CAIB 2 FULL STUDY GUIDE | 371 QUESTIONS AND
ANSWERS | 2026 UPDATE | WITH COMPLETE SOLUTIONS.
The three amounts to be considered when calculating the amount of payment as outlined in the
Indemnity Agreement are: - (answer)1) the value of the lost or damaged property (ACV)
2) the interest of the insured in the property (ex. financial interest, home, mortgage)
3) the amount of insurance specified on the "Declarations Page" for the loss or damaged property (least
amount|)
Identify the four categories that buildings may fall into: - (answer)Residential (ex. home)
Non-mercantile (ex. hospitals, nursing homes)
Mercantile (ex. drycleaners, bakeries)
Manufacturing/Industrial (ex. autobody shops)
Three classes of property commercially insured are: - (answer)building, stock, equipment
Identify the two bases that coverage can be provided on: - (answer)Scheduled
All property
Property of every description
Identify and give an example of each of the five types of property contained in the definition of Building
found in the IBC Commercial Property Broad Form - (answer)1) Growing plants, trees, shrubs INSIDE the
building used for decorative purposes only when insured is the owner of the building (ex. cactus)
2) Materials and equipment supplies ON the premises for maintenance (ex. lumbar, glass)
3) Additions and extensions IN CONTACT with the building (enclosed walk-way between buildings)
,CAIB 2 FULL STUDY GUIDE | 371 QUESTIONS AND
ANSWERS | 2026 UPDATE | WITH COMPLETE SOLUTIONS.
4) Permanent fittings and fixtures ATTACHED and FORMING part of the building. (ex. light fixtures,
carpeting)
5) Fixed structures PERTAINING to building and located on the premises (ex. fence)
[GMAPF]
Identify the three conditions pertaining to the coverage for growing plants, trees, etc. - (answer)- such
property was INSIDE the building
- was being used for decorative purposes
- insured was the owner of the building
Identify and give an example of the three types of property contained in the definition of Stock found in
the IBC Commercial Property Broad Form: - (answer)1) packing, wrapping and advertising materials (ex.
bubble plastic, Styrofoam)
2) merchandise of every description USUAL to insureds business (ex. goods for sale for business)
3) similar property belonging to others which the insured is under obligation to keep insured or for
which he is legally liable for (appliance if appliance store.
[PMS]
Identify the three conditions that need to be present before 'similar property belonging to others' will
be insured under the definition of Stock: - (answer)1) must be similar to that insured by the policy
2) the insured must have had an obligation to keep the property insured
3) the insured must be legally liable for it.
,CAIB 2 FULL STUDY GUIDE | 371 QUESTIONS AND
ANSWERS | 2026 UPDATE | WITH COMPLETE SOLUTIONS.
Identify and give an example of each of the three types of property contained in the definition of
Equipment found in the IBC Commercial Property Broad Form: - (answer)1) generally all contents USUAL
to insureds business, other than building or stock (ex. furniture)
2) similar property belonging to others which the insured is under obligation to keep insured or for
which he is legally liable for (ex. shaw cable box)
3) tenants improvements (ex. space rented out or leased, malls)
[GST]
Identify the three ways in which property may be valued: - (answer)Actual Cash Value (ACV)
Replacement Value
Book Value
Which way is NOT an appropriate means of valuing property for insurance purposes? - (answer)Book
Value
Identify the one word that can summarize the difference between Actual Cash Value and Replacement
Cost: - (answer)depreciation
Who does the onus rest upon to establish the amount of insurance required? - (answer)the Insured
Identify the five methods that may be used to determine Actual Cash Value: - (answer)1) Actual Cash
Value
2) True Value to customer
3) Market Value/Direct Sales Approach
4) Income Approach
5) Formula/Cost Approach Method
, CAIB 2 FULL STUDY GUIDE | 371 QUESTIONS AND
ANSWERS | 2026 UPDATE | WITH COMPLETE SOLUTIONS.
Identify the two types of depreciation used in the Formula/Cost Approach, and give an example of a
type of property that would be appropriate using each: - (answer)Straight Line Depreciation (ex.
buildings)
&
Plateau Accelerated Depreciation (ex. cars, furniture)
A licensed real estate appraiser will generally be consulted to provide an expert opinion when
establishing Market Value/Direct Sales Approach. Identify the three items he or she may consider: -
(answer)Property before the loss
Property after the loss
the land
When is the Income Approach method most commonly employed? - (answer)This method of evaluating
a loss is commonly used with income producing properties
The Broad Evidence ties together the previous four methods when establishing actual cash value, and
the courts will take into account many different factors. Identify any three such factors: -
(answer)Market Value -assessed valuation
Rental Value -use of building
Location -resale success, replacement value less depreciation {any of these}
Insurers can reduce their amount of exposure on large risks by the use of Reinsurance or Subscription
polies. Outline three rules, or guidelines that apply when reinsurance is used to provide insurance
coverages: - (answer)1) all insurers share premiums collected and losses incurred
2) the policy is controlled by the primary insurer and all claims are paid by it
3) the contract is between the primary insurer and the reinsurer
ANSWERS | 2026 UPDATE | WITH COMPLETE SOLUTIONS.
