CAIB 2 - Midterm Exam 2
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Questions and Answers

What acronym is mentioned for memory in the content?

  • WHORP (correct)
  • HOPED
  • TOP HEG
  • BRAIN
  • A high risk detachment is not considered significant if surrounded by less hazardous locations.

    False

    What is typically required by a broker when dealing with high-risk policies?

    An additional questionnaire

    There are approximately ______ fire losses that occur in Canada each year.

    <p>50,000</p> Signup and view all the answers

    Match the following terms with their descriptions:

    <p>Moral = Relates to a person's character or ethics Morale = Related to a person's mental state or spirit Underwriter = Evaluates risk and decides policy suitability Broker = Acts as an intermediary between clients and insurers</p> Signup and view all the answers

    What would typically be a reason for the insurance company to accept a higher risk policy?

    <p>The broker has a history of high premium placements</p> Signup and view all the answers

    It is important to distinguish between moral and morale when studying insurance policies.

    <p>True</p> Signup and view all the answers

    What is the annual property loss in Canada due to fire incidents?

    <p>$1.5 billion</p> Signup and view all the answers

    What is the maximum amount the policy will pay out in the event of a loss when the item is declared at $10,000 but the actual cash value is $15,000?

    <p>$10,000</p> Signup and view all the answers

    The co-insurance clause applies automatically when conditions are not met.

    <p>True</p> Signup and view all the answers

    What may an owner decide regarding tenant improvements if the lease is not renewed after a loss?

    <p>Not put the same tenant improvements back.</p> Signup and view all the answers

    If an insured fails to disclose a prior theft claim, the insurer could _____ the contract.

    <p>void</p> Signup and view all the answers

    Match the following roles with their descriptions.

    <p>Broker = Facilitates communication between the insurer and the insured. Insurer = Provides the coverage based on the assessed risk. Insured = The party that purchases insurance. Underwriter = Evaluates and analyzes the risk before policy issuance.</p> Signup and view all the answers

    Which of the following could constitute a breach of warranty?

    <p>Allowing an alarm contract to lapse and then suffering a theft loss</p> Signup and view all the answers

    The insured is not required to provide all pertinent facts about their risk to the insurer.

    <p>False</p> Signup and view all the answers

    What is the maximum value an insurance policy will pay if a declared item is listed at $10,000 and its actual cash value is $8,000?

    <p>$8,000</p> Signup and view all the answers

    What is the average daily cost associated with the fires mentioned?

    <p>$4 million</p> Signup and view all the answers

    Local time at the insured's address changed from standard time to align with government auto policy.

    <p>True</p> Signup and view all the answers

    What is an example of coverage that will be discussed later for insureds regarding bylaws?

    <p>Coverage for bylaws</p> Signup and view all the answers

    Until the ______ is removed, the property may not be able to be rebuilt or repaired.

    <p>debris</p> Signup and view all the answers

    Match the type of commercial insurance policy with its description:

    <p>Fire only = Covers damages strictly from fire Fire and Extended = Includes additional protections for other risks Broad Form = Covers a wider range of perils and risks Equipment Breakdown = Protection against mechanical failures</p> Signup and view all the answers

    Which phrase is essential when reviewing commercial policies?

    <p>Perils included and exclusions</p> Signup and view all the answers

    As more spacecraft are launched, the potential for loss decreases.

    <p>False</p> Signup and view all the answers

    What might a client leasing property for a flower shop be responsible for according to their lease agreement?

    <p>Upkeep and maintenance of the boiler</p> Signup and view all the answers

    What happens if debris from the wind damages a customer's vehicle being worked on at an auto repair shop?

    <p>The shop is liable for the damage.</p> Signup and view all the answers

    All personal lines coverage is applicable to commercial properties.

    <p>False</p> Signup and view all the answers

    What is the reimbursement limit for damages caused to an employee's cell phone in the lunchroom due to a sprinkler system malfunction?

    <p>$250</p> Signup and view all the answers

    Under a broad form policy, ____________ are covered unless explicitly listed as exclusions.

