Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

To which class of property does the Peak Season Endorsement apply?

1. Luxury items only

2. 25% more stock required

3. All commodities under $500

4. Excess inventory at retail locations

The correct answer is: 25% more stock required

The Peak Season Endorsement is designed to provide coverage for increased inventory levels during peak business periods. This endorsement is especially relevant for businesses that experience fluctuations in inventory needs, such as retail operations during holiday seasons or special sales events. The endorsement typically allows the insured to increase their stock coverage by a specified percentage, often around 25%, to accommodate the additional inventory they anticipate needing to manage heightened demand. This means that during peak seasons, where sales typically spike, companies can ensure they have adequate insurance coverage for their excess stock without needing to purchase additional, potentially unnecessary, coverage throughout the entire year. Options that specify luxury items only, all commodities under a specific financial threshold, or simply excess inventory at retail locations do not capture the essence of the Peak Season Endorsement, which centers around the proportional increase in stock required during high-demand periods. Therefore, the correct classification focuses on the endorsement's intent to cover more stock than usual, accurately described by the percentage increase needed.