Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

What does commercial property insurance primarily protect against?

1. Personal injuries in commercial spaces

2. Financial losses due to unions and contractual issues

3. Physical damage to property and business interruption

4. Stock market volatility affecting business assets

The correct answer is: Physical damage to property and business interruption

Commercial property insurance primarily protects against physical damage to property and business interruption, making it a crucial coverage for businesses. This type of insurance specifically covers tangible assets such as buildings, equipment, inventory, and furniture from risks such as fire, theft, vandalism, and certain natural disasters. In addition to protecting against physical damage, commercial property insurance often includes coverage for the loss of income due to business interruption that can occur as a result of these damaging events. For example, if a fire damages a business's premises and it takes time to repair, the coverage ensures that the business can still meet its financial obligations, like payroll and rent, even while it is unable to operate at full capacity. The other options do not represent the primary focus of commercial property insurance. Personal injuries in commercial spaces relate more to liability insurance. Financial losses due to unions and contractual issues typically fall under business interruption insurance, not specific to property. Lastly, stock market volatility pertains to investment risks rather than the physical protection that commercial property insurance provides.