Copy of RIBO Level One – Practice Exam Seven – 2025 – BU

During a social gathering, Mia accidentally knocks over a large flowerpot on her condo balcony. It falls to the balcony below and injures her neighbour. Mia is sued for medical expenses. What is the correct coverage outcome?

A severe windstorm snaps the tie-down straps securing Jasmine’s mobile home. The home shifts off its base, damaging the underside and interior flooring. Her policy includes building coverage for attached equipment. What is the correct outcome?

Sophia’s son attends university in another city and lives in a dormitory. A small electrical fire in the dorm damages his laptop and textbooks. Sophia’s condo policy includes the extension for students living away from home. What is the correct coverage outcome?

Heavy snow accumulates on Noah’s seasonal cottage roof, causing a partial collapse of the roof structure. His seasonal dwelling policy is a named-perils form, and collapse due to snow load is excluded under the insurer’s underwriting rules. What is the correct outcome?

A pipe bursts inside the building’s common hallway, and water leaks into Lucas’s condo unit, damaging his flooring and walls. The condo corporation’s master policy covers repairs to the hallway but refuses coverage for Lucas’s unit because “unit interiors are the owners’ responsibility.” Lucas has a standard condo unit-owner policy. What is the correct outcome?

A 30-year-old mobile home suffers fire damage to its kitchen. The owner applies for comprehensive-form settlement under the policy, but the insurer issues only a broad-form policy because of the home’s age and condition. What is the correct underwriting outcome?

During a break-in at Yaya’s rented apartment, the intruder kicks in the front door and damages part of the door frame and lock. Yaya’s tenant’s policy covers personal property, personal liability, and specified building damage caused by theft. What is the correct coverage outcome?

A fire in the neighbouring unit cuts power to Olivia’s condo. As a result, her fridge stops working, causing food spoilage and damage to temperature-sensitive items. Her condo policy includes the “Loss Due to Temperature Change” extension. What is the correct outcome?

Jenna owns two cars insured with the same insurer. Car A has Liability $1,000,000 and Loss/Damage – Collision only. Car B has Liability $300,000 and Loss/Damage – Comprehensive only. Jenna purchases a third vehicle on Saturday and immediately begins driving it. She forgets to notify the insurer for 13 days. On day 13, she rear-ends another vehicle, causing bodily injury to the other driver and collision damage to her new car. What coverage applies?

Aiden’s car is in the shop for mechanical repairs. He borrows his coworker’s car as a Temporary Substitute Auto. While driving it, he strikes a pedestrian. The coworker’s auto policy has $200,000 liability, while Aiden’s own auto policy has $2,000,000 liability. Which liability limit pays?

Noah, age 22, is a full-time student with a part-time job earning $180 per week. He is injured in an accident and is unable to attend school OR work. He applies for Income Replacement Benefits (IRB). He also qualifies for Non-Earner Benefits (NEB) but not Caregiver Benefits. What benefits is Noah entitled to?

Maria is listed on her parents’ auto policy but has been designated as an Excluded Driver due to past suspensions. One night she takes the family car without permission and causes a collision, injuring herself and damaging the car. What benefits, if any, can Maria claim?

Liam lives in Ontario and is driving his Ontario-insured vehicle in Quebec. Another Quebec driver hits him. Liability is 100% on the Quebec driver. Liam’s vehicle is damaged; Liam wants to claim under Ontario’s DCPD rules. What is the correct outcome?

Maya is a 26-year-old full-time caregiver for her disabled sister. She earns zero employment income, and she is catastrophically injured in an automobile accident, losing the ability to care for her sister. She applies for Accident Benefits. What is she entitled to?

Avery is enrolled in college but withdrew temporarily because of family issues. Two weeks later, they are injured in a car accident and cannot return to school for the upcoming semester. What benefit applies?

Chloe buys a third vehicle in her name only but intends to use it primarily for her spouse’s business, though she herself drives it home from the dealership. She forgets to notify the insurer for 12 days. On day 12, the new vehicle is stolen from her workplace. Which coverage applies to the newly acquired auto?

Olivia lives with her parents but has recently rented an apartment in another city for school. She is injured as a passenger in her boyfriend’s car. She is still financially dependent on her parents, owns no vehicle, and is listed as an occasional driver on her parents’ policy. Her boyfriend’s insurer has higher coverage limits. Which insurer pays Accident Benefits?

Two Ontario-insured vehicles collide in a parking lot. Fault is determined 80% to Driver A, 20% to Driver B. Driver A has no Collision coverage but has Liability $1M. Driver B has Collision with a $1,000 deductible. Driver A’s damage outcome?

NorthStar Mutual, a federally incorporated insurer licensed in all provinces, begins selling a new homeowner’s policy. The insurer’s head office is in Ontario, but its marketing campaign originates from its Alberta regional office and includes several misstatements that violate Alberta’s Insurance Act.

