Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

What does the 'No Benefit to Bailee' condition imply?

1. Bailees must incur losses for property damage

2. Bailees must insure all property on their own

3. Bailees must take care of others’ property with ordinary care

4. Bailees are exempt from liability for damages

The correct answer is: Bailees must take care of others’ property with ordinary care

The 'No Benefit to Bailee' condition indicates that the bailee is expected to exercise a certain standard of care towards the property entrusted to them, but it does not grant them any special advantage or benefit from the property itself. This means that while the bailee has a duty to take care of the property, the bailee cannot assert that they are entitled to benefit from it or claim any ownership over it. The expectation is that the bailee will handle the property with reasonable care, which aligns with the principles of fiduciary responsibility – taking property entrusted to them and ensuring it is protected. In this context, other options do not correctly capture the essence of what the 'No Benefit to Bailee' condition implies. The first option suggests that bailee must incur losses, which does not directly relate to the concept of caring for property. The second option implies a requirement for the bailee to insure the property themselves, which shifts the focus from the care provided to obligations of insurance coverage. The last option suggests a blanket exemption from liability, which contradicts the core principle of the bailee's duty of care in handling the property.