Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

Insurers might choose to waive any co-insurance requirement for a loss when the loss is under a certain percentage of the insured amount, typically a threshold that is considered minor or manageable. In this context, waiving the co-insurance condition for losses under 2% of the insured amount helps insurers streamline the claims process for relatively small claims that would not significantly impact their overall financial exposure. This approach also benefits policyholders, as it allows them to receive the full amount of the loss without facing penalties that might arise from the co-insurance formula, which could require them to share a portion of the loss if they are underinsured. By setting a threshold of 2%, insurers acknowledge that lower claim amounts are less likely to affect their loss ratios significantly, thus promoting customer satisfaction and maintaining positive relationships with their clients. The other options presented do not align with typical practices regarding co-insurance requirements. For instance, a loss exceeding 5% might trigger more scrutiny, potential penalties, or insurer involvement. Doubling the insured amount would generally not influence co-insurance requirements directly. Lastly, a fixed loss amount of $10,000 does not correspond systematically with the co-insurance calculations that are often percentage-based, thus making it less relevant in