    <p>perils</p> Signup and view all the answers

    Match the terms with their corresponding coverage type:

    <p>Fire = Basic property coverage Extended Coverage = Additional perils beyond fire Named Perils = Specific perils covered Broad Coverage = All risks except exclusions</p> Signup and view all the answers

    Which of the following is a key consideration in commercial property policies?

    <p>Limitations on extensions of coverage</p> Signup and view all the answers

    What is the primary focus of the exam in relation to coverage types?

    <p>Commercial property coverage</p> Signup and view all the answers

    Exclusions from a broad form policy are the only situations that will be covered.

    <p>False</p> Signup and view all the answers

    What acronym represents the five causes of mechanical and electrical breakdown for EDP policies?

    <p>DEEPS</p> Signup and view all the answers

    Exclusion policies are uniform across all insurers.

    <p>False</p> Signup and view all the answers

    What should brokers be aware of when reviewing company wordings?

    <p>Differences in exclusion policies and specialized forms</p> Signup and view all the answers

    Coverage for additional perils can often be added to an Insured's policy through __________ forms.

    <p>specialized</p> Signup and view all the answers

    Match the following types of insurance forms with their descriptions:

    <p>Limited form = Specifies what is covered Comprehensive form = Covers all risks limited by exclusions</p> Signup and view all the answers

    Which chart is used to review insuring property excluded in a broad form policy?

    <p>4-2</p> Signup and view all the answers

    Recent times have shown that flood coverage is less available than before.

    <p>False</p> Signup and view all the answers

    What event led to a high demand for adding earthquake coverage in Abbotsford?

    <p>Recent earthquake occurrence</p> Signup and view all the answers

    Study Notes

    Insurance Claim Procedures

    • When a client declares items worth $10,000, the payout will be the lesser amount, even if the actual cash value at the time of loss is $15,000.
    • A 100% co-insurance clause applies if conditions are not met regarding fire insurance policies.

    Tenant Improvements and Obligations

    • If a tenant's lease ends shortly after a loss, the property owner may opt not to restore previous improvements, allowing the next tenant to customize as needed.
    • Breach of warranty occurs if necessary conditions, like a monitored alarm, are neglected, leading to theft.

    Insurers’ Disclosure Requirements

    • Insured parties must reveal all relevant facts and prior claims; failure to disclose claims (e.g., a $10,000 theft) can lead to policy cancellation.
    • Brokers utilize submitted information for risk assessment, including applications, photos, and other required documents.

    Understanding the Insurance Market

    • The current state of the insurance market can be categorized as soft or hard, reflecting trends in premium rates and coverage availability.
    • Brokers may require additional questionnaires for high-risk areas, such as retail establishments near nightclubs or industrial facilities.

    Fire and Extended Coverage Policy Essentials

    • Understanding which perils are covered and their exclusions is crucial across all commercial policies.
    • Equipment Breakdown Insurance can complement existing policies for enhanced coverage.

    Commercial Insurance Key Points

    • Commercial property policies usually have limited liability extensions for covered losses.
    • Familiarity with standard exclusions within broad form policies helps brokers navigate coverage effectively.

    Financial Considerations and Reporting

    • Canada experiences approximately 50,000 annual fire losses, totaling around $1.5 billion, averaging over $4 million daily in damages.
    • Data and examples from Chapter 3 illustrate important insurance policy structures and definitions.

    Extensions of Coverage

    • Most commercial property policies include extensions that limit the insurer's liability.
    • Employers may be reimbursed for limited damages (e.g., cell phones) under coverage extensions based on specific scenarios like sprinkler system failures.

    Specialized Coverage Considerations

    • Specialized forms differ by insurer; brokers need an understanding of varying guidelines and exclusion differences.
    • Additional coverage for risks like earthquakes includes provisions for landslides or other movements happening concurrently with seismic activity.
    • Increased demand for specific coverage, such as earthquake protection, illustrates the evolving nature of insurance policies in response to recent events.
    • Flood coverage availability has improved in personal lines, indicating changing risk assessments by insurers.

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    Description

    Explore the essential procedures related to insurance claims, tenant obligations, and disclosure requirements. This quiz delves into the complexities of the insurance market, offering insights into co-insurance clauses and the impact of tenant improvements on leases. Test your knowledge and understanding of these crucial concepts.

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