CAIB 3 PRACTICE EXAM (ACTUAL 2025)
QUESTIONS AND VERIFIED CORRECT
ANSWERS UPDATE
What is the name given to the collection of written decisions?
Case Law
Explain the concept of the Rule of Precedent.
Current court decisions must follow those made in cases
having similar circumstances, which allows the development
of a logical body of general principles against which specific
cases to be compared.
The S.P.F. No. 1 Owner's Form does not cover automobiles
which are rented or leased to another. For insureds whose are
in the business of renting or leasing vehicles to others the
policy must be endorsed to cover their lessor's exposures.
Explain the purpose of and any provisions applicable to the
following endorsements.
a) S.E.F. No. 5c Permission to Rent or Lease Endorsement.
,extends coverages to lessor when insured automobiles are
rented or leased to unspecified lessees for periods not in
excess of 30 days.
b) S.E.F. No. 5 Permission to Rent or Lease Endorsement
provides permission for the lessor to rent or lease automobiles
on a long term basis to specified lessees where a separate
S.P.F. No. 1 Owner's Form is issued to each lessee.
c) S.E.F. No. 5d Conversion Coverage Endorsement
covers losses caused by the dishonest acts of the lessee which
result in the loss of the automobile to the lessor. This
endorsement can be used when automobiles are leased on
either a short or long term basis.
Motor vehicles that are used in the Insured's business, other
than employees' own vehicles, which are owned or leased
long term, can be insured either individually or on a fleet
basis.
a) Indicate the minimum number of vehicles under common
ownership or control that would qualify the Insured for
coverage under a fleet policy
, To qualify for a fleet policy four or more vehicles must be
owned or controlled by the Insured.
b) What are the options available for insuring fleet vehicles?
Vehicles can be insured either on a Scheduled or Blanket
Basis.
c) Explain the method of retrospective rating and the main
factor upon which this rating is based
Before the policy is issued both the Insurer and the Insured
agree that the final premium charged will fall within an
established minimum and maximum range. The Insured's loss
ratio is the main factor that determines the premium to be
charged.
Nearly all businesses have a non-owned automobile liability
exposure.
a) Identify the two ways in which this exposure can be
insured.
Can be insured under the S.P.F. No. 6 Standard Non-Owned
Automobile Policy, or under an endorsement to the
Commercial General Liability Policy.
QUESTIONS AND VERIFIED CORRECT
ANSWERS UPDATE
What is the name given to the collection of written decisions?
Case Law
Explain the concept of the Rule of Precedent.
Current court decisions must follow those made in cases
having similar circumstances, which allows the development
of a logical body of general principles against which specific
cases to be compared.
The S.P.F. No. 1 Owner's Form does not cover automobiles
which are rented or leased to another. For insureds whose are
in the business of renting or leasing vehicles to others the
policy must be endorsed to cover their lessor's exposures.
Explain the purpose of and any provisions applicable to the
following endorsements.
a) S.E.F. No. 5c Permission to Rent or Lease Endorsement.
,extends coverages to lessor when insured automobiles are
rented or leased to unspecified lessees for periods not in
excess of 30 days.
b) S.E.F. No. 5 Permission to Rent or Lease Endorsement
provides permission for the lessor to rent or lease automobiles
on a long term basis to specified lessees where a separate
S.P.F. No. 1 Owner's Form is issued to each lessee.
c) S.E.F. No. 5d Conversion Coverage Endorsement
covers losses caused by the dishonest acts of the lessee which
result in the loss of the automobile to the lessor. This
endorsement can be used when automobiles are leased on
either a short or long term basis.
Motor vehicles that are used in the Insured's business, other
than employees' own vehicles, which are owned or leased
long term, can be insured either individually or on a fleet
basis.
a) Indicate the minimum number of vehicles under common
ownership or control that would qualify the Insured for
coverage under a fleet policy
, To qualify for a fleet policy four or more vehicles must be
owned or controlled by the Insured.
b) What are the options available for insuring fleet vehicles?
Vehicles can be insured either on a Scheduled or Blanket
Basis.
c) Explain the method of retrospective rating and the main
factor upon which this rating is based
Before the policy is issued both the Insurer and the Insured
agree that the final premium charged will fall within an
established minimum and maximum range. The Insured's loss
ratio is the main factor that determines the premium to be
charged.
Nearly all businesses have a non-owned automobile liability
exposure.
a) Identify the two ways in which this exposure can be
insured.
Can be insured under the S.P.F. No. 6 Standard Non-Owned
Automobile Policy, or under an endorsement to the
Commercial General Liability Policy.
