CAIB 1 EXAM QUESTIONS AND
ANSWERS (VERIFIED AND UPDATED)
Risk - ANS the chance of financial loss to which an object of insurance is exposed
Speculative Risk - ANS possibility of financial loss or gain
Pure Risk - ANS Chance of financial loss, no gain
Insurance - ANS undertaking by one person to indemnify another person against loss or
liability for loss in respect of a certain risk or peril to which the object of insurance may be
exposed or to pay a sum of money or other ting of value upon the happening of a certain event
Contract - ANS an agreement between two or more persons which creates an obligation to
do or not to do a particular thing
Insurable Interest - ANS showing you would suffer financially by a loss
Utmost good faith - ANS caveat emptor, buyer beware. Exercise a higher standard of honesty
Indemnity - ANS putting the insured back into the same position as they were in as
immediately prior to loss
@2026/2027 ALLRIGHTS RESERVED.
, Binder - ANS Contract of insurace
Agency Agreement - ANS source of a brokers authority
Void - ANS Unable to support its intended purpose, treated as though it never existed
Voidable - ANS void to the wrongdoer but not to the wronged party unless they elect to treat
it so
Peril - ANS The cause of a loss
Direct Loss - ANS When the object of insurance is the loss
Indirect loss - ANS Losses which arise as a consequence of a direct loss
Actual cash value - ANS New or replacement cost of the insured property less depreciation
Replacement cost - ANS repair or replacement of lost or damaged property with new
property of like kind and quality without depreciation
Valued policy - ANS insured and insurer agree on the cash value of the property at the time
the policy is issued
Blanket coverage - ANS single limit of insurance for all property falling within specific class
Scheduled coverage - ANS property is itemized on the policy
Fiduccary - ANS someone who occupies a position of special trust or confidence in the
handling or supervising of the affairs or funds of another
@2026/2027 ALLRIGHTS RESERVED.
ANSWERS (VERIFIED AND UPDATED)
Risk - ANS the chance of financial loss to which an object of insurance is exposed
Speculative Risk - ANS possibility of financial loss or gain
Pure Risk - ANS Chance of financial loss, no gain
Insurance - ANS undertaking by one person to indemnify another person against loss or
liability for loss in respect of a certain risk or peril to which the object of insurance may be
exposed or to pay a sum of money or other ting of value upon the happening of a certain event
Contract - ANS an agreement between two or more persons which creates an obligation to
do or not to do a particular thing
Insurable Interest - ANS showing you would suffer financially by a loss
Utmost good faith - ANS caveat emptor, buyer beware. Exercise a higher standard of honesty
Indemnity - ANS putting the insured back into the same position as they were in as
immediately prior to loss
@2026/2027 ALLRIGHTS RESERVED.
, Binder - ANS Contract of insurace
Agency Agreement - ANS source of a brokers authority
Void - ANS Unable to support its intended purpose, treated as though it never existed
Voidable - ANS void to the wrongdoer but not to the wronged party unless they elect to treat
it so
Peril - ANS The cause of a loss
Direct Loss - ANS When the object of insurance is the loss
Indirect loss - ANS Losses which arise as a consequence of a direct loss
Actual cash value - ANS New or replacement cost of the insured property less depreciation
Replacement cost - ANS repair or replacement of lost or damaged property with new
property of like kind and quality without depreciation
Valued policy - ANS insured and insurer agree on the cash value of the property at the time
the policy is issued
Blanket coverage - ANS single limit of insurance for all property falling within specific class
Scheduled coverage - ANS property is itemized on the policy
Fiduccary - ANS someone who occupies a position of special trust or confidence in the
handling or supervising of the affairs or funds of another
@2026/2027 ALLRIGHTS RESERVED.
