Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

What is a condition that must be met for landscaping to be covered under a Builder's Risk Policy?

1. Exclusive ownership by the insured

2. Value included in the total insurance

3. Must be planted by a licensed contractor

4. Coverage must be purchased separately

The correct answer is: Value included in the total insurance

For landscaping to be covered under a Builder's Risk Policy, it is essential that the value of the landscaping is included in the total insurance. Builder's Risk Policies are designed to provide coverage for buildings under construction, and this includes various components like landscaping. When landscaping is included in the total insured value, it signifies that the owner is aware of its value and that it is part of the overall project being insured. In this context, having the value included is critical because a policy always covers what is explicitly specified. If landscaping is not accounted for in the total insurance value, it may not be eligible for coverage when a loss occurs, leading to potential financial gaps in protection for that aspect of the project. While other options discuss different aspects related to ownership, licensing, and the necessity of separate coverage for landscaping, they do not address the fundamental requirement of ensuring that the landscaping value is integrated into the policy, which is crucial for it to be covered. Therefore, ensuring that the value of the landscaping is included in the total insurance is a pivotal condition for coverage under a Builder's Risk Policy.