CAIB 2 Chapter 7 Practice Test 2 Questions
and Answers (2024/2025)(Verified Answers)
What are two factors to consider when deciding which form of business
interruption insurance to purchase?
i) Nature of business
ii) Types of perils most likely to cause losses
When using old financial statements to establish amount of insurance, what
problems could be encountered?
Clients may be underinsured because future trends were not considered
What type of employee salaries may not be considered a "necessary continuing
expense?"
Ordinary payroll
Explain the due diligence and dispatch provision found in the Gross Earnings
forms.
Everyone involved in the restoration of the business must act with due diligence
and dispatch
What are two situations which could cause insureds to purchase the 50% CoInsurance
option on Gross Earnings forms?
i) When sales are consistent from month to month
ii) When interruption will likely be short
State the four provisions of the Premium Adjustment Clause found in Gross
Earnings forms.
i) Application for premium adjustment must be made within 12 months of expiry
of policy
ii) When losses were paid during policy term, premium is considered to be fully
earned
iii) 50% Co-insurance basis forms are eligible for refunds up to 25% of premium
iv) 80% Co-insurance basis forms are eligible for refunds up to 50% of premium
When will payment be made when there has been an Interruption by Civil
Authority?
This coverage is available only when there has been damage to neighbouring
premises from a peril insured under insured's policy resulting in access being
denied by civil authority
How long will coverage be provided when there is an Interruption by Civil
Authority?
Coverage is available for two weeks when access is prohibited by order of civil
authority
Explain the Due Diligence and Dispatch provision of the Profits forms.
Only clients are required to exercise due, diligence and dispatch
and Answers (2024/2025)(Verified Answers)
What are two factors to consider when deciding which form of business
interruption insurance to purchase?
i) Nature of business
ii) Types of perils most likely to cause losses
When using old financial statements to establish amount of insurance, what
problems could be encountered?
Clients may be underinsured because future trends were not considered
What type of employee salaries may not be considered a "necessary continuing
expense?"
Ordinary payroll
Explain the due diligence and dispatch provision found in the Gross Earnings
forms.
Everyone involved in the restoration of the business must act with due diligence
and dispatch
What are two situations which could cause insureds to purchase the 50% CoInsurance
option on Gross Earnings forms?
i) When sales are consistent from month to month
ii) When interruption will likely be short
State the four provisions of the Premium Adjustment Clause found in Gross
Earnings forms.
i) Application for premium adjustment must be made within 12 months of expiry
of policy
ii) When losses were paid during policy term, premium is considered to be fully
earned
iii) 50% Co-insurance basis forms are eligible for refunds up to 25% of premium
iv) 80% Co-insurance basis forms are eligible for refunds up to 50% of premium
When will payment be made when there has been an Interruption by Civil
Authority?
This coverage is available only when there has been damage to neighbouring
premises from a peril insured under insured's policy resulting in access being
denied by civil authority
How long will coverage be provided when there is an Interruption by Civil
Authority?
Coverage is available for two weeks when access is prohibited by order of civil
authority
Explain the Due Diligence and Dispatch provision of the Profits forms.
Only clients are required to exercise due, diligence and dispatch
