Canadian Accredited Insurance Broker Program CAIB 1
Comprehensive Questions with Their Verified Answers
2025 Rollout!
C
Terms in this set (96)
1. Personal - i.e. health
3 categories of risk 2. Property - i.e. home
3. Liability - i.e. negligence
1. Avoidance of risk - eliminate or avoid exposure
- Avoiding one leads to new exposures
2. Controlling of risk - measures to reduce frequency and severity
- Nothing is 100% effective, and some things cannot be controlled
4 ways to manage risk
3. Retention of risk - assume financial responsibility for losses - all or
part
- Many cannot afford complete retention
4. Transfer of risk - for amounts you cannot afford to retain in exchange
for premium
- Most common and practical way
1. Speculative - either financial gain or loss
- Not insurable since you can't profit from insurance
2 types of risk
2. Pure - financial loss
- Insurable because it is good for society
1. Agreement - parties agree on subject matter and terms of contract
2. Consideration - exchange between parties of something of value
5 elements of a legally 3. Legality of object
enforceable contract 4. Legal capacity of the parties to the contract - party must be
competent or have legal capacity
5. Genuine intention - both parties intended to enter into contract
1. Insurable interest - party would suffer financially by a loss
3 unique elements of insurance 2. Utmost good faith - complete honesty by both parties is required
contracts 3. Indemnity - ensure people receive actual loss amount - no more, no less
2 statuses of contract when 1. Void - deem contract to have never existed
element missing 2. Voidable - up to wronged party to deem void
, 1. Oral - confirm immediately in writing
2 types of binders
2.Written - also known as a cover note
1. Accidental
2 types of losses insured
2. Future
1. Direct - object of insurance damaged by an insured peril
2 types of property losses
2. Indirect - a consequence of a direct loss - not insured under a property
policy
1. Actual cash value at time of loss - replacement cost minus depreciation
3 steps to determine 2. Replacement value - like kind and quality with no depreciation
indemnification value 3. Insurable interest - must have financial interest in property
1. Insurers will be financially competent
- Obligation to ensure premiums paid are available to pay claims
3 reasons for insurance laws - Only use earned premiums, unearned are deemed to be in trust
2. Forms of contracts are drafted fairly
3. Business is conducted to the general benefit of the public
1. Grant license to companies who meet OSFI's financial standards
2 roles of federal government
2. Monitor insurers for solvency and financial stability
1. Administer the insurance act
3 roles of provincial government 2. Supervise terms and conditions of insurance contracts
3. License insurers, brokers, agents, and adjusters
- Removed requirement for insurers to provide deposit to
government to protect insureds
- Created property and casualty insurance compensation
corporation (PACICC) to pay claims for insolvent insurer
Insurance Companies Act, 1992 - Participating insurers are assessed amount based on direct
premiums to cover claims
- Amounts covered
- Maximum $250,000 for all claims from single occurrence
- Up to 70% of unearned premium refunded to a maximum $700 per policy
1. Basic coverages legislated
4 ways to ensure uniform 2. Standard exclusions legislated
coverage across provinces for 3. Fire statutory conditions legislated
policies insuring fire 4. Other legislated conditions
1. Fire - friendly fire not covered
- Covers other damages which arise proximately
- Caused by water and other extinguishing agents
- Physical damage to buildings caused by firefighters
3 basic coverages legislated (fire
policy) - Resulting from actions to prevent the spread of fire
2. Lightning - direct damage only
3. Explosion of natural, coal, or manufactured gas - damage caused by ignition
, only
1. Property
2 types of exclusions (fire policy)
2. Losses
1. More specialized coverage is available
2 reasons for exclusions (fire
policy) 2. Uninsurable since it would bankrupt the insurer (i.e., war)
