CAIB 2 · Commercial Insurance · New Edition 1.0
CAIB 2 / Commercial Insurance
Study Guide + Practice Questions — Complete Bundle
Pass the CAIB 2 exam and advance to commercial lines brokering. The only prep bundle that covers all 7 modules — commercial property, CGL, commercial auto, and the law — with a complete study guide, co-insurance formula with 5 worked examples, and 81 practice questions with full model answers and mark-by-mark breakdowns.
✓Complete study guide — all 7 CAIB 2 modules with textbook-accurate content and key term glossary
✓Co-insurance formula with 5 fully worked examples — the #1 tested calculation on CAIB 2
✓81 practice questions — 22 key terms, 12 MC (every wrong answer explained), 29 short answer
✓Every short answer has a model answer + mark breakdown showing how each mark is split
✓Exam trap callouts for co-insurance, CGL, commercial auto — distinctions that cost candidates marks
✓Aligned to CAIB New Edition 1.0 — definitions, multiple choice, and short answer format
✓Instant PDF download — 81 pages. Money-back guarantee if you do not pass.
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Short answer + mark breakdowns
⚠ CAIB 2 is where most candidates first encounter commercial insurance — and the co-insurance formula stops a lot of them
CAIB 2 introduces concepts that do not exist in personal lines: co-insurance penalties, CGL insuring agreements, commercial auto fleet policies, and the law of proximate cause. The co-insurance formula accounts for a significant portion of short answer marks — and most prep materials either skip it entirely or show it without the policy limit cap, which is the step that costs candidates marks on partial loss questions. This bundle covers the formula with 5 worked examples, covers the cap, covers the total loss exception, and provides 5 short answer questions on it with complete mark breakdowns.
What is CAIB 2
The gateway to commercial lines brokering
CAIB 2 — Commercial Insurance is the second level of the Canadian Accredited Insurance Broker program. Passing it allows you to advise business clients on commercial property, CGL, and commercial auto insurance. It is offered in BC, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, PEI, and Newfoundland and Labrador.
The New Edition 1.0 exam format: 12 key term definitions + 10 multiple choice + 26 short answer = 100 marks. You need 60% to pass. You have 3.5 hours. Short answer is 78 of those 100 marks. Most candidates who fail do so because they do not know how marks are awarded on short answer — and they run out of time. This bundle fixes both problems.
What’s inside
A complete study guide and 81 practice questions — together
The study guide covers every topic tested across all 7 modules with textbook-accurate definitions, key concept boxes, comparison tables for easily confused concepts, and Exam Trap callouts throughout. Immediately after each module’s notes come the practice questions for that module.
Module 1 — Introduction to Commercial Property6 KT · 2 MC · 5 SA
Co-insurance clause and formula — the full 6-step process including the policy limit cap and total loss exception. Replacement cost vs. ACV. Straight-line vs. plateau depreciation. Scheduled, blanket, and POED coverage. Co-insurance waiver ($5,000 / 2%). Stated amount clause. 5 fully worked co-insurance scenarios. The most calculation-heavy module — practice these scenarios until you can do them without looking.
Module 2 — Commercial Property Forms2 KT · 2 MC · 5 SA
Named Perils vs. Broad Form vs. All Risks — and critically, which party bears the burden of proof under each. Mortgage clause. Vacancy vs. unoccupancy (30-day threshold). Pair and Set, Sue and Labour, No Benefit to Bailee, Consequential Loss Assumption. Locked Vehicle Warranty — all 4 conditions. The burden of proof reversal under All Risks is one of the most tested MC distinctions.
Module 3 — Exclusions and Additional Coverages2 KT · 2 MC · 4 SA
Why standard property excludes equipment breakdown, earthquake, flood, and wear and tear. Equipment Breakdown Insurance — the gap it fills. Inland marine: contractors equipment floater, motor truck cargo, installation floater. Accounts receivable coverage — it covers the inability to collect, not the physical records themselves.
Module 4 — Roles in Commercial Property2 KT · 1 MC · 3 SA
Four underwriting hazards: physical, moral, morale, legal — with the moral vs. morale distinction fully explained. Staff, independent, and public adjusters — who each represents. Broker obligations before, during, and after placement. Subrogation in commercial claims.
