Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

What is the function of the Fire Department Charges Endorsement?

1. To charge the insured directly for fire services

2. To reimburse for costs incurred by neighbouring fire departments

3. To cover legal liabilities related to fire damage

4. To provide training for the local fire department

The correct answer is: To reimburse for costs incurred by neighbouring fire departments

The Fire Department Charges Endorsement serves the purpose of reimbursing for costs incurred by neighbouring fire departments when they respond to a fire at an insured property. This endorsement is important as it ensures that fire departments, which may provide mutual aid and respond to incidents that extend beyond their normal jurisdiction, can recover costs associated with their response efforts. Given that fire services are critical in protecting property and lives, this endorsement facilitates funding for those services rendered during emergencies, thereby enhancing community safety and resource management. The other options do not accurately reflect the function of this endorsement. Charging the insured directly for fire services does not take into account the mutual aid aspect, while covering legal liabilities related to fire damage pertains to liability insurance rather than the specific reimbursement of response costs. Providing training for the local fire department is also unrelated to the financial aspect of responding to incidents, as the endorsement is focused on cost recovery rather than training initiatives.