Canadian Accredited Insurance Broker (CAIB) One Practice Exam

Which type of theft is commonly excluded in homeowners forms?

1. Theft by a stranger

2. Theft by an employee

3. Theft of valuables outside the home

4. Theft by a neighbor

The correct answer is: Theft by an employee

The type of theft that is commonly excluded in homeowners forms pertains to theft by an employee. Homeowners insurance policies often have specific exclusions that reflect the understanding that theft by those in a position of trust, such as employees, might be viewed differently than theft by a stranger. In many instances, insurance companies consider employee dishonesty a risk that businesses typically manage through a different type of coverage, such as fidelity insurance or commercial crime insurance. This distinction is crucial because it highlights how insurance policies tailor their coverage to address the various risks associated with personal property. Homeowners policies are generally designed to protect against losses stemming from external threats, rather than those arising within the household or business. Understanding these exclusions enables policyholders to know what to expect from their coverage and helps them make informed decisions about additional insurance they may need for specific risks, such as employee theft. This approach allows policyholders to seek adequate protections for their unique circumstances without relying on their homeowners insurance to cover all potential losses.