Registered Insurance Brokers of Ontario (RIBO) Practice Exam

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Are custom duties applied when an insured vehicle's motor is replaced while vacationing in the U.S.A.?

Yes, always
No, this is an example of wear and tear
Only if the vehicle is uninsured
Only if the vehicle is deemed a total loss

The correct answer is: No, this is an example of wear and tear

The correct answer is that custom duties are not applied in this scenario because replacing a vehicle's motor while on vacation in the U.S.A. considers the condition of the vehicle rather than an import situation. Typically, customs duties are associated with the importation of goods into a country, but replacing a motor is regarded as a repair or maintenance action rather than an import of a new item, which falls into general wear and tear. The concept of wear and tear refers to the natural degradation of a vehicle's components over time, and replacing the motor is simply a continuation of maintaining the vehicle's operation. This is why customs duties would not typically apply in this context, as the vehicle is still the same entity and remains under the owner's legal possession, regardless of the repairs made.