Canadian Accredited Insurance Broker (CAIB) One Practice Exam

Which of the following is NOT a coverage typically found in broad form insurance?

1. Collapse due to faulty workmanship

2. Theft

3. Water damage from ruptured water lines

4. Vehicle impact when driven by insured

The correct answer is: Collapse due to faulty workmanship

Broad form insurance policies are designed to provide coverage for a wide range of perils, but they do have limitations. Coverage such as theft and water damage from ruptured water lines are generally included because they represent common risks that insureds face. Vehicle impact when driven by the insured is also typically covered under broad form policies since it's a direct risk associated with the insured's property. In contrast, collapse due to faulty workmanship is usually not included in broad form insurance. This exclusion arises because such collapses are often considered a result of the policyholder's negligence or failure to adhere to building codes, rather than an unforeseen event or peril. Insurers generally view this as an issue of insurable interest, focusing on perils beyond the control of the insured. Therefore, this type of risk is excluded from standard broad form coverage, making it the correct answer to this question. Understanding these distinctions is key for anyone involved in the insurance industry, as it impacts how policies are written and what risks are covered.