Free CAIB 2 Practice Questions: Commercial Automobile Insurance

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These are original Finance Prep practice questions aligned to this topic area. They are not official exam questions, copied live-exam content, or exam dumps. Use them for self-assessment, scope review, and deciding what to drill next.

Question 1

Topic: Commercial Automobile Insurance

A commercial bakery asks its broker to arrange automobile coverage for an expansion. The owner says the business will keep its existing local delivery van, add a pickup with a trailer, lease a refrigerated cube van for six months, and occasionally rent a van during busy weeks. Deliveries may extend to neighbouring provinces, and some vehicles may be kept overnight at employees’ homes. Which inquiry best fits the commercial automobile placement concern?

• A. Confirm the replacement cost of ovens, stock, tenant improvements, and refrigeration equipment at the bakery premises.
• B. Confirm vehicle type, ownership or leasing arrangement, garaging, delivery radius, cargo carried, vehicle use, and driver details for each unit.
• C. Confirm the bakery’s annual gross receipts and payroll for products and completed operations rating.
• D. Confirm whether the landlord requires additional insured status on the bakery’s commercial general liability policy.

Best answer: B

What this tests: Commercial Automobile Insurance

Explanation: Commercial automobile placement depends on how each vehicle is owned, used, driven, garaged, and exposed to loss. A broker cannot treat all business vehicles as the same exposure. A leased cube van, occasional rented van, pickup with trailer, and owned delivery van may require different scheduling, underwriting details, physical damage treatment, or hired and non-owned automobile consideration. Radius of operation can affect territory and rating. Cargo and refrigeration may raise questions about use and any separate cargo coverage needs. Overnight garaging at employees’ homes and driver information are also material to underwriting. The best broker response is to gather a complete vehicle-use profile before recommending or placing coverage.

• Building, stock, and equipment values are commercial property facts, not the main automobile placement issue.
• A landlord’s additional insured requirement relates mainly to liability risk transfer and CGL documentation, not vehicle scheduling or use.
• Gross receipts and payroll may support CGL rating, but they do not answer who owns, drives, garages, or uses the vehicles.

These facts directly affect commercial automobile eligibility, rating, policy structure, and any hired or non-owned automobile needs.

Question 2

Topic: Commercial Automobile Insurance

A plumbing contractor has a pickup truck scheduled for local service calls. The owner tells the broker the truck will now be used daily to haul rented equipment for a new excavation sideline and asks the broker to confirm that the existing commercial auto coverage applies. Which broker action matches the required CAIB 2 concept before confirming coverage?

• A. Confirm coverage immediately because the vehicle is already listed on the commercial auto schedule.
• B. Issue a certificate showing the new operation because certificates can broaden the policy for business needs.
• C. Gather the details of the changed use and new operation, then obtain insurer underwriting agreement before confirming coverage.
• D. Wait until renewal to report the changed use if there has been no claim or vehicle change.

Best answer: C

What this tests: Commercial Automobile Insurance

Explanation: Commercial auto coverage and rating depend heavily on the vehicle’s actual use, operations, territory, drivers, and cargo or hauling exposures. A shift from local plumbing service calls to daily equipment hauling for an excavation sideline can change the underwriting exposure. The broker should not treat the existing vehicle schedule as automatic confirmation for the new use. The proper action is to collect the relevant facts, disclose the material change to the insurer or underwriter, document the client’s instructions and insurer response, and confirm coverage only within the broker’s authority and the insurer’s approval.

• A scheduled vehicle is not automatically covered for every changed commercial use.
• A certificate cannot amend, broaden, or create coverage that the policy and insurer have not provided.
• Waiting until renewal ignores a material change that may affect underwriting, rating, or coverage before a loss occurs.

A changed vehicle use or new commercial operation is a material underwriting matter that must be disclosed and accepted before coverage is confirmed.

Question 3

Topic: Commercial Automobile Insurance

A bakery with a small commercial auto fleet is insured for local deliveries using light vans in its city. The owner asks the broker to confirm that coverage now applies to a newly leased 5-ton truck, a new young driver with recent convictions, and weekly deliveries into the United States. The broker says the details must be sent to the insurer before coverage can be confirmed. Which CAIB 2 concept does this best illustrate?

• A. Underwriting referral for a material change in driver, vehicle, territory, or use
• B. Non-owned automobile coverage for employees using their own cars
• C. Routine certificate issuance for an existing fleet policy
• D. Hired automobile coverage for a temporary rental vehicle

Best answer: A

What this tests: Commercial Automobile Insurance

Explanation: Commercial automobile coverage should not be confirmed automatically when facts change in a way that may alter the risk accepted by the insurer. New drivers, different vehicle types, expanded operating territories, and changed business use can affect eligibility, rating, conditions, endorsements, and underwriting acceptance. A broker should gather the details, document the client’s request, and obtain insurer approval or instructions before confirming coverage. This protects the client from relying on an assumption and protects the broker from exceeding authority.