OSFI conducts a routine solvency audit and finds no solvency issues, but Alberta’s superintendent orders the insurer to revise the policy’s wording and threatens to suspend its authority to write business in the province if changes are not made.

Which regulatory statement is correct?

A business owner insures his warehouse and includes a clause in the application stating that he “sometimes stores customer property temporarily.” The insurer issues the policy without making any amendments. A fire destroys the building along with $180,000 of customer-owned equipment.

The insured did not specifically disclose the customers’ items as an insurable interest, nor does the policy wording reference them.

What is the correct regulatory outcome?

An insurance broker accidentally emails a client’s full claim history and medical documentation to the wrong employer after mixing up two customers with similar names. Weeks later, the employer uses the information to deny a promotion, and the insured files a complaint and a civil claim for damages.

The insurer argues that because the breach was “accidental,” no privacy violation occurred.

According to PIPEDA and Digital Privacy Act principles, what is correct?

An insured truthfully reports that her building is a single-occupancy warehouse at inception. Six months later, she leases half the space to a welding company operating high-heat equipment. She forgets to notify the insurer. A fire occurs and the insurer investigates, discovering the added tenant. Which is correct under statutory conditions?

A brokerage deposits all premiums into a single operating account for “efficiency.” One commercial client pays a $50,000 premium. To mask cash-flow issues, the broker delays transferring the insurer’s portion for 45 days, while using the funds to pay overdue office rent, staff bonuses, and replenish shortfalls from a prior month.

During an unannounced audit, the regulator finds that although the account statements show sufficient total funds, the actual insurer premium was not segregated at any point. What regulatory breach occurred?

A client applying for commercial insurance tells the broker that the business “only stores office supplies,” but during the walk-through, the broker notices multiple large propane cylinders and welding equipment. Because the broker is in a rush and fears losing the sale, he chooses not to ask about the cylinders and submits the application as originally stated.

A fire occurs four months later, and the insurer denies the claim for nondisclosure of hazardous materials. The client sues the broker for negligence. Who is MOST at fault under ethical duty standards?

A broker verbally recommends flood coverage during a meeting with a homeowner client but never documents the conversation, never follows up in writing, and never updates the application. The client declines coverage verbally but later denies the conversation ever occurred after experiencing a $180,000 basement flood loss. The broker has no emails, notes, or follow-up correspondence. What is the likely E&O outcome?

A broker handling a long-time client’s file learns confidential financial hardships during a renewal interview. The broker shares the information informally with another broker in the office “so they understand why the client is always late paying premiums.” The information eventually spreads, and the client discovers the breach. The broker claims the disclosure was acceptable because it was internal to the brokerage. What ethical rule was violated?

A brokerage receives 17 complaints over two months about slow service and unreturned phone calls. Instead of investigating, the manager blames these on “difficult clients” and deletes the complaints without recording them or responding. A regulator review later discovers this pattern and asks why no complaint logs were maintained. Which statement reflects proper conduct?

A law firm keeps original client wills, land transfer documents, and other irreplaceable papers in a basement storage room. A plumbing rupture in the floor above destroys 70% of the physical documents and corrupts the digital backups stored on the firm’s internal server.

The firm submits a claim under its Commercial Property, Valuable Papers, Electronic Data Processing (EDP), and Accounts Receivable policies. Which coverage MOST accurately responds to the physical destruction of the original legal documents?

A contractor is renovating a medical clinic. They have a Builder’s Risk policy covering the structure under renovation and n Installation Floater covering HVAC and specialized medical ventilation units awaiting installation

A windstorm collapses scaffolding, damaging the partially renovated building, the HVAC units stored onsite but not yet installed and the tools belonging to subcontractors. Which coverage correctly applies to the HVAC units?

A restaurant manager makes daily deposits. One evening, while driving to the bank after closing, a thief breaks into the manager’s car at a gas station and steals the bank deposit bag containing $14,500. Which coverage applies?

Hackers infiltrate a manufacturing company’s network and corrupt the production scheduling software, demand a ransom which causes a 3-week production shutdown and results in severe social media backlash damaging brand image

The company wants to claim all four categories as insured losses. Which portion is MOST likely excluded under standard Cyber Liability coverage?

A jeweler sends several custom pieces to an offsite artisan for polishing. While in the artisan’s workshop, a break-in occurs overnight. Thieves steal the jeweler’s own stock, customers’ jewelry left for repair and the artisan’s polishing equipment The jeweler wants ALL items covered under their own policy. Which policy BEST covers the jeweler’s stock AND customers’ property while off-premises?

