Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

What type of coverage would apply to property in transit?

1. General liability coverage

2. Off premises coverage

3. Commercial auto insurance

4. Property damage coverage

The correct answer is: Off premises coverage

When considering coverage for property in transit, off premises coverage is the most applicable choice. This type of coverage specifically includes protection for property that is not located at the insured's primary premises. It often extends to situations where property is being transported or stored away from the insured's main location. Off premises coverage ensures that items remain protected while they are being moved, whether it’s for delivery or other purposes, which is vital for businesses that regularly transport goods. This coverage typically applies to property lost or damaged while away from the insured's premises, thereby encompassing various transit scenarios. Other options like general liability coverage, commercial auto insurance, and property damage coverage may provide some level of protection in specific circumstances, but they do not directly address the unique risks associated with property in transit as effectively as off premises coverage does. General liability pertains to third-party claims, commercial auto insurance covers vehicles specifically rather than the cargo itself, and property damage coverage focuses on damage to property that could occur in various contexts, but again, it is not as tailored for transit situations. Thus, off premises coverage stands out as the most relevant and protective option for property during transportation.