Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

Which option best describes the Employee dishonesty agreement under the 3D Policy?

1. Coverage for theft by outsiders

2. Coverage for losses due to dishonest acts by employees

3. Coverage for accidents involving employees

4. Coverage for natural disasters affecting employees

The correct answer is: Coverage for losses due to dishonest acts by employees

The Employee dishonesty agreement under the 3D Policy specifically addresses coverage for losses that occur due to dishonest acts committed by employees. This type of coverage is designed to protect businesses from financial damage resulting from theft or fraud perpetrated by individuals who are employed by the company. It recognizes that employees, by virtue of their position, may exploit their access to the organization’s assets for personal gain. This is an essential aspect of risk management for businesses, as employee-related dishonesty can lead to significant financial losses. Each of the other options describes different scenarios. Coverage for theft by outsiders pertains to risks associated with burglary or break-ins by individuals who are not employees. Coverage for accidents involving employees revolves around workplace injuries or incidents, which fall under different types of insurance, such as workers' compensation. Coverage for natural disasters affecting employees would relate to broader insurance considerations concerning property and liability rather than dishonest acts, focusing instead on events like floods, earthquakes, or similar disasters impacting the workplace environment. Hence, the emphasis of the Employee dishonesty agreement on protecting against employee dishonesty distinctly identifies why the chosen answer accurately reflects the essence of this coverage.