Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

What is one advantage for owners of goods carrying their own insurance?

1. Broader perils insured against

2. Less paperwork involved

3. Reduced risk of filing claims

4. Higher premiums paid

The correct answer is: Broader perils insured against

The advantage of owners of goods carrying their own insurance lies in the broader perils that can be covered under their policy. When owners opt for their own insurance, they have the flexibility to tailor their coverage to meet specific risks associated with their goods, which can often surpass the standard or limited coverage that might be offered through a contractual agreement with a carrier or third party. This means they can include additional perils such as theft, damage in transit, or specific environmental hazards that may not be included in standard transportation insurance. Having the ability to choose and purchase insurance that aligns more closely with their unique needs can provide significant peace of mind and financial protection. This approach allows them to potentially close coverage gaps that could leave them vulnerable under a more generic policy provided by another entity. The other options suggest advantages that might not be inherently true. For instance, while there may be reduced paperwork in some situations, insurance typically involves documentation that is unavoidable. Claims filing can vary in difficulty based on circumstances, and carrying one's own insurance does not necessarily reduce the risk of needing to file a claim. Lastly, higher premiums paid would typically be seen as a disadvantage rather than an advantage, as many would seek to manage costs effectively.