppliers for late payment of account
• Sum charged by insureds accountant to reconstruct lost records
• Sums charged by collector agency to collect amounts due to insured
• Sums due from customers which the insured is unable to collect asa direct

result of the loss of records ✔️Ans - A. Penalties charged by the insured by suppliers for late payment on the account The coverages provided by the contractors equipment floater would insure

which of the following losses:

• Damage caused to the front end loader due to its falling off the trailer being

used to transport it to the job site

• Cracking of the engine block on caterpillar due to freezing
• Fire damage to contractors plans, blueprints, designs or specs ✔️Ans - A.

Damage caused to the front end loader due to its falling off the trailer being used to transport it to the job site All of the following statements regarding commercial crime insurance policy

are true except one. Pick the exception:

• When there is an existing policy in force, broker has the right to bind the

insurer for any interim increase in coverage limits

• Insurer must provide the insured with 30 days notice when it intents to

cancel the policy, except when cancellation is for non-payment of premium

• All losses under the policy will be paid in Canadian funds
• Insured is required to maintain adequate records to substantiate the

amount of the loss under the policy ✔️Ans - A. When there is an existing

• / 3