Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

Which insurance condition stipulates that the bailee must take care of the property with ordinary care?

1. No benefit to Bailee

2. Pair and Set

3. Insured's financial interest

4. Actual Cash Value

The correct answer is: No benefit to Bailee

The condition that stipulates the bailee must take care of the property with ordinary care is indeed the "No benefit to Bailee" concept. This principle is rooted in the relationship between the bailor (the owner of the property) and the bailee (the person or entity temporarily in possession of the property). Under this condition, the bailee is required to exercise a reasonable standard of care when handling the property, ensuring that it is safeguarded against damage or loss. This standard is significant because it establishes the expectation that the bailee does not benefit from the property in any substantial way; rather, they have a duty to maintain it faithfully while it is in their possession. This condition reflects an acknowledgement of the trust that the bailor places in the bailee, creating legal expectations for responsible behavior concerning the property. The other options refer to concepts that do not address the obligation of care required of a bailee. For instance, "Pair and Set" relates to situations involving items that are part of a matched group, while "Insured's financial interest" pertains to the financial stake of the insured party. "Actual Cash Value" describes a method of valuing insured items at their current worth rather than their replacement cost. None of these concepts