Registered Insurance Brokers of Ontario (RIBO) Practice Exam

The correct choice indicates that coverage for a newly acquired automobile extends to those coverages that applied to the vehicle it replaces. This is important in insurance practice as it ensures continuity of coverage when policyholders make changes to their owned vehicles.

When an individual acquires a new vehicle that serves as a replacement for an existing car already insured under the policy, the existing coverages associated with that replaced vehicle automatically carry over to the new automobile for a limited time of 14 days. This provision safeguards policyholders during the transitional period, allowing them to operate their new vehicle without a lapse in protection, as long as it mirrors the coverage of the outgoing vehicle.

This option highlights the importance of maintaining coverage consistency, as it prevents the potential risks and financial gaps that could arise if an insured vehicle is not immediately covered under the relevant policy conditions. In this context, having coverage extend from the previous vehicle reinforces the notion of protecting the insured's interests throughout the acquisition of a new automobile.