Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

Which of the following types of property must be directly attacked for coverage to respond?

1. Raw materials

2. Refrigerating or cooling apparatus

3. Finished goods

4. Inventory in transit

The correct answer is: Refrigerating or cooling apparatus

The correct choice highlights that refrigerating or cooling apparatus must be directly attacked for coverage to respond due to the specific nature of the endorsement surrounding their operational integrity. In general, many insurance policies incorporate specific clauses that outline the conditions under which coverage is activated. For refrigerating or cooling apparatus, damage or loss often needs to be initiated by an external factor directly impacting the equipment's functionality. This typically means that for coverage to apply, the apparatus must suffer direct damage that impairs its ability to maintain temperature control of perishables or stored goods. The policy may also cover losses resulting from the failure of the apparatus itself if it was caused by a covered peril. In contrast, other options like raw materials, finished goods, or inventory in transit generally do not require a direct attack or damage to initiate a claim. These items are covered under broader policy provisions that protect against various risks typically associated with loss or damage rather than requiring an immediate and direct threat. Consequently, the nature of coverage differs significantly across these property types, making refrigerating or cooling apparatus unique in this regard.