Canadian Accredited Insurance Broker (CAIB) One Practice Exam

What type of building structure might be expressly excluded in most insurance policies?

1. Temporary structures

2. Commercial buildings

3. Residential buildings

4. Public buildings

The correct answer is: Temporary structures

Temporary structures are often expressly excluded in most insurance policies due to their transient nature and potential lack of permanence or stability. Insurance underwriters assess risk based on the durability and expected lifespan of a structure. Since temporary structures, such as tents, construction scaffolding, or similar installations, are not meant for long-term use and are subject to different types of risks (like weather-related damage or material failure), insurers often decide to exclude them from standard coverage. This exclusion helps manage the risk portfolio, as temporary structures may see higher rates of damage or collapse compared to permanent buildings. Other building types, such as commercial, residential, or public buildings, typically have established standards and longer lifespans, making them more insurable and often included within policy coverage, subject to the specific terms of the policy. They generally meet the criteria for insurability, providing a clear rationale for their inclusion in coverage.