CAIB 2

Question 1

3 ways to determine Insurance Values

Answer 1

1. ACV
2. Replacement cost
3. Book Value

Question 2

5 ways to calculate ACV

Answer 2

1. Formula approach - RC - Depreciation.
2. Market value / direct sales approach
3. Income approach
4. Trade Value to the Owner
5. Broad Evidence

Question 3

The classes of property insured by commercial property insurance policies are

Answer 3

Building
Equipment
Stock

Question 4

Additional Conditions to a Policy (NNSPP)

Answer 4

Notice to Authorities
No Benefits to Bailee
Sue and Labour
Pair and Set
Parts

Question 5

Identify three things that a Survey does

Answer 5

1. Assist in identification of loss exposures
2. Helps to determine the coverages needed
3. Develops other underwriting information needed by the insurer

Question 6

Why a policy has so many exclusions ?

Answer 6

To exclude losses that are considered by the insurer to be commercially uninsurable, examples would be deliberate acts of violence such as riot and war.
Another reason to have exclusions is to exclude the losses for which a more specialized policy provides coverage for, such as automobile insurance.
Lastly, the insurers also exclude losses that have the potential to be catastrophic such as earthquake and flood.

Question 7

Mechanical Breakdown

Answer 7

“a failure in the working mechanism of the machinery…a functional defect in the moving parts of the equipment which causes the latter to cease functioning or to function improperly.