Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

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Prepare for the Canadian Accredited Insurance Broker Exam. Enhance your understanding with multiple choice questions and detailed explanations. Achieve success in your CAIB exam journey!

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Which of the following is a condition in commercial property policies regarding the Pair and Set provision?

The total claim payment will include the full value of the set
The undamaged property’s value will be deducted from the claim payment
The policy will cover all parts of the set equally
Replacement costs for each piece of the set will be provided

The correct answer is: The undamaged property’s value will be deducted from the claim payment

The correct choice highlights an essential aspect of the Pair and Set provision found in commercial property policies. This provision addresses what happens when only a portion of a pair or set is damaged. When a claim is made under this provision, the insurer will determine the value of the undamaged property within the pair or set and deduct that amount from the total amount paid for the claim. This reflects the idea that the value of the complete set is essentially diminished when one part of it is lost or damaged. Consequently, the insured party is only compensated for the actual loss incurred, which means they won’t receive a full payment for a complete set when only part of it is affected. This principle ensures that claims fairly reflect the true economic impact of the loss. Acknowledging the undamaged property’s value aligns with the goal of insurance: to restore the insured to their pre-loss financial condition without profiting from the loss.