Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

Which of the following is considered an 'off premises' coverage?

1. Property stored on the insured's premises

2. Contents in transit

3. Equipment undergoing maintenance

4. Property acquired for future use

The correct answer is: Contents in transit

Off premises coverage refers to protection for property that is not located at the insured's primary location. This type of coverage is important for businesses that may have property stored or utilized in various locations aside from where their main operations are conducted. In the context of the question, contents in transit qualifies as off premises coverage because it encompasses items that are being transported to or from different locations. This reflects the essence of off premises coverage, which safeguards against potential losses that can occur while the property is away from the insured's premises. The other options, such as property stored on the insured's premises or equipment undergoing maintenance, are situated at the insured's main location or involve activities conducted there, thus they do not fall under off premises coverage. Similarly, property acquired for future use, although it may not be in active use, is also typically considered as being on the premises where it is stored until put into service, again not meeting the criteria for off premises coverage.