Canadian Accredited Insurance Broker (CAIB) Three Practice Exam

What is the required notice period for cancellation of an insurance policy as stated by the insurer?

1. 5 days

2. 10 days

3. 30 days

4. 15 days

The correct answer is: 10 days

The correct answer indicates that a notice period of 10 days is typically required for the cancellation of an insurance policy as stated by the insurer. This time frame is a common requirement in many insurance agreements, allowing both the insurer and the insured adequate time to process the cancellation and make necessary arrangements. The ten-day period strikes a balance, ensuring that the policyholder is given sufficient notice to understand the implications of the cancellation, such as the potential for a lapse in coverage or the need to seek alternative insurance. This timeframe also helps insurers manage administrative processes effectively as they handle the cessation of the policy. In various jurisdictions, regulations may dictate specific notice periods for different types of insurance policies. The choice of 10 days reflects a standard that aligns with many of these regulatory frameworks, thereby reducing confusion and providing clarity to all parties involved.