A tailoring business stores clients’ designer garments for alteration. The business buys a Commercial Property Floater, a Bailee’s Customer Form and a Transportation Floater for delivering finished garments. A windstorm destroys the business premises AND the delivery van waiting outside. Inside the van were customer garments being returned, while the garments inside the store belonged to both the business and customers. Which policy BEST responds to the customers’ garments destroyed inside the van?

An employee steals $30,000 of jewelry from the business safe and then arranges a staged break-in so it appears thieves stole it. Security footage shows both an external break-in AND employee involvement. Which coverage applies?

A contractor installs a complex electrical panel in a new commercial building. During the testing phase, a voltage surge destroys the panel and sparks a fire damaging the building structure. The contractor claims under the Builder’s Risk policy. What is covered?

A dental clinic has a digital X-ray machine with integrated imaging software. A power surge burns out the compressor in the machine and corrupts the digital imaging software. The clinic has Equipment Breakdown, EDP Coverage and the Commercial Property Form Which is the MOST accurate coverage allocation?

At 3:00 a.m., thieves break into a specialty electronics store by smashing the window. Alarms scare them away before they steal anything, but in their rush they knock several shelves over, damaging $22,000 of stock. Which policy responds?

A retailer uses a third-party cloud provider to run its point-of-sale system. A cyberattack shuts down the cloud provider’s servers, preventing all customer transactions for 18 hours. No attack occurs on the retailer’s own systems. Which coverage applies?

A lightning strike destroys the accounting server storing the company’s receivable records. The backup files were corrupted. The business can still operate, but it must spend weeks reconstructing customer balances manually, and during this period it cannot verify several overdue accounts. Which is covered under Accounts Receivable Insurance?

A small explosion in the server room burns cabling and melts server housing. The fire itself destroys hardware and also makes digital records unrecoverable. The insured claims full replacement + data restoration under one form. What is the correct coverage split?

A contractor borrows a $250,000 excavator from another firm for 3 weeks. During use, the contractor accidentally overturns it on uneven terrain, destroying the cab. The contractor has a Contractors’ Equipment Floater, but the borrowed excavator is  not scheduled. Which outcome is MOST accurate?

Hackers breach a retailer’s POS system, causing the system to repeatedly crash and preventing any transactions for 36 hours. No physical damage occurs. The retailer has Commercial Property, Crime Insurance, Business Interruption (BI) and Cyber Liability

A BI claim is submitted under the Property policy, citing “system destruction.” What is the correct outcome?

A broker provides an  oral binder for a commercial auto policy before sending the application to the insurer. The insured causes a loss two hours later. The insurer argues the binder is invalid because the broker “did not have actual underwriting authority.” What is the Correct contract status?

A building is insured by Policy A: $500,000 limit, standard contribution wording and  Policy B: $500,000 limit,  excess insurance clause. A $600,000 loss occurs. How is indemnity allocated?

A small business owner is considering whether to expand into a risky new product line. If the expansion succeeds, profits will increase by 40%. If it fails, the business could lose its entire investment.

Simultaneously, the owner worries that a wildfire approaching the region could destroy the existing inventory. The owner attempts to insure both the potential business expansion losses and the wildfire risk under one commercial policy. Which risk is insurable?

Lightning strikes a tree in the insured’s backyard. The tree weakens but does not fall for two days. On day three, strong winds (a peril not insured under the policy) blow the weakened tree over, crushing the garage. The insured claims the lightning was the proximate cause. What is the correct proximate cause?

An insurer fails to maintain adequate loss reserves and  unearned premium reserves. During a surge of claims, it cannot pay all insureds. The insurer argues that it can delay payment until more premiums come in. What is the correct outcome?

Sam works for a brokerage but is still waiting for his RIBO licence number to be issued. He begins quoting, binding coverage, and collecting premiums “on behalf of the brokerage” under the supervision of a licensed broker. A client later suffers an uninsured loss because Sam mis-stated coverage during the quoting stage. Which regulatory consequence is MOST correct?

A client requests “full coverage for business interruption.” The broker places a standard property policy but fails to explain that BI coverage requires a separate endorsement. Months later, a fire closes the business for eight weeks; no BI coverage exists. What is RIBO’s evaluation of this action?

A principal broker delegates oversight of trust accounts to a junior broker to “focus on sales.” The junior broker forgets reconciliation for three months. During RIBO audit, severe trust deficiencies are uncovered. What is the outcome?

A broker offers a commercial client a “free drone inspection” service valued at $300 if they place their insurance through his brokerage. He argues it is not a rebate because he isn’t reducing the premium. What is the Regulatory classification?

A broker places coverage with a U.S. surplus lines insurer not licensed in Ontario but reasons that they have “A-rated financial strength” and therefore are acceptable. A claim occurs, and the insurer refuses jurisdiction. What is the correct regulatory position?

A broker changes residential address, legal surname, and employment status but only notifies the brokerage. Six months later RIBO sends renewal documents to the old address and licence lapses. What is the regulatory interpretation?

