Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

Which of the following is NOT typically a feature of a risk that may qualify for rate credit?

1. Monitored alarm

2. Constructed after 1945

3. No basement

4. Multiple tenants

The correct answer is: Multiple tenants

When evaluating features that may qualify a risk for rate credit, certain characteristics are looked at for their ability to minimize risk or potential claims. A monitored alarm, for example, provides a security measure that can deter theft or damage, making it a favorable feature for rate credit. Similarly, a property constructed after 1945 is often built to more modern safety and building codes, which can reduce risk, particularly regarding structural integrity and safety features. A property with no basement can also be viewed as advantageous for rate credit since basements can be susceptible to flooding and other damage, which may increase the risk profile of a property. On the other hand, the presence of multiple tenants may not qualify for rate credit. A multi-tenant property can introduce complexities such as varied occupant behaviors, increased liability exposures, and difficulties in managing risk compared to single-occupancy properties. This multiplicity does not inherently provide a risk reduction or mitigation that would warrant any rate credit, which is why it is identified as a feature that typically does not qualify.