Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

Which of the following is a reason an owner should not rely solely on a carrier’s insurance?

1. Carrier's insurance may not have adequate limits

2. Carrier’s insurance is mandatory by law

3. Carrier's insurance is always sufficient

4. Carrier’s coverage is guaranteed to be broad

The correct answer is: Carrier's insurance may not have adequate limits

Relying solely on a carrier's insurance can pose significant risks, as such insurance may not provide adequate coverage limits for the owner's specific needs. Carrier insurance is designed primarily to cover the carrier's liability in the event of an incident during the transportation of goods. This means that if an event occurs that results in significant damages or loss, the limits of the carrier's insurance may fall short of what is necessary to fully compensate the owner for their losses. In many cases, the value of the cargo being transported may exceed the coverage limits provided by the carrier's insurance. If an owner were to depend exclusively on the insurance carried by the transportation provider, they could face substantial financial loss if a situation arises that is only partially covered or entirely excluded under the carrier's policy. The other choices describe aspects of carrier insurance that do not support the notion that it should be the sole coverage relied upon. While carrier insurance is often a requirement under regulations, and some may believe it to be sufficient or broad, these aspects do not guarantee that it meets the unique coverage needs of the owner's assets. Each situation should be assessed on its own merits, and supplementary insurance may be necessary for comprehensive protection.