Module 5 — The Law in Canada2 KT · 1 MC · 3 SA
Three sources of insurance law and which takes precedence. Affirmative vs. promissory warranty — and the effect of breaching each. Proximate cause with two worked scenarios: fire that causes water damage (what is the proximate cause?) and earthquake that causes fire (what does the policy cover?).
Module 6 — Commercial General Liability (CGL)4 KT · 2 MC · 6 SA
All four CGL insuring agreements (Coverage A, B, C, D). Premises and operations vs. products and completed operations. Key exclusions: employee injuries, pollution, professional liability. Claims-made vs. occurrence, retroactive date, tail coverage. Umbrella liability. A 5-item Covered / Not Covered scenario — the hardest question type on CAIB 2. The CGL module generates the most short answer marks of any module.
Module 7 — Commercial Automobile4 KT · 2 MC · 4 SA
SPF No. 4 — non-owned automobile liability and the vicarious liability exposure. Fleet policy: named vs. blanket (automatic coverage for newly acquired vehicles). Garage policy and Garagekeepers Legal Liability — the care, custody, and control gap in the CGL. Hired automobile coverage.
Practice questions
81 questions — every format the CAIB 2 exam uses
Questions are written at the difficulty and style of the real CAIB 2 exam. Every answer includes marking notes showing how marks are awarded. Write your answers before checking the model answers.
Part 1 — Key Term Definitions 22 questions · 1 mark each
22 definitions across all 7 modules. Each includes a Marker Keywords callout showing the exact words that earn the mark — not just the full definition. Covers co-insurance, ACV, replacement cost, mortgage clause, proximate cause, all four CGL coverages, SPF No. 4, Garagekeepers Legal Liability, and more.
Part 2 — Multiple Choice 12 questions · 1 mark each
12 questions built around the exact distinctions CAIB 2 tests — co-insurance calculations, burden of proof, All Risks coverage, mortgage clause, CGL insuring agreements, and commercial auto. Every wrong answer is explained so you understand the error in reasoning, not just the correct answer.
Part 3 — Short Answer 29 questions · 3 marks each
29 questions with full model answers and mark-by-mark breakdowns. Includes 5 co-insurance calculation questions, a 5-item CGL Covered / Not Covered scenario, proximate cause applied scenarios, warranty breach effects, SPF No. 4 and the Garagekeepers gap. The hardest questions on the real exam — practiced here first.
Sample question
See exactly what the practice questions look like
Scenario: A commercial building is insured for $600,000. The replacement cost of the building is $1,000,000. The co-insurance requirement is 80%. A fire causes $400,000 in damage. The building is not a total loss.
What amount will the insurer pay?
(A) $400,000 — the insured carried enough coverage for this loss
(B) $240,000 — the insured is underinsured and the co-insurance penalty applies
(C) $300,000 — the formula result, subject to the policy limit ◄ CORRECT
(D) $600,000 — the full policy limit because the formula exceeds the limit
Why (C) is correct: Required insurance = $1,000,000 × 80% = $800,000. The insured carried $600,000. Apply the formula: ($600,000 ÷ $800,000) × $400,000 = $300,000. The formula result ($300,000) does not exceed the policy limit ($600,000), so the insurer pays $300,000.
Why (A) is wrong: The insured is underinsured — they carried $600,000 against a required $800,000. The co-insurance penalty applies to partial losses when the insured carries less than the required amount.
Why (B) is wrong: The calculation is incorrect. The formula gives $300,000, not $240,000. Always show your working: (Carried ÷ Required) × Loss.
Why (D) is wrong: The insurer never pays more than the formula result. If the formula gives a number higher than the policy limit, the insurer pays the policy limit — but here the formula result ($300,000) is below the limit ($600,000), so the formula result stands.
The full bundle contains 81 questions at this level — every one with complete answer rationale and mark breakdowns.
Exam traps
The distinctions that cost CAIB 2 candidates the most marks
EXAM TRAP — The co-insurance policy limit cap
The formula result can never exceed the policy limit. If (Carried ÷ Required) × Loss = $220,000 but the policy limit is $150,000, the insurer pays $150,000. Most prep materials skip this step. This bundle shows it in all 5 worked examples.
