CAIB 1 EXAM NEWEST ACTUAL

CAIB 1 EXAM NEWEST ACTUAL

EXAM COMPLETE 370 QUESTIONS

AND CORRECT DETAILED

ANSWERS (VERIFIED ANSWERS)

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QUESTION 1: Define in pure insurance terms "risk"

CORRECT ANSWER : Chance of financial loss to an object

of insurance

QUESTION 2: List 3 categories of risk generally faced by

people

CORRECT ANSWER :

• Property
• Personal
• Liability

QUESTION 3: State 4 possible options people can choose to

deal with risk and give a brief explanation and example of each

CORRECT ANSWER :

• Avoid the risk - rent rather than buy
• Retain the risk - self insurance or share risk through

deductibles

• Control the risk - loss control measures
• Transfer the risk - purchase insurance

QUESTION 4: Give 2 examples of loss control measures that

can be taken to reduce the frequency and severity of losses

CORRECT ANSWER :

• Install intrusion detection equipment
• Install fire detection equipment

QUESTION 5: State 2 reasons why loss control measures are

not a total solution in eliminating financial loss

CORRECT ANSWER :

• Equipment are not guaranteed to work 100% of the time

• Some losses cannot be controlled like hail or lightning

QUESTION 6: Explain, using an example, "speculative risk"

CORRECT ANSWER : Chance of financial loss or gain like

gambling

QUESTION 7: Explain, using an example, "pure risk"

CORRECT ANSWER : Chance of financial loss only like

owning a building that could burn down

QUESTION 8: Which of the following types of risk insurers

will not provide an insurance policy for?

• Speculative Risk
• Pure Risk

CORRECT ANSWER : Speculative Risk

A contract is an agreement between two or more persons which creates an obligation to do or not to do a particular thing. All contracts contain 5 elements.

QUESTION 9: Identify and explain these 5 elements.

CORRECT ANSWER :

• Acceptance - a meeting of minds on the subject of matter

and terms of the contract

• Consideration - one party gives something of value and the

other returns a promise, performs an act or agrees not to perform an act

• Legality of Object - contract's purpose which is contrary to

public policy is not enforceable at law

• Legal Capacity of Parties - contract is only enforceable if

the parties are competent or have legal capacity

• Genuine Intention - contract is only enforceable only when

it can be shown that the parties actually intended to enter into a contract

QUESTION 10: List 2 items that are required for a proper

agreement, or meeting of the minds, to be valid

CORRECT ANSWER :

• Offer made
• Acceptance of offer