Canadian Accredited Insurance Broker (CAIB) Three Practice Exam

How can a business address non-owned automobile liability exposure?

1. Through a blanket insurance policy

2. By increasing employee coverage

3. Using S.P.F. No. 6 or endorsement to Commercial General Liability

4. By limiting employee driving privileges

The correct answer is: Using S.P.F. No. 6 or endorsement to Commercial General Liability

A business can effectively address non-owned automobile liability exposure by utilizing the Standard Automobile Form No. 6 (S.P.F. No. 6) or an appropriate endorsement to the Commercial General Liability (CGL) policy. Non-owned automobile liability exposure arises when employees or representatives use their personal vehicles for business purposes or when a business is held liable for accidents involving vehicles that are not owned by the business. By incorporating S.P.F. No. 6, a business can extend coverage to include liabilities that may arise from the use of non-owned automobiles. This specific form provides clarity and assurance that the business is protected against claims resulting from incidents involving non-owned vehicles, thus safeguarding the business from potentially significant financial losses. The CGL endorsement allows for broader protection and ensures that there are no gaps in coverage when employees are using their vehicles for business-related activities. In contrast, a blanket insurance policy may not specifically address the nuances of non-owned automobile liability exposure. Increasing employee coverage could enhance individual protection but does not directly tackle the liability concerns that stem from the use of personal vehicles for business purposes. Limiting employee driving privileges could reduce risk but is not a comprehensive solution to mitigate potential liability exposure.