CAIB 1 - Chapter 1 Questions And Answers 100% Verified.
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CAIB 1 - Chapter 1
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CAIB 1 - Chapter 1
CAIB 1 - Chapter 1 Questions And Answers 100% Verified.
Define "Risk" - correct answer. The chance of a financial loss to which the object of insurance may be exposed to
List 3 Categories of Risk - correct answer. 1) Personal 2) Property 3) Liability
List 4 Types of Risk Mana...
CAIB 1 - Chapter 1 Questions And Answers
100% Verified.
Define "Risk" - correct answer. The chance of a financial loss to which the object of
insurance may be exposed to
List 3 Categories of Risk - correct answer. 1) Personal 2) Property 3) Liability
List 4 Types of Risk Management Techniques - correct answer. 1) Risk Avoidance 2)
Risk Retention 3) Risk Control 4) Risk Transfer
Define "Risk Avoidance" - correct answer. To avoid doing something in order to
eliminate the chance of risk
Define "Risk Retention" - correct answer. To self-insure or to pay for losses
themselves
Define "Risk Control" - correct answer. To reduce the frequency or severity of the loss
Define "Risk Transfer" - correct answer. To shift the financial obligation to someone
better equipped to handle it (an insurance company)
List 2 Types of Risks - correct answer. 1) Speculative Risk 2) Pure Risk
Define "Speculative Risk" - correct answer. Chance of Financial Loss or Financial
Gain
Define "Pure Risk" - correct answer. Chance of Financial Loss only
What type of risk is insurable? - correct answer. Pure Risk
What is a Contract? - correct answer. An agreement between 2 or more parties that
creates an obligation or do or not to do a specific thing
List the 5 components of a contract - correct answer. 1) Agreement 2) Consideration
3) Legality of Object 4) Legal Capacity 5) Genuine Intention
, Define "Agreement" - correct answer. a meeting of the minds where an offer has been
made and accepted unconditionally
Define "Consideration" - correct answer. the exchange of something of value
Define "Legality of Object" - correct answer. must be legal and cannot violate the
public good
Define "Legal Capacity" - correct answer. all parties must be competent and of sound
mind
Define "Genuine Intention" - correct answer. basic level of honesty
Who cannot enter into contracts? - correct answer. Minors, people with mental illness'
or under the influence of drugs or alcohol, business who operate under a trade name
List 3 additional components of a contract specific to Insurance Contracts - correct
answer. 1) Insurable Interest 2) Utmost Good Faith 3) Indemnity
Define "Insurable Interest" - correct answer. must be able to show that they'd be hurt
financially from a loss
Define "Utmost Good Faith" - correct answer. complete and total honesty of all parties
- a higher degree of honesty
Define "Indemnity" - correct answer. ensures people receive the actual amount of their
loss, no more and no less
Define "Void" - correct answer. to have never existed
Define "Voidable" - correct answer. wronged party may void the contract at discrection
What 3 Elements are found in the Indemnity Agreement? - correct answer. 1) ACV 2)
Financial Interest 3) Amount of Insurance
How is Actual Cash Value Determined? - correct answer. Replacement Cost -
Condition/Resale Value/Life Expectancy = ACV
Define "Financial Interest" - correct answer. The amount of property that is actually
owned by the insured
What role does the Federal Government play in insurance? - correct answer. They
ensure the financial health (solvency) of federally licensed insurers
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