Canadian Accredited Insurance Broker (CAIB) Three Practice Exam

What is another name for the policy that provides increased limits of liability only?

1. Excess Liability Policy

2. Broadform Liability Policy

3. Standard Liability Policy

4. General Liability Policy

The correct answer is: Excess Liability Policy

The choice of "Excess Liability Policy" is correct because this type of policy is specifically designed to provide additional layers of coverage beyond the limits of an underlying liability policy. Essentially, it serves as a backup, kicking in when the primary liability coverage has been exhausted. This allows policyholders to manage higher risks by ensuring they have more substantial financial protection against liabilities, particularly in scenarios where the financial repercussions might exceed standard policy limits. The other options refer to different forms of liability coverage. A "Broadform Liability Policy" typically includes a wider range of risks in its coverage but does not exclusively focus on increasing limits of liability. A "Standard Liability Policy" usually covers essential risks but may not provide the expansive coverage levels that an excess liability policy offers. Meanwhile, a "General Liability Policy" is foundational coverage that covers common risks faced by businesses but does not inherently increase limits; it primarily protects against standard liabilities.