• A certificate only confirms coverage that already exists; it should not be used to create or imply unapproved coverage.
• Hired automobile coverage relates to vehicles hired or rented by the business, not a newly leased truck being added to the fleet.
• Non-owned automobile coverage addresses vehicles the business does not own, typically employee-owned vehicles used for business, not the listed fleet change described here.

The new driver, heavier vehicle, cross-border territory, and changed use all affect the auto risk and require insurer review before confirmation.

Question 4

Topic: Commercial Automobile Insurance

A commercial client operates a small plumbing business. At renewal, the owner says one employee will now take a company van home each night, use it to travel directly to job sites, and occasionally tow a trailer carrying tools and pipe. The current automobile application describes the van as used only for local service calls from the shop, with no trailer use. What is the broker’s best action?

• A. Tell the client the employee’s personal automobile policy will respond while the van is being driven home.
• B. Update the vehicle-use details with the insurer before renewal, including commuting, job-site travel, trailer use, driver details, and garaging location.
• C. Issue a certificate showing trailer coverage because the trailer is used only to carry the client’s own tools and materials.
• D. Leave the renewal unchanged because the van is still being used for the same plumbing business.

Best answer: B

What this tests: Commercial Automobile Insurance

Explanation: Commercial automobile underwriting depends heavily on actual vehicle use. A van used only for local service calls from the shop presents a different exposure than a van taken home nightly, driven directly to job sites, garaged away from the business premises, and used to tow a trailer. These facts can affect rating, eligibility, required endorsements, driver underwriting, and physical damage or liability considerations. The broker should not assume the existing description remains adequate or confirm coverage that has not been reviewed. The appropriate action is to gather and document the changed use facts and submit them to the insurer for renewal instructions or approval.

• Keeping the renewal unchanged misses material changes in use, garaging, driver exposure, and towing.
• Relying on the employee’s personal automobile policy is inappropriate because the vehicle is a company van used in the employer’s business.
• Issuing a certificate for trailer coverage overstates authority unless the policy and insurer have confirmed the trailer exposure is covered as required.

The changed use, overnight garaging, driver exposure, and towing exposure are material automobile underwriting facts that should be disclosed before renewal.

Question 5

Topic: Commercial Automobile Insurance

A marketing agency has no vehicles registered in its business name. Employees regularly use their own cars to visit clients, and the agency rents vans several times a year to move trade-show displays. A new client contract requires evidence that the agency carries automobile liability insurance for vehicles used in the work, including rented and employee-owned vehicles. Which coverage concept or inquiry is most appropriate for the broker to address both a possible liability claim and the contract evidence request?

• A. Issue a certificate under the CGL policy because the agency does not own any automobiles.
• B. Rely on the commercial property policy because the vans carry the agency’s trade-show displays.
• C. Treat the exposure as a fleet underwriting issue because employees drive regularly for business.
• D. Review whether the agency has hired and non-owned automobile liability coverage, and obtain insurer-approved evidence if it is in force.

Best answer: D

What this tests: Commercial Automobile Insurance

Explanation: Hired and non-owned automobile facts matter even when a business owns no vehicles. A rented van is a hired automobile exposure, and an employee’s personal car used on company business is a non-owned automobile exposure. These facts can affect how an automobile liability claim may respond and whether the broker can provide contractual evidence requested by a client, landlord, or other contracting party. The broker should verify the actual policy wording, limits, endorsements, and insurer authority before issuing any certificate or confirmation. Evidence should not be created just because a contract asks for it; it must match coverage actually in force or be requested from the insurer.

• Commercial property may insure business property such as displays, but it does not address third-party automobile liability arising from rented or employee-owned vehicles.
• A CGL policy is not a catch-all substitute for automobile liability and commonly has automobile-related boundaries or exclusions.
• Fleet underwriting usually concerns owned or scheduled business vehicles; having employees drive their own cars does not by itself make this a fleet placement.

Rented vehicles and employee-owned vehicles used for business can create hired and non-owned auto liability exposures that must be confirmed before evidence is issued.

Question 6

Topic: Commercial Automobile Insurance

A Manitoba plumbing contractor calls about a new service pickup. The current commercial automobile policy says:

• Covered automobiles are only the vehicles shown on the schedule.
• The schedule lists two Winnipeg-garaged vans with a $2,000,000 liability limit and a $1,000 collision deductible.
• An endorsement excludes operation by drivers under age 25 unless the insurer agrees in writing.