1. Loss or damage due to direct application of heat
- Only excludes property that has heat applied, resulting damage is
4 losses excluded (fire policy) covered
2. Lightning damage to electrical devices or appliances
3. Other electrical currents
4. Contamination by radioactive material
Comprehensive Questions with Their Verified Answers
2025 Rollout!
C
Terms in this set (96)
1. Personal - i.e. health
3 categories of risk 2. Property - i.e. home
3. Liability - i.e. negligence
1. Avoidance of risk - eliminate or avoid exposure
- Avoiding one leads to new exposures
2. Controlling of risk - measures to reduce frequency and severity
- Nothing is 100% effective, and some things cannot be controlled
4 ways to manage risk
3. Retention of risk - assume financial responsibility for losses - all or
part
- Many cannot afford complete retention
4. Transfer of risk - for amounts you cannot afford to retain in exchange
for premium
- Most common and practical way
1. Speculative - either financial gain or loss
- Not insurable since you can't profit from insurance
2 types of risk
2. Pure - financial loss
- Insurable because it is good for society
1. Agreement - parties agree on subject matter and terms of contract
2. Consideration - exchange between parties of something of value
5 elements of a legally 3. Legality of object
enforceable contract 4. Legal capacity of the parties to the contract - party must be
competent or have legal capacity
5. Genuine intention - both parties intended to enter into contract
1. Insurable interest - party would suffer financially by a loss
3 unique elements of insurance 2. Utmost good faith - complete honesty by both parties is required
contracts 3. Indemnity - ensure people receive actual loss amount - no more, no less
2 statuses of contract when 1. Void - deem contract to have never existed
element missing 2. Voidable - up to wronged party to deem void
, 1. Oral - confirm immediately in writing
2 types of binders
2.Written - also known as a cover note
1. Accidental
2 types of losses insured
2. Future
1. Direct - object of insurance damaged by an insured peril
2 types of property losses
2. Indirect - a consequence of a direct loss - not insured under a property
policy
1. Actual cash value at time of loss - replacement cost minus depreciation
3 steps to determine 2. Replacement value - like kind and quality with no depreciation
indemnification value 3. Insurable interest - must have financial interest in property
1. Insurers will be financially competent
- Obligation to ensure premiums paid are available to pay claims
3 reasons for insurance laws - Only use earned premiums, unearned are deemed to be in trust
2. Forms of contracts are drafted fairly
3. Business is conducted to the general benefit of the public
1. Grant license to companies who meet OSFI's financial standards
2 roles of federal government
2. Monitor insurers for solvency and financial stability
1. Administer the insurance act
3 roles of provincial government 2. Supervise terms and conditions of insurance contracts
3. License insurers, brokers, agents, and adjusters
- Removed requirement for insurers to provide deposit to
government to protect insureds
- Created property and casualty insurance compensation
corporation (PACICC) to pay claims for insolvent insurer
Insurance Companies Act, 1992 - Participating insurers are assessed amount based on direct
premiums to cover claims
- Amounts covered
- Maximum $250,000 for all claims from single occurrence
- Up to 70% of unearned premium refunded to a maximum $700 per policy
1. Basic coverages legislated
4 ways to ensure uniform 2. Standard exclusions legislated
coverage across provinces for 3. Fire statutory conditions legislated
policies insuring fire 4. Other legislated conditions
1. Fire - friendly fire not covered
- Covers other damages which arise proximately
- Caused by water and other extinguishing agents
- Physical damage to buildings caused by firefighters
3 basic coverages legislated (fire
policy) - Resulting from actions to prevent the spread of fire
2. Lightning - direct damage only
3. Explosion of natural, coal, or manufactured gas - damage caused by ignition
, only
1. Property
2 types of exclusions (fire policy)
2. Losses
1. More specialized coverage is available
2 reasons for exclusions (fire
policy) 2. Uninsurable since it would bankrupt the insurer (i.e., war)
1. Loss or damage due to direct application of heat
- Only excludes property that has heat applied, resulting damage is
4 losses excluded (fire policy) covered
2. Lightning damage to electrical devices or appliances
3. Other electrical currents
4. Contamination by radioactive material
