TheoryCAIB 2 Insurance Exam Prep
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CAIB 2 Insurance Exam Prep sample questions
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Regs Which of the following best describes the purpose of an 'occurrence' trigger in a commercial general liability policy?
A. Coverage applies only when the claim is filed during the policy period
B. Coverage applies when the bodily injury or property damage occurs during the policy period, regardless of when the claim is made ✓
C. Coverage applies only to claims that are both made and paid during the policy period
D. Coverage applies retroactively to all incidents prior to the policy inception
Correct — B. An occurrence-based CGL policy responds when the injury or damage takes place during the policy period, even if the claim is filed years later. This differs from a claims-made policy, which requires the claim to be submitted during the policy period.
Safety A jewellery store installs a monitored central-station alarm. From a commercial crime underwriting perspective, this is considered a:
A. Moral hazard
B. Morale hazard
C. Physical hazard reduction ✓
D. Speculative risk
Correct — C. Installing a monitored alarm system is a physical measure that reduces the likelihood of theft losses by deterring intruders and enabling rapid response. It directly addresses physical hazard rather than moral or morale concerns.
Ops A 'blanket limit' in commercial property insurance means the coverage amount:
A. Applies separately and automatically to each insured location
B. Applies as a single shared limit across all covered locations or items ✓
C. Increases automatically each year by 10%
D. Covers only the land value of all properties combined
Correct — B. A blanket limit provides one aggregate amount of insurance that applies across multiple buildings, contents, or locations. This allows the insured to spread coverage flexibly rather than assigning fixed per-location limits.
Regs Under a commercial property policy, 'coinsurance' requires the insured to carry coverage equal to at least what percentage of the property's replacement cost to collect full loss payments?
A. 50%
B. 70%
C. 80% ✓
D. 100%
Correct — C. Most commercial property policies require the insured to carry insurance equal to at least 80% of the property's full replacement cost value. If the insured carries less, a coinsurance penalty is applied to any partial loss settlement.
Safety Which inland marine coverage form protects a contractor's tools, equipment, and machinery while at various job sites?
A. Installation floater
B. Contractors equipment floater ✓
C. Transit coverage form
D. Bailees customers floater
Correct — B. A contractors equipment floater (also called a tool floater) is an inland marine form that provides all-risk coverage for a contractor's owned or leased equipment, tools, and machinery wherever they are located.
Regs A business interruption policy is designed primarily to cover which type of loss following a covered property damage event?
A. Extra costs to reconstruct damaged inventory
B. Lost net income and continuing operating expenses ✓
C. Liability claims from customers who cannot be served
D. The cost of replacing key employees who resign after the loss
Correct — B. Business interruption (or business income) insurance indemnifies the insured for lost net income and necessary continuing expenses such as rent and payroll during the period of restoration after a covered property loss.
Safety Which concept in risk management involves transferring the financial consequences of a risk to another party through a contractual mechanism?
A. Risk retention
B. Risk avoidance
C. Risk transfer ✓
D. Risk reduction
Correct — C. Risk transfer shifts the financial impact of a risk to another entity, most commonly through insurance contracts or indemnity clauses in commercial agreements, so the original party is not solely responsible for any resulting loss.
Regs Which clause in a commercial property policy requires the insured to take immediate reasonable steps to protect property from further loss after a covered peril occurs?
A. Subrogation clause
B. Salvage clause
C. Protective safeguards clause
D. Duty to preserve property clause ✓
Correct — D. The duty-to-preserve-property (or 'sue and labour') clause obligates the insured to act promptly to mitigate damage after a loss, ensuring that preventable additional damage does not become a further claim against the insurer.
About the CAIB 2 Insurance Exam Prep test
Built around Finance & Accounting, this CAIB 2 Insurance Exam Prep question bank mirrors the real exam format instead of guessing at trick questions. Work through the free sample, read every explanation, then move on to full timed mock exams once you're ready.
You will be tested on
- The core topics and terminology you'll be tested on
- Rules, standards and best-practice procedures
- Real-world scenarios and how to respond
- Common mistakes and how to avoid them
How TheoryPractice helps you pass
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Topics in this question bank
The core topics and terminology you'll be tested on
Rules, standards and best-practice procedures
Real-world scenarios and how to respond
Common mistakes and how to avoid them
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