EXAM TRAP — All Risks reverses the burden of proof
Under Named Perils, the insured must prove a listed peril caused the loss. Under All Risks, the insurer must prove a specific exclusion applies to deny it. An unexplained loss is NOT covered under Named Perils — but IS covered under All Risks. This reversal is one of the most commonly failed MC questions.
EXAM TRAP — Moral vs. Morale hazard
MORAL hazard involves the insured’s INTENT to cause a loss (dishonesty, fraud). MORALE hazard is CARELESSNESS because the insured knows insurance will cover it — no intent. Confusing these loses marks on both the definition and scenario questions. Memory trick: moRALE = cAReless attitude.
EXAM TRAP — The CGL does not cover employee injuries
The CGL specifically excludes bodily injury to the insured’s own employees. Employee injuries go to Workers’ Compensation — not the CGL. Candidates routinely assume a workplace injury is a CGL claim. The 5-item Covered / Not Covered scenario in this bundle tests this exact point.
EXAM TRAP — SPF No. 4 covers the EMPLOYER, not the employee’s vehicle
SPF No. 4 protects the employer’s third-party liability when an employee drives their own vehicle for company business. It does not cover the employee’s car for physical damage and does not replace the employee’s own insurance. Candidates who think it covers the vehicle miss the question entirely.
How to use this bundle
Instant access. One PDF. Study anywhere.
1
Purchase and download immediately — one PDF, 81 pages, delivered instantly. Open on any device, print for paper-based study, or work on screen. No login required after download.
2
Read one module’s study notes — focus on Key Concept boxes, comparison tables, and Exam Trap callouts. These are the highest-yield sections for the exam.
3
Attempt that module’s practice questions — write your answers in full before looking at the model answers. Write key terms from memory. Attempt MC before reading the options’ explanations.
4
Check mark breakdowns and identify gaps — the mark breakdowns show which specific words earn which marks. Use the scoring tracker at the end to identify modules below 70% and prioritize review.
Reviews
What CAIB 2 candidates are saying
★★★★★
“I failed CAIB 2 once before finding this guide. The co-insurance section alone was worth it — I finally understood the policy limit cap, which I’d never seen explained anywhere else. Passed with 74%.”
Sarah K. — BC, Commercial Lines Broker
★★★★★
“The mark breakdowns on every short answer question are what made this different. I stopped guessing what the marker wanted and started writing to the breakdown. First attempt pass.”
James T. — Saskatchewan
★★★★★
“Covered the moral vs. morale hazard distinction way better than my textbook. The exam trap callouts saved me on at least two questions I know I would have gotten wrong.”
Priya M. — Manitoba
FAQ
Frequently asked questions
Is this updated for CAIB New Edition 1.0?
Yes. Aligned to CAIB New Edition 1.0 — 7 modules covering commercial property, CGL, and commercial auto, in the exam format: 12 definitions + 10 MC + 26 short answer = 100 marks. All practice questions match this format.
Is the co-insurance section thorough enough?
More than any other resource available. The formula is shown as a 6-step process including the policy limit cap — the step most guides miss. Five fully worked scenarios covering every situation the exam uses. Five short answer questions with complete mark breakdowns. Work through all of it and you will not drop marks on co-insurance.
Do I need the CAIB textbook as well?
This bundle is designed to work alongside your CAIB 2 textbook, not replace it. The study guide distils the key content, concepts, and definitions into a focused exam preparation format. Candidates who use both are best prepared — but many candidates use this bundle as their primary preparation resource with strong results.
What provinces does CAIB 2 apply to?
CAIB 2 is recognized in BC, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, PEI, and Newfoundland and Labrador. The content is based on the CAIB national curriculum and applies in all participating provinces.
What format is it in?
One PDF — 81 pages. Download immediately after purchase. Print it or study on screen. No login required after download.
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The most thorough CAIB 2 prep available — 81 pages, instant download.
Complete study notes for all 7 modules. Co-insurance formula with 5 worked examples and the policy limit cap. 81 practice questions — definitions with Marker Keywords, MC with every wrong answer explained, short answer with model answers and mark breakdowns. Scoring tracker, master glossary, and short answer writing strategy. Money-back guarantee if you do not pass.
