Canadian Accredited Insurance Broker (CAIB) One Practice Exam

What is typically covered under a standard commercial property policy?

1. Earthquake damage

2. Flooding from exterior sources

3. Loss due to fire and theft

4. Wear and tear over time

The correct answer is: Loss due to fire and theft

A standard commercial property policy generally covers specific risks associated with property damage. Among these, loss due to fire and theft is included as it addresses significant hazards that can impact businesses. This coverage ensures that if an insured peril such as fire occurs, or if property is stolen, the policyholder can recover losses, allowing for business continuity and financial protection. In contrast, earthquake damage and flooding from exterior sources are typically not covered under a standard commercial property policy unless additional coverage is purchased. Wear and tear over time is considered a maintenance issue rather than a sudden and accidental loss, and thus it also falls outside the typical coverage of a standard policy. Therefore, the inclusion of fire and theft loss under the standard coverage reflects the policy's focus on protecting businesses from both sudden disasters and criminal acts.