CAIB 2 - Chapter 2 Questions and Answers
(2024/2025)(Verified Answers)
3 advantages of using a fact find or survey
1) Assists brokers when identifying potential losses 2) Assists brokers not to sell coverages the client
does not need 3) Assists brokers in collecting information needed by insurance companies
3 benefits of commercial property checklists
1) Assists brokers when identifying potential losses 2) Assists brokers to make sure coverages are not
overlooked 3) Assists brokers in reducing E&O losses
Define "Fire Resistive"
This means that the building has achieved the standard set in hours to remain structurally sound
when attacked by fires
Define "Non-Combustible"
These buildings are slightly below the standard of fire resistive structures
5 areas where insurers request additional information when the building is 25 years or older (WHORP)
1)Wiring 2) Heating 3) Over-current protection 4) Roof 5) Plumbing
5 fire hazards common to commercial buildings
1) Heating 2) Occupancy 3) Protection 4) Electrical Services 5) Detachment
Define "Detachment"
The distance between the insured building to other commercially rated buildings
Describe 2 types of protection
Private protection; steps taken within the building to reduce frequency and severity of losses such as
sprinkler systems. Public protection; methods used by municipalities such as fire departments
4 functions performed by underwriters
1) Risk selection 2) Risk classification 3) rating & rate making 4) policyholders services
Define "Adverse Selection"
Occurs when the applicant for insurance is more likely to suffer a loss
Define "Risk Classification"
Grouping or classifying risks according to established criteria which is based on their probability for
loss
What is the main advantage of risk classification?
allows insurers to properly calculate premiums to charge
Identify an internal source underwriters utilise when rate making
(2024/2025)(Verified Answers)
3 advantages of using a fact find or survey
1) Assists brokers when identifying potential losses 2) Assists brokers not to sell coverages the client
does not need 3) Assists brokers in collecting information needed by insurance companies
3 benefits of commercial property checklists
1) Assists brokers when identifying potential losses 2) Assists brokers to make sure coverages are not
overlooked 3) Assists brokers in reducing E&O losses
Define "Fire Resistive"
This means that the building has achieved the standard set in hours to remain structurally sound
when attacked by fires
Define "Non-Combustible"
These buildings are slightly below the standard of fire resistive structures
5 areas where insurers request additional information when the building is 25 years or older (WHORP)
1)Wiring 2) Heating 3) Over-current protection 4) Roof 5) Plumbing
5 fire hazards common to commercial buildings
1) Heating 2) Occupancy 3) Protection 4) Electrical Services 5) Detachment
Define "Detachment"
The distance between the insured building to other commercially rated buildings
Describe 2 types of protection
Private protection; steps taken within the building to reduce frequency and severity of losses such as
sprinkler systems. Public protection; methods used by municipalities such as fire departments
4 functions performed by underwriters
1) Risk selection 2) Risk classification 3) rating & rate making 4) policyholders services
Define "Adverse Selection"
Occurs when the applicant for insurance is more likely to suffer a loss
Define "Risk Classification"
Grouping or classifying risks according to established criteria which is based on their probability for
loss
What is the main advantage of risk classification?
allows insurers to properly calculate premiums to charge
Identify an internal source underwriters utilise when rate making
