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CAIB 2 - Chapter 7 Questions And Answers With Verified Solutions Already Passed!!!
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CAIB 2 - Chapter 7 Questions And Answers With Verified Solutions Already Passed!!!
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CAIB 2 - Chapter 7 Questions AndAnswers With Verified Solutions Already
Passed!!!
Section 1 - The need for BI Insurance - ANSWER✔✔
Why as a broker we need to sell B coverage - ANSWER✔✔- the losses form BI
are larger then the direct property losses
- can keep a business afloat instead of it shutting down due to mounting bills they
cant pay
- business continuity
Obstacles to selling BI coverage - ANSWER✔✔- It costs a lot
- uncertainty of what it covers (lack of knowledge)
- not wanting to share financial information
- too technical (complicated rules and coverages)
Sources of BI losses - ANSWER✔✔- direct property loss
- failure of public services (power lines go down in storm)
- customer is shut down
- supplier is shut down (fire at manufacturing plant)
- damage to neighboring premise (anchor property)
- action of regulatory authorities (tornado, flood, earthquake, tsuanami, riot. etc)
Costs of getting back into the operations - ANSWER✔✔1. reduction of capital
reserves - reserve funds profitable businesses maintain
2. bank loan
, 3. Increasing product prices - potentially long term consequence and further losses
4. Purchase of adequate BI insurance - businesses close after interruption mostly
due to inadequate insurance levels carried to meet their continuing expenses.
What 2 things BI insures - ANSWER✔✔1. Fixed expenses (continuing expenses
whether the business is open and running or closed)
2. Net profit
2 Bi forms - ANSWER✔✔1. gross earnings
2. Profits
Gross earnings form
**what does it assume - ANSWER✔✔coverage commences once the loss occurs
and ceases once the premise is ready to operate in again / indemnity period is
reached
** It assumes one will be in the same competitive advantage as just prior to the
loss
Profits Form - ANSWER✔✔Coverage commences at the time of the loss and
ceases once the business returns to its normal operating level prior to the loss (had
the loss not occurred) until the indemnity period has been reached
**Assumes that it will take longer for the insured to get back to their normal
income operating level prior to the loss
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