Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

Besides theft, which type of damage is also covered by specific extensions?

1. Natural disasters

2. Malicious acts

3. Accidental damage

4. Negligence

The correct answer is: Malicious acts

The correct answer is the coverage for malicious acts, as it is commonly included in specific extensions within an insurance policy. These extensions are designed to broaden the protection offered under the standard policy beyond the basic perils covered. While theft is a clearly defined risk covered in many policies, malicious acts such as vandalism or intentional damage by third parties are generally accounted for under these extensions, allowing policyholders to seek compensation for damages resulting from hostile actions that may not be specifically addressed in the main coverage. Natural disasters, accidental damage, and negligence may also be important considerations for policyholders, yet they often fall under different categories of coverage or require separate endorsements. Natural disasters may have specific exclusions or require special provisions to be included in standard policies. Accidental damage usually bears its own definition and coverage stipulations, often also needing additional endorsements. Negligence typically relates to liability issues rather than direct property damage claims. Thus, while they are significant topics in risk management and insurance, they do not align as closely with the type of damage covered by extensions aimed explicitly at safeguarding against malicious acts.