CAIB 3: FINAL EXAMINATION QUESTIONS WITH COMPLETE ANSWERS ALREADY SCORED A+
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Course
CAIB 3
Institution
CAIB 3
Constructive Total Loss (MARINE INSURANCE) - Occurs when the cost of salvaging the cargo is too
high relative to the value saved
Define the following insurance terms.
Bill of Lading - Documents issued by carriers responsible for transporting or forwarding goods
Going Concern Value - Difference ...
CAIB 3 : FINAL EXAMINATION Constructive Total Loss (MARINE INSURANCE) - Occurs when the cost of salvaging the cargo is too high relative to the value saved Define the following insurance terms. Bill of Lading - Documents issued by carriers responsible for transporting or forwarding goods Going Concern Value - Difference in the value of property which must be sold after a loss and its value had the business continued Penalty (SURETY BOND) - Amount of credit given to the principal by the surety or the amount which the surety is prepared to pay in the event the principal should default Question #10 i) When a surety bond is provided on behalf of a principal, the surety is liable to the obligee and not the principal. Identify 2 (two) important characteristics of the guarantee made to the obligee. (1 mark) ii) What guarantees are provided to the obligee when the following contract bonds are provided on behalf of a contractor: (2 marks) - i) 1) Guarantee is secondary and arises only on default of principal 2) Guarantee is provided immediately upon default of principal ii) (a) Bid Bond These bonds guarantee that the principal can and will enter into contract at agreed price and that principal will be able to provide follow up bonding required for project (b) Labour and Material Payment Bond. These bonds guarantee that the principal will perform the work required for project and provide maintenance on project for one year after completion Question #11 Every loss exposure faced by an organization can be classified in accordance with the type of value exposed to loss. One such value is that relating to property. Property can be either tangible or intangible. i) The way in which tangible property is valued after a loss should be considered in the risk management process. Indicate how the following valuation methods used by the insurer after a loss could impact on the amount of the financial loss to the organization: (2 marks) ii) Provide 2 (two) examples of intangible property having value to an organization. (1 mark) - i) (a) pair or set value. Loss paid by insurers for damage to one item in pair or set will not consider the loss of value of the remaining item in any pair or set (b) going concern value. Loss paid by insurers for damage to businesses will not consider the difference in value of property which must be sold after a loss and the value had the loss not occurred ii) 1) Securities 2) Trademarks Question #2 All of the following statements in regards to the coverages provided under Coverage A. Bodily Injury and Property Damage Liability (Commercial General Liability Policy) are true, except one. Pick the Exception. a) Coverage provided only for such sums as the insured is legally obligated to pay as damages. b) Insurer has both a right and duty to defend the insured. c) Coverage is provided only for losses which occur during the policy period. d) Only those losses which occur in Canada and the United States of America(including its territories and possessions) are insured. - d) Only those losses which occur in Canada and the United States of America(including its territories and possessions) are insured.
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