CAIB 1 EXAM 2025 UPDATE/PRACTICE QUESTIONS AND
CORRECT VERIFIED ANSWERS (complete solutions) ASSURED
SUCCESS/GRADED A+!!!
Void Contract - CORRECT ANSWER-one which is unable in law to support the
purpose for which it was intended
Voidable Contract - CORRECT ANSWER-one which is void as to the wrongdoer
but not void as to the wronged party, unless he elects to so treat it
Peril - CORRECT ANSWER-the cause of a loss
Direct Loss - CORRECT ANSWER-when the object of insurance is actually
attacked by an insured peril
Indirect Loss - CORRECT ANSWER-loss which arise as a consequence of direct
loss
Risk - CORRECT ANSWER-the chance of financial loss to which an object of
insurance is exposed
,Speculative Risk - CORRECT ANSWER-Involves the possibility of either financial
loss or gain
Consideration - CORRECT ANSWER-an exchange of something of value between
the parties
Insurable Interest - CORRECT ANSWER-when they are able to show that they
would suffer financially by a loss
Utmost Good Faith - CORRECT ANSWER-sellers are to tell the truth about their
products and that buyers exercise care in their selection
Insurance Binder - CORRECT ANSWER-contracts of insurance; the broker has
committed the insurer to provide a contract of insurance on the subject matter
under discussion
Pure Risk - CORRECT ANSWER-involves the chance of financial loss does not, at
the same time, offer a chance of financial gain
Insurance - CORRECT ANSWER-the undertaking by one person to indemnify
another persons 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 thing of value upon the happening of a certain event
Contract - CORRECT ANSWER-an agreement between two or more people
which creates an obligation to do or not to do something
,Actual Cash Value - CORRECT ANSWER-the new or replacement cost of the
property at the time of the loss, less depreciation
Replacement Cost - CORRECT ANSWER-how much it would cost to replace or
repair any lost or damaged property of LIKE kind and quality, without deduction
for depreciation
Valued Policy - CORRECT ANSWER-Insurance for property such as old jewellery,
antiques, memorabilia, and original works of art, will generally be unable to
replace them in the event of a loss
Blanket Coverage - CORRECT ANSWER-policies that allow insured's to select a
single limit of insurance for all property falling within a specific class
Scheduled Coverage - CORRECT ANSWER-when property is itemized on a policy
Fiduciary - CORRECT ANSWER-one who occupies a position of special trust in
the handling or supervising of the affairs or funds of another
Unearned Premiums - CORRECT ANSWER-are deemed to be held in trust in
order to refund the insured's in event the policy is cancelled prior to the expiry
date
Fire - CORRECT ANSWER-involves the presence of a visible flame or glow
, Friendly Fire - CORRECT ANSWER-one that is contained in its proper receptacle
Hostile Fire - CORRECT ANSWER-once a fire passes out the limits assigned to it
Proximate Result - CORRECT ANSWER-Damage which arises from a natural or
continuous sequence of the peril causing the loss
Material Change - CORRECT ANSWER-any change within control and knowledge
of the insured which; arises after the policy has been issued, and serves to
increase the chance of loss
Pro Rata - CORRECT ANSWER-when the policy is terminated by the insurer, the
amount of the refund will be calculated using this
Short Rate - CORRECT ANSWER-when the insured terminates the policy, the
amount of the refund is calculated using this
Notice of Loss - CORRECT ANSWER-must be given forthwith and immediately as
well as in writing
Proof of Loss - CORRECT ANSWER-states what was lost and how
CORRECT VERIFIED ANSWERS (complete solutions) ASSURED
SUCCESS/GRADED A+!!!
Void Contract - CORRECT ANSWER-one which is unable in law to support the
purpose for which it was intended
Voidable Contract - CORRECT ANSWER-one which is void as to the wrongdoer
but not void as to the wronged party, unless he elects to so treat it
Peril - CORRECT ANSWER-the cause of a loss
Direct Loss - CORRECT ANSWER-when the object of insurance is actually
attacked by an insured peril
Indirect Loss - CORRECT ANSWER-loss which arise as a consequence of direct
loss
Risk - CORRECT ANSWER-the chance of financial loss to which an object of
insurance is exposed
,Speculative Risk - CORRECT ANSWER-Involves the possibility of either financial
loss or gain
Consideration - CORRECT ANSWER-an exchange of something of value between
the parties
Insurable Interest - CORRECT ANSWER-when they are able to show that they
would suffer financially by a loss
Utmost Good Faith - CORRECT ANSWER-sellers are to tell the truth about their
products and that buyers exercise care in their selection
Insurance Binder - CORRECT ANSWER-contracts of insurance; the broker has
committed the insurer to provide a contract of insurance on the subject matter
under discussion
Pure Risk - CORRECT ANSWER-involves the chance of financial loss does not, at
the same time, offer a chance of financial gain
Insurance - CORRECT ANSWER-the undertaking by one person to indemnify
another persons 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 thing of value upon the happening of a certain event
Contract - CORRECT ANSWER-an agreement between two or more people
which creates an obligation to do or not to do something
,Actual Cash Value - CORRECT ANSWER-the new or replacement cost of the
property at the time of the loss, less depreciation
Replacement Cost - CORRECT ANSWER-how much it would cost to replace or
repair any lost or damaged property of LIKE kind and quality, without deduction
for depreciation
Valued Policy - CORRECT ANSWER-Insurance for property such as old jewellery,
antiques, memorabilia, and original works of art, will generally be unable to
replace them in the event of a loss
Blanket Coverage - CORRECT ANSWER-policies that allow insured's to select a
single limit of insurance for all property falling within a specific class
Scheduled Coverage - CORRECT ANSWER-when property is itemized on a policy
Fiduciary - CORRECT ANSWER-one who occupies a position of special trust in
the handling or supervising of the affairs or funds of another
Unearned Premiums - CORRECT ANSWER-are deemed to be held in trust in
order to refund the insured's in event the policy is cancelled prior to the expiry
date
Fire - CORRECT ANSWER-involves the presence of a visible flame or glow
, Friendly Fire - CORRECT ANSWER-one that is contained in its proper receptacle
Hostile Fire - CORRECT ANSWER-once a fire passes out the limits assigned to it
Proximate Result - CORRECT ANSWER-Damage which arises from a natural or
continuous sequence of the peril causing the loss
Material Change - CORRECT ANSWER-any change within control and knowledge
of the insured which; arises after the policy has been issued, and serves to
increase the chance of loss
Pro Rata - CORRECT ANSWER-when the policy is terminated by the insurer, the
amount of the refund will be calculated using this
Short Rate - CORRECT ANSWER-when the insured terminates the policy, the
amount of the refund is calculated using this
Notice of Loss - CORRECT ANSWER-must be given forthwith and immediately as
well as in writing
Proof of Loss - CORRECT ANSWER-states what was lost and how