A client receives a new policy with exclusions pages missing due to a printing error. The broker notices the exclusions weren’t attached but assumes “the client can request them if needed.” A loss occurs, and an exclusion applies. What is the regulatory conclusion?

A dealership employee takes a customer’s vehicle for a test drive and causes an accident. Customer argues the loss must be covered by their own auto policy. Who pays first?

A newly licensed G2 driver is excluded on the parents’ policy via OPCF 28A. One evening he takes the family car without permission and hits a parked vehicle. What Accident Benefits is he entitled to?

A driver with $1M liability and Collision hits another vehicle. The other driver is 100% at fault. However, the claim falls under DCPD rules. The at-fault driver’s insurer is not licensed in Ontario. How is the claim settled?

A driver is injured in an accident while driving his employer’s company car in Ontario. The employer has a valid fleet policy. The driver also has his own personal Ontario Auto Policy. Who pays Accident Benefits first?

A driver with an OPCF 27 (Liability for Damage to Non-Owned Automobiles) rents a car in Florida. He causes collision damage to the rental vehicle. How does OPCF 27 respond?

A business has a commercial auto policy with OAP (Garage Auto Policy). A customer’s vehicle is damaged when an employee accidentally reverses a forklift into it while moving parts inside the service bay. Which coverage responds?

A client with OPCF 20 (Loss of Use) gets into an at-fault accident. Their vehicle is not drivable, and repairs will take 15 days. They rent a car immediately. When does OPCF 20 coverage begin?

A client with an OAP 1 Collision deductible of $1,000 hits a hydro pole. The insurer settles the claim for $7,500. The client also has OPCF 39 (Accident Forgiveness). What happens to the client’s rating?

A vehicle carrying a trailer is involved in an accident. The trailer is not listed on the policy but is being used for personal, not business, purposes. Which statement is correct regarding liability coverage?

A contractor borrows a backhoe belonging to a friend for a weekend project. The contractor carries a Contractors’ Equipment Floater (CEF) but no non-owned equipment extension. The backhoe is stolen overnight. What coverage applies?

An insured suffers a fire loss and submits a claim. After reviewing the policy, the insurer discovers the insured failed to disclose that they began storing flammable chemicals in the garage six months earlier.

A driver without Collision coverage hits a telephone pole and destroys their car. They also purchased OPCF 27 for rental vehicles. How does the policy respond?

An insured lends his ATV to a friend. The friend crashes it on a public trail. The ATV is insured only under the homeowner’s policy.

A client asks their broker for “full coverage.” The broker fails to explain optional Loss of Use coverage and does not offer OPCF 20. After an at-fault accident, the client has no rental coverage. What will be the outcome of this?

A leasing company requires the lessee to purchase an OPCF 5. The lessee crashes the car. The leasing company sues the lessee for damage to the lease vehicle. How does OPCF 5 respond?

Jaresh is driving when a deer jumps out; they swerve to avoid the deer, hits a guardrail, spins, and the vehicle catches fire. Which section pays for the physical damage?

A collector car insured under OPCF 19A for $150,000 is stolen. During the claim, the insurer argues the real market value is only $110,000. How will the policy respond?

A driver has multiple impaired-driving convictions and several accidents. No insurer will voluntarily write his policy. How can he still obtain coverage?

A customer states on a written application that they have never had a prior claim. The broker later discovers a previous major fire loss. The applicant insists it was “not relevant.” How should this be treated?

A tenant’s apartment becomes uninhabitable due to a burst pipe, an insured peril. The tenant stays with a friend rent-free, but pays for meals and daily transportation. What Additional Living Expense (ALE) can be claimed?

A homeowner insured under this package policy has Coverage A – Dwelling Building on a replacement cost basis. After a fire, the dwelling is only 40% damaged. The insured decides not to repair the damage and instead keeps the cash. How will the loss be settled?

The insured owns a 14-foot canoe and a 16-foot motorboat with a 25 HP engine. While using the canoe on a lake, the insured accidentally injures a swimmer. Which liability coverage applies?

A homeowner moves to a new permanent residence. While moving, a thief steals furniture from the moving truck. The policy on the old home expired yesterday; the policy on the new home activates tomorrow. Is the loss covered?

Angela owns a described automobile insured for Liability, Accident Benefits, DC-PD, and Collision with a $500 deductible. On June 1st she purchases an additional newly acquired auto. Angela forgets to notify the insurer until June 20th. On June 15th she collides with a guardrail, entirely at fault, causing $7,500 in damage. All other autos she owns are insured with the same insurer for the same coverages.

Jonah is an excluded driver on his mother’s policy. He takes the car without permission, crashes it, and injures a friend riding as a passenger who is unaware the car was taken without permission.  What Accident Benefits apply?