Canadian Accredited Insurance Broker (CAIB) One Practice Exam

What must an insurer provide to ensure the insured is covered when property is moved for safety?

1. A notice of coverage

2. A removal clause

3. An update to the policy

4. A new insurance contract

The correct answer is: A removal clause

A removal clause is necessary to ensure that the insured is covered when property is moved for safety. This clause provides specific terms and conditions under which the coverage will continue for property that is temporarily relocated. It allows an insured party to move their property to a safer location during situations such as a natural disaster or imminent threat, while still maintaining insurance coverage. Having a removal clause in the policy is crucial because it clearly delineates the insurer's responsibility for the property during the time it is away from its usual location. This provision typically states that coverage applies, often up to a certain limit or for a defined period, allowing the insured to obtain peace of mind knowing their assets are protected even when relocated. While options such as a notice of coverage or updates to the policy might provide information about existing coverage, they do not guarantee that the specific circumstances of moving property for safety are addressed. Additionally, drafting a new insurance contract would be impractical and unnecessary in most cases, as it would delay the immediate coverage needed during urgent situations. The removal clause is specifically designed to address these concerns efficiently.