The client bought a pickup in Alberta, plans to garage it in Calgary, and wants a 22-year-old Calgary employee to drive it tomorrow. What is the best broker action?

• A. Add the pickup to the client file after the call and tell the client that the Manitoba policy terms automatically control the Alberta exposure.
• B. Confirm liability coverage only, but warn that collision coverage will not apply until the pickup is added to the schedule.
• C. Confirm the pickup has the same coverage as the scheduled vans because it is used in the same plumbing business.
• D. Do not confirm coverage; obtain vehicle, driver, garaging, use, registration, and jurisdiction details and request insurer approval and any required endorsement before the pickup is used.

Best answer: D

What this tests: Commercial Automobile Insurance

Explanation: Commercial automobile coverage depends heavily on the policy schedule, stated limits and deductibles, approved drivers, endorsements, and jurisdictional requirements. Here, the policy covers only scheduled vehicles, so the Alberta pickup cannot simply be treated as another insured vehicle. The under-25 driver is also affected by a specific endorsement requiring insurer agreement in writing. In addition, garaging and registering the vehicle in Alberta may affect the policy form, insurer acceptance, rating, and required handling. The broker should not give a coverage confirmation beyond the policy facts or assume automatic protection. The proper service response is to gather the missing underwriting information, advise the client that insurer approval is needed, document the request, and seek the required policy change before the vehicle is put into service.

• Same-business use does not overcome a schedule that limits covered automobiles to listed vehicles.
• Separating liability from collision ignores the driver exclusion and the fact that the vehicle is not scheduled at all.
• Treating Manitoba terms as automatically controlling the Alberta exposure overlooks jurisdictional auto rules and insurer underwriting approval.

The pickup is not scheduled, the proposed driver is excluded unless approved, and the Alberta garaging/registration facts may require jurisdiction-specific handling.

Question 7

Topic: Commercial Automobile Insurance

A plumbing contractor calls the brokerage because a scheduled service van was stolen overnight from a jobsite. The broker records the date, location, police report number, vehicle details, driver and key-control facts, and possible contents in the van, then directs the insured to report the loss promptly through the insurer’s claims process. Which commercial automobile concept does this best illustrate?

• A. Automatic coverage for a newly acquired automobile
• B. Adding a new driver to the policy schedule
• C. Issuing a certificate of insurance for a contract holder
• D. Prompt claim reporting and documented claim-service follow-up

Best answer: D

What this tests: Commercial Automobile Insurance

Explanation: After a commercial automobile accident or theft, the broker’s service role includes helping the insured report the claim promptly, gathering and documenting key facts, and directing the client to the insurer’s claim process. For a stolen vehicle, useful details include when and where the theft occurred, police reporting information, vehicle identification, driver or custodian information, keys and security facts, and any related property that may need separate coverage review. The broker should avoid promising claim payment and should keep the file notes clear. Vehicle changes and driver changes are also important servicing issues, but they are different from opening and supporting a loss report.

• Newly acquired automobile issues concern vehicle changes, not the immediate handling of a reported theft loss.
• Certificate issuance relates to proving insurance to another party and does not start a claim.
• Adding a driver is a policy-servicing change, but the facts describe reporting a stolen scheduled vehicle.

A theft loss requires timely insurer notice and careful documentation of the facts needed to open and support the commercial auto claim.

Question 8

Topic: Commercial Automobile Insurance

A landscaping contractor is renting a pickup truck for four months while a company vehicle is being repaired. The rental agreement requires the rental company to be shown on proof of insurance as an additional interest and requires confirmation of physical damage coverage. The client asks the broker to issue the certificate today using the firm’s existing commercial automobile policy.

What is the most appropriate follow-up?

• A. Obtain the rental agreement and vehicle details, then confirm with the automobile insurer whether the vehicle, additional interest, and physical damage coverage can be endorsed before issuing proof.
• B. Issue the certificate immediately because hired automobile liability automatically satisfies all rental company insurance requirements.
• C. Advise that no coverage can apply unless the contractor owns the pickup truck and adds it to the fleet schedule.
• D. Tell the client the commercial general liability policy should respond because the rental company is a third party.

Best answer: A

What this tests: Commercial Automobile Insurance

Explanation: A broker should not issue a certificate or confirm coverage beyond what the policy and insurer authority support. A rented or leased commercial vehicle can raise several issues: whether it qualifies under the automobile policy as a hired, leased, or temporary substitute vehicle; whether physical damage coverage applies; whether the rental company can be shown as an additional interest or loss payee; and whether an endorsement or insurer approval is required. The proper follow-up is to gather the rental agreement and vehicle details and obtain insurer confirmation before issuing proof of insurance. This protects the client, the insurer relationship, and the broker from overstating coverage.

