Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

What is the implication of a 'Pair and Sets' condition in insurance?

1. Only undamaged pairs can be claimed

2. The value of undamaged property is deducted from claims

3. Only complete sets can receive full coverage

4. Claims on pairs are unnecessary

The correct answer is: The value of undamaged property is deducted from claims

The 'Pair and Sets' condition in insurance specifically addresses the coverage concerning pairs or sets of items. This condition implies that when a claim is made for a partial loss of a pair or set, the value of the undamaged property is deducted from the total claim amount. For example, if a pair of shoes is damaged and one shoe is still intact, the insurance payout would be adjusted to reflect only the loss of the damaged shoe. This ensures that insurers are not responsible for replacing items that are still usable or intact, thus preventing overpayment in claims. It emphasizes the insurer's goal of making the policyholder whole without giving more value than what was lost. Understanding this condition is crucial for policyholders when assessing the extent of their coverage for similar items.