Canadian Accredited Insurance Broker (CAIB) Two Practice Exam 2026 – Comprehensive All-In-One Guide for Exam Success!

Co-insurance in property insurance is a provision that requires the insured to carry a minimum percentage of their property's value, typically 80%, 90%, or 100%. This is aimed at encouraging policyholders to insure their property adequately and to protect the insurer from risk associated with underinsurance.

When co-insurance applies, if the insured fails to meet the required percentage of coverage, they may face a penalty in the event of a loss, meaning the insurer will only pay a proportionate amount of the claim based on how much coverage was actually purchased relative to the required amount. This principle helps to ensure that the insured maintains coverage that reflects the true value of the property, which in turn helps stabilize the insurance market by promoting sound underwriting practices.

The other choices do not accurately reflect the co-insurance requirement. The insurer paying all claims does not align with the purpose of co-insurance; rather, it is the responsibility of the insured to ensure adequate coverage. Valuing property at market price relates to appraisal and not specifically to co-insurance requirements, while selecting a higher deductible pertains to the terms of the policy and does not have a direct relationship with co-insurance.