CAIB 1

Question 0

Speculative risk

Answer 0

The category of risk that involves either financial loss or gain

Question 1

Risk

Answer 1

The chance of financial loss to which an object of insurance is exposed

Question 2

Pure risk

Answer 2

Pure risk involves the chance of financial loss or gain

Question 3

Contract

Answer 3

A contract is an agreement between two or more persons which creates an obligation to do or not to do a particular thing

Question 4

Consideration

Answer 4

An exchange of something of value between parties

Question 5

Insurance interest

Answer 5

People have an insurance interest in the subject matter of an insurance contract when they are able to show that they would suffer financially by a loss.

Question 6

Utmost good faith

Answer 6

The complete honesty of of the parties is critical to the contract

Question 7

Indemnity

Answer 7

People receive the actual amount of their loss , no more, no less

Question 8

Insurance binder

Answer 8

The broker has committed the insurer to provide a contract of insurance on the subject matter of discussion

Question 9

Agency agreement

Answer 9

Agreement between an insurance company and a broker to represent the company

Question 10

Void contract

Answer 10

A contract which is unable in law to support the purpose for which it is intended

Question 11

Voidable contract

Answer 11

One which is void as to the wrongdoer but not void as to the wrong party unless he elects to treat is as such

Question 12

Peril

Answer 12

The cause of a loss

Question 13

Direct loss

Answer 13

When the object of insurance is actually attacked by the named peril

Question 14

Indirect loss

Answer 14

Losses that arise as a consequence of direct loss

• loss of rental income
• loss of profits after a windstorm levels a building

Question 15

Actual cash value

Answer 15

The new or replacement cost of the property at the time of loss, minus depreciation.

Question 16

Replacement cost

Answer 16

Repair or replacement of lost property, with new product of like kind and quality, without deduction for depreciation

Question 17

Valued policy

Answer 17

Both the insured and the insurer agree at the time the policy is issued as to the cash value of the property. In the event of a loss, the agreed amount would be paid

Question 18

Blanket policy

Answer 18

Single limit without need to schedule items

Question 19

Scheduled coverage

Answer 19

Itemized on policy

Question 20

Fiduciary

Answer 20

Fiduciary is one who occupies a position of special trust or confidence in the handling or supervising of the affairs or funds of others

Question 21

Unearned premium

Answer 21

Premiums paid for insurance not yet in force

Question 22

Fire

Answer 22

The prescience of visible flame or glow

Question 23

Friendly fire

Answer 23

Fire contained in its proper recepticle

Question 24

Hostile fire

Answer 24

Fire outside the limits assigned to it

Question 25

Proximate cause

Answer 25

A natural and continuous sequence of the peril causing the loss

Question 26

Material change

Answer 26

Any change material to the risk and within the control and knowledge of the insureds.

Question 27

Pro rata

Answer 27

The insurer divides the amount of the premium paid by the number of days in the policy

Question 28

Proof of loss

Answer 28

Formal verification, under oath of the details and amounts being claimed under the policy

Question 29

Notice of loss

Answer 29

Notice if an intent to make a claim

Question 30

Fraud

Answer 30

Deliberate attempt to deceive, with a view to securing some profit

Question 31

Subrogation

Answer 31

To put into another's shoes. Right of the insurer to recover a loss from a responsible in the name of the insured

Question 32

Proprietary insurers

Answer 32

Exist to make a profit, may be either incorporated or un-incorporated

Question 33

Non-proprietary insurers

Answer 33

Organized for reasons other than profit Owned and controlled by the policy holders No stock or share capital involved

Question 34

Vandalism

Answer 34

Wilful or ignorant destruction of property

Question 35

Malicious act

Answer 35

A wrongful act done without legal justification or excuse

Question 36

Vacant

Answer 36

When the insured has been gone for longer than four days

Question 37

Theft

Answer 37

Theft includes all means of taking property without the owner's consent

Question 38

Criminal law

Answer 38

Deals with wrongs against society! defined by the criminal code

Question 39

Civil law

Answer 39

Concerned with settling disputes between individuals or other legal entities in matters not involving a criminal act

Question 40

Plaintiff

Answer 40

The party doing the complaining

Question 41

Defendant

Answer 41

The party who allegedly committed the wrong

Question 42

Tort

Answer 42

A tort is a wrong done to another in breach of a duty laid down by law, it is not a breach of contract

Question 43

Strict liability

Answer 43

Certain activities have been determined by legislation or common law to create liability without regard to fault. Storing dangerous chemical or keeping a dangerous animal

Question 44

Special damages

Answer 44

Special damages can be accurately measured and are intended to reimburse the plaintiff for out of pocket expenses

Question 45

General damages

Answer 45

These are damages which cannot be quantified with precision in monetary terms, but reflect what the court believes to be necessary to compensate the aggrieved party fairly

Question 46

Negligence

Answer 46

The omission to do something which a reasonable man, guided by those ordinary considerations which ordinarily regulate human affairs would do, or the doing of something a reasonable and prudent man would not do

Question 47

Trespasser

Answer 47

People who are on another's premises for their own purposes without the express or implied permission of the occupier. Their prescience is of no value to the occupier and such persons are viewed as having temporarily appropriated the property for their own use

Question 48

Licensee

Answer 48

One who comes on the premises for his own purpose but with the occupiers consent Postal workers, meter readers

Question 49

Invitee

Answer 49

Enters by invitation, express or implied His entry is connected with the owners business or with an activity the owner conducts or permits to be conducted on his land Their is a mutuality of benefit or benefit to the owner

Question 50

Visitor

Answer 50

Licences or invitees

Question 51

Joint liability

Answer 51

When two or more people act together so as to cause injury or damage, they have the same legal duties as if they were working alone.