Canadian Accredited Insurance Broker (CAIB) Three Practice Exam

What is the role of endorsements like S.E.F. No. 5d Conversion Coverage Endorsement?

1. To cover losses from vehicle theft

2. To cover losses caused by the dishonest acts of lessees

3. To allow for long-term rentals

4. To provide additional liability coverage

The correct answer is: To cover losses caused by the dishonest acts of lessees

The S.E.F. No. 5d Conversion Coverage Endorsement specifically addresses the situation where a vehicle is rented or leased and subsequently not returned by the lessee, which can be considered a form of theft or conversion. This endorsement effectively provides coverage for losses sustained as a result of the dishonest actions of lessees, safeguarding vehicle owners from potential financial loss due to the non-return of the vehicle. While options may touch on other aspects of vehicle coverage, the primary function of the S.E.F. No. 5d endorsement is to protect against the specific scenario of conversion—where the lessee appropriates the vehicle without the intention of returning it—as opposed to losses from general theft or additional liability coverage. The focus on covering dishonest acts emphasizes the endorsement's role in providing peace of mind to those who lease or rent vehicles, ensuring they are not unduly burdened by the actions of others.