Canadian Accredited Insurance Broker Program CAIB 1
Comprehensive Questions with Their Verified Answers
2025 Rollout!
The undertaking by one person to indemnify another
person against loss or liability for loss in respect of a
Insurance
certain risk or peril to which the object of the insurance
may be exposed... or to pay a sum of money or other
thing of value upon the happening of a certain event.
An agreement between two or more persons which
Contract
creates an obligation to do or not to do a particular
thing.
Consideration An exchange of something of value between parties.
One has an insurable interest in the subject matter of
Insurable Interest
the insurance when they will suffer financially by a
loss.
The law requires insurance contracts maintain a higher standard of
Utmost Good Faith honesty than is
needed of other contracts. (The duty of utmost good faith
applies to the insured, the insurer and the broker.)
Application of the principle of indemnity ensures people
Indemnity
receive the actual amount of their loss, no more and no
less.
A temporary agreement in which the insurer agrees to
Insurance Binder
provide certain coverages pending the issuance of the
policy.
A written agreement or contract between the insurer and
Agency Agreement
the brokerage which acknowledges their relationship.
One which is unable in law to support the purpose for
Void Contract
which it was intended. Such contracts are deemed
never to have existed.
A contract that may be voided at the option of the wronged
Voidable Contract
party only and not the wrongdoer.
Peril The cause of loss
Direct Loss A direct loss occurs when the peril insured actually attacks the
object of insurance.
Indirect Loss Losses which arise as a consequence of a direct loss.
Actual Cash Value New or replacement cost of the property at the time of the loss,
, less depreciation.
The cost to repair or replace the lost or damaged
Replacement Cost
property with new property of like kind and quality,
without deduction for depreciation.
Both the insured and insurer agree at the time the
Valued Policy
policy is issued as to the cash value of the property. In
the event of a loss, the agreed amount would be paid.
Policy which provides a single limit of insurance for all
Blanket Coverage
property falling within a specific class.
Scheduled Coverage Covered property is itemized on the policy.
One who occupies a special position of trust or
Fiduciary
confidence in the handling or supervising of the affairs
or funds of another.
Premiums not yet earned by the insurer. Such
Unearned Premiums premiums are deemed to be held in trust in order to
refund the insureds in the event the policy is
cancelled prior to expiry date.
Involves the presence of a visible flame or glow, actual
Fire
ignition or burning is required.
Friendly Fire A fire that is contained in its proper receptacle.
A fire that passes outside of the limits assigned to it.
Hostile Fire
(e.g. spark thrown from a fireplace that burns a
carpet is hostile fire)
Damage which arises from a natural or continuous
Proximate Result
sequence of the peril causing the loss.
Comprehensive Questions with Their Verified Answers
2025 Rollout!
The undertaking by one person to indemnify another
person against loss or liability for loss in respect of a
Insurance
certain risk or peril to which the object of the insurance
may be exposed... or to pay a sum of money or other
thing of value upon the happening of a certain event.
An agreement between two or more persons which
Contract
creates an obligation to do or not to do a particular
thing.
Consideration An exchange of something of value between parties.
One has an insurable interest in the subject matter of
Insurable Interest
the insurance when they will suffer financially by a
loss.
The law requires insurance contracts maintain a higher standard of
Utmost Good Faith honesty than is
needed of other contracts. (The duty of utmost good faith
applies to the insured, the insurer and the broker.)
Application of the principle of indemnity ensures people
Indemnity
receive the actual amount of their loss, no more and no
less.
A temporary agreement in which the insurer agrees to
Insurance Binder
provide certain coverages pending the issuance of the
policy.
A written agreement or contract between the insurer and
Agency Agreement
the brokerage which acknowledges their relationship.
One which is unable in law to support the purpose for
Void Contract
which it was intended. Such contracts are deemed
never to have existed.
A contract that may be voided at the option of the wronged
Voidable Contract
party only and not the wrongdoer.
Peril The cause of loss
Direct Loss A direct loss occurs when the peril insured actually attacks the
object of insurance.
Indirect Loss Losses which arise as a consequence of a direct loss.
Actual Cash Value New or replacement cost of the property at the time of the loss,
, less depreciation.
The cost to repair or replace the lost or damaged
Replacement Cost
property with new property of like kind and quality,
without deduction for depreciation.
Both the insured and insurer agree at the time the
Valued Policy
policy is issued as to the cash value of the property. In
the event of a loss, the agreed amount would be paid.
Policy which provides a single limit of insurance for all
Blanket Coverage
property falling within a specific class.
Scheduled Coverage Covered property is itemized on the policy.
One who occupies a special position of trust or
Fiduciary
confidence in the handling or supervising of the affairs
or funds of another.
Premiums not yet earned by the insurer. Such
Unearned Premiums premiums are deemed to be held in trust in order to
refund the insureds in the event the policy is
cancelled prior to expiry date.
Involves the presence of a visible flame or glow, actual
Fire
ignition or burning is required.
Friendly Fire A fire that is contained in its proper receptacle.
A fire that passes outside of the limits assigned to it.
Hostile Fire
(e.g. spark thrown from a fireplace that burns a
carpet is hostile fire)
Damage which arises from a natural or continuous
Proximate Result
sequence of the peril causing the loss.
