Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

What obligation does an insured have regarding their installed Property Protection Systems?

1. They must upgrade the system every year

2. They must notify the insurer if the system is dismantled

3. They must notify the insurer if policy service has been suspended

4. They must keep the system operational without exception

The correct answer is: They must notify the insurer if policy service has been suspended

The obligation of an insured regarding their installed Property Protection Systems primarily focuses on their duty to keep the insurer informed about changes that may affect coverage. In this context, notifying the insurer if the policy service has been suspended is particularly important. This is because a suspension could indicate a higher risk for the insurer and might affect the terms of coverage or the insurer’s willingness to continue providing protection. While maintaining the operational status of a property protection system is essential, unexpected events may occur that hinder its functionality. Therefore, ensuring that the insurer is aware of any service suspensions helps protect both the insured and the insurer from misunderstandings or disputes regarding coverage. Staying in communication allows for necessary adjustments to policy terms to align with the insured's current circumstances, which can be crucial in the event of a claim. The other options suggest obligations related to upgrades or operational status, which, while important, do not carry the same direct responsibility of notification to the insurer in the event of a blanket change like service suspension. Therefore, the primary obligation is centered around informing the insurer of significant status changes.