Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

Which situation does NOT normally cause coverage to cease under the Builders Risk Policy?

1. Building used as office space during construction

2. Vacant building during winter

3. Building occupied as residence before completion

4. Daily site evaluations

The correct answer is: Daily site evaluations

The situation involving daily site evaluations does not normally cause coverage to cease under the Builders Risk Policy because these evaluations are typically considered part of the ongoing construction process. Builders Risk Policies are designed to provide insurance protection for buildings under construction, and regular site evaluations fall within the normal operational activities that ensure the project is progressing as planned. They help monitor construction progress, assess any risks, and confirm that safety measures are in place. In contrast, the other situations mentioned can lead to a cessation of coverage due to increased risks. For example, using a building as office space could indicate a change in the purpose of the property that may not align with the coverage that a Builders Risk Policy provides. A vacant building during winter presents additional risks related to weather and potential damage, which could breach the terms of the policy. Similarly, occupying a building as a residence before its completion may also introduce risks that are not covered under a typical Builders Risk Policy. Understanding these distinctions is crucial for effectively managing insurance needs during the construction process. Regular evaluations keep the project in compliance with the coverage terms, while deviations from intended use or increases in inherent risk can jeopardize the coverage provided by the policy.