The three amounts to be considered when calculating the amount of payment as outlined in the
Indemnity Agreement are: - (answer)1) the value of the lost or damaged property (ACV)
2) the interest of the insured in the property (ex. financial interest, home, mortgage)
3) the amount of insurance specified on the "Declarations Page" for the loss or damaged property (least
amount|)
Identify the four categories that buildings may fall into: - (answer)Residential (ex. home)
Non-mercantile (ex. hospitals, nursing homes)
Mercantile (ex. drycleaners, bakeries)
Manufacturing/Industrial (ex. autobody shops)
Three classes of property commercially insured are: - (answer)building, stock, equipment
Identify the two bases that coverage can be provided on: - (answer)Scheduled
All property
Property of every description
Identify and give an example of each of the five types of property contained in the definition of Building
found in the IBC Commercial Property Broad Form - (answer)1) Growing plants, trees, shrubs INSIDE the
building used for decorative purposes only when insured is the owner of the building (ex. cactus)
2) Materials and equipment supplies ON the premises for maintenance (ex. lumbar, glass)
3) Additions and extensions IN CONTACT with the building (enclosed walk-way between buildings)
,CAIB 2 FULL STUDY GUIDE | 371 QUESTIONS AND
ANSWERS | 2026 UPDATE | WITH COMPLETE SOLUTIONS.
4) Permanent fittings and fixtures ATTACHED and FORMING part of the building. (ex. light fixtures,
carpeting)
5) Fixed structures PERTAINING to building and located on the premises (ex. fence)
[GMAPF]
Identify the three conditions pertaining to the coverage for growing plants, trees, etc. - (answer)- such
property was INSIDE the building
- was being used for decorative purposes
- insured was the owner of the building
Identify and give an example of the three types of property contained in the definition of Stock found in
the IBC Commercial Property Broad Form: - (answer)1) packing, wrapping and advertising materials (ex.
bubble plastic, Styrofoam)
2) merchandise of every description USUAL to insureds business (ex. goods for sale for business)
3) similar property belonging to others which the insured is under obligation to keep insured or for
which he is legally liable for (appliance if appliance store.
[PMS]
Identify the three conditions that need to be present before 'similar property belonging to others' will
be insured under the definition of Stock: - (answer)1) must be similar to that insured by the policy
2) the insured must have had an obligation to keep the property insured
3) the insured must be legally liable for it.
,CAIB 2 FULL STUDY GUIDE | 371 QUESTIONS AND
ANSWERS | 2026 UPDATE | WITH COMPLETE SOLUTIONS.
Identify and give an example of each of the three types of property contained in the definition of
Equipment found in the IBC Commercial Property Broad Form: - (answer)1) generally all contents USUAL
to insureds business, other than building or stock (ex. furniture)
2) similar property belonging to others which the insured is under obligation to keep insured or for
which he is legally liable for (ex. shaw cable box)
3) tenants improvements (ex. space rented out or leased, malls)
[GST]
Identify the three ways in which property may be valued: - (answer)Actual Cash Value (ACV)
Replacement Value
Book Value
Which way is NOT an appropriate means of valuing property for insurance purposes? - (answer)Book
Value
Identify the one word that can summarize the difference between Actual Cash Value and Replacement
Cost: - (answer)depreciation
Who does the onus rest upon to establish the amount of insurance required? - (answer)the Insured
Identify the five methods that may be used to determine Actual Cash Value: - (answer)1) Actual Cash
Value
2) True Value to customer
3) Market Value/Direct Sales Approach
4) Income Approach
5) Formula/Cost Approach Method
, CAIB 2 FULL STUDY GUIDE | 371 QUESTIONS AND
ANSWERS | 2026 UPDATE | WITH COMPLETE SOLUTIONS.
Identify the two types of depreciation used in the Formula/Cost Approach, and give an example of a
type of property that would be appropriate using each: - (answer)Straight Line Depreciation (ex.
buildings)
&
Plateau Accelerated Depreciation (ex. cars, furniture)
A licensed real estate appraiser will generally be consulted to provide an expert opinion when
establishing Market Value/Direct Sales Approach. Identify the three items he or she may consider: -
(answer)Property before the loss
Property after the loss
the land
When is the Income Approach method most commonly employed? - (answer)This method of evaluating
a loss is commonly used with income producing properties
The Broad Evidence ties together the previous four methods when establishing actual cash value, and
the courts will take into account many different factors. Identify any three such factors: -
(answer)Market Value -assessed valuation
Rental Value -use of building
Location -resale success, replacement value less depreciation {any of these}
Insurers can reduce their amount of exposure on large risks by the use of Reinsurance or Subscription
polies. Outline three rules, or guidelines that apply when reinsurance is used to provide insurance
coverages: - (answer)1) all insurers share premiums collected and losses incurred
2) the policy is controlled by the primary insurer and all claims are paid by it
3) the contract is between the primary insurer and the reinsurer
