Registered Insurance Brokers of Ontario (RIBO) Practice Exam

Which coverage under a Homeowners Comprehensive policy is not automatically increased at the policy anniversary?

1. Property damage coverage

2. Liability coverage

3. Dwelling coverage

4. Contents coverage

The correct answer is: Liability coverage

The correct answer is liability coverage. In a Homeowners Comprehensive policy, coverage amounts for dwelling, contents, and property damage are typically subject to automatic increases at each policy anniversary. This adjustment is meant to keep up with inflation and rising repair and replacement costs, ensuring that the insured property maintains adequate coverage over time. Liability coverage, however, operates differently. It generally remains fixed unless the policyholder actively opts to increase it or the insurer proposes a change. Therefore, it does not experience the same automatic adjustments as the other types of coverage included in the policy. This distinction is important for policyholders to understand when managing their coverage levels effectively.