• Immediate certificate issuance is unsafe because hired automobile liability does not automatically satisfy every contractual insurance requirement.
• A CGL policy is not the usual coverage source for automobile liability or physical damage to a rented commercial vehicle.
• Ownership is not always required, but leased or rented vehicle coverage must be checked against the automobile policy and insurer requirements.

A leased or rented commercial vehicle with additional interests and physical damage requirements may need insurer approval and policy endorsement before coverage can be confirmed.

Question 9

Topic: Commercial Automobile Insurance

A retail bakery has a commercial automobile policy that schedules two owned delivery vans, each with automobile liability and physical damage coverage. During a busy afternoon, the manager asks an employee to use the employee’s own car to deliver a replacement order to a customer. On the trip, the employee hits another vehicle and the employee’s car is also damaged.

Which coverage concept is the most appropriate fit for the bakery’s possible automobile exposure?

• A. Non-owned automobile liability for the bakery’s liability arising from the employee’s business use of a personal vehicle
• B. Owned automobile liability on the scheduled vans because the employee was acting within the bakery’s business
• C. Physical damage coverage on the bakery’s scheduled delivery vans for damage to the employee’s personal vehicle
• D. Commercial general liability coverage because the accident occurred while making a business delivery

Best answer: A

What this tests: Commercial Automobile Insurance

Explanation: A commercial auto policy’s scheduled vehicle coverages apply to the automobiles described on the policy, such as the bakery’s owned delivery vans. When an employee uses a personal vehicle on company business, the employer may have a non-owned automobile liability exposure if it is alleged to be responsible for the accident. That is different from physical damage coverage for the employee’s own car, which is not automatically provided merely because the trip was for the business. The broker should identify the non-owned auto liability issue and check whether the policy includes the needed coverage or endorsement, while avoiding any promise that the employee’s vehicle damage is covered under the bakery’s scheduled auto physical damage coverage.

• Scheduled-vehicle physical damage applies to covered scheduled autos, not automatically to an employee’s personal car.
• Commercial general liability is not the usual fit for automobile accidents arising from vehicle use.
• Owned automobile liability on the scheduled vans does not extend simply because the employee was acting for the business while driving a different, employee-owned vehicle.

The employee-owned car is not a scheduled vehicle, so the bakery needs non-owned automobile liability protection for its business-related exposure.

Question 10

Topic: Commercial Automobile Insurance

A plumbing contractor emails the brokerage on Friday afternoon: “We bought a used pickup this morning. Our new apprentice will drive it starting Monday for service calls and occasional parts deliveries. It may tow our small equipment trailer. Please send proof of insurance to the finance company today.” The current commercial auto schedule does not list the pickup or the apprentice, and the brokerage file does not show binding authority for this change.

Which response best fits proper commercial auto servicing?

• A. Tell the client to start using the pickup and update the vehicle schedule at renewal if there is no claim.
• B. Advise that the apprentice’s personal automobile policy should cover the pickup until the insurer processes the change.
• C. Gather the pickup, use, garaging, trailer, finance company, and apprentice driver details, then seek insurer approval or binding instructions before confirming coverage or issuing proof.
• D. Issue proof of insurance immediately because a commercial fleet policy automatically covers any vehicle the business buys.

Best answer: C

What this tests: Commercial Automobile Insurance

Explanation: Commercial auto servicing depends on keeping the vehicle schedule and underwriting information current. A newly acquired pickup, a new driver, delivery use, towing, garaging, and a finance company interest can all affect eligibility, rating, endorsements, limits, and evidence of insurance. A broker should not assume automatic coverage or issue proof that implies coverage without checking the policy wording, the insurer’s rules, and the brokerage’s binding authority. The proper service response is to collect the missing details, document the request, and obtain insurer approval or binding instructions before confirming coverage or issuing proof to a third party.

• Assuming every newly purchased vehicle is automatically covered ignores schedule requirements, policy wording, and insurer authority.
• Waiting until renewal leaves the client exposed to inaccurate records and possible coverage disputes.
• Relying on the apprentice’s personal automobile policy does not properly address a business-owned vehicle used in commercial operations.

Current schedules, accurate use and driver information, and insurer authority are needed before the broker can properly confirm or evidence coverage.

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Related focused pages

• Free CAIB 2 Full-Length Practice Exam
• CAIB 2: Introduction to Commercial Property Insurance
• CAIB 2: Commercial Property Insurance Forms
• CAIB 2: Commercial Property Exclusions and Additional Coverages
• CAIB 2: Roles Involved with Commercial Property Insurance
• CAIB 2: Law in Canada for Commercial Insurance
• CAIB 2: Commercial General Liability Policy
• CAIB 2: Commercial General Liability Exclusions

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