RIBO Licensing Exam Package Quiz 2 Copy

Question 1 of 24

Which one of the following is true of insurers?

A mutual insurance company is owned by it’s policyholders
A farm mutual company is owned by it’s shareholders
A joint stock company is owned by its policyholders
Lloyd’s of London is an insurer still owned by the descendants of the original Edward Lloyd

Question 2 of 24

A deductible clause in a policy

Specifies the amount in excess of which an insurer will pay a loss
Applies separately to each item that is lost or damages
Applies only to the contents loss if both the building and contents are insured in the same policy
Is not permitted if the policy only covers fire and extended perils

Question 3 of 24

In arranging a contract of insurance an agent or broker must always

Pass on to the Insurer all relevant information whether requested or not
Have an application signed
Disclose the commission on every policy
Collect the full premium at the time of the inception date

Question 4 of 24

A peril is

An event that may cause a loss to occur
A condition related to the human element of risk
A condition that may cause a loss to be more severe
An extended coverage usually added to a fire policy

Question 5 of 24

An agent

Is an independent business person who places business with a number of insurers
Represents one company as either an independent business person or employee
Is a person who has charge of a company’s business for a province or provinces
Acts solely on behalf of clients in arranging insurance contracts with insurers

Question 6 of 24

Authority for a broker to bind coverage on behalf of an insurer is granted by

The Financial Services Commission of Ontario (FSCO)
The Insurance Act
The Registered Insurance Brokers of Ontario
The Insurance Company

Question 7 of 24

Regulations regarding an agent or brokers handling of premium funds stipulates

The business must have a claims reserve account and an operating account
One account is sufficient as long as separate records are kept
The business must have a trust account and an operating account
The business must have a trust account and an unearned premium reserve account

Question 8 of 24

Where a loss occurs under an insurance binder before a policy has been issued, the insurer will

Cancel the binder by registered letter and deny liability
Demand that the broker or agent pay the loss
Pay the claim in accordance with the coverage bound
Take no action until the policy is issued

Question 9 of 24

When discussing the management of an insurance brokers office, adequate capacity refers to

Being able to offer knowledgeable insurance advice
Being able to provide good claims handling service
Having the resources to handle all accounting and policy functions
Having enough money to pay claims

Question 10 of 24

In insurance terms, a peril is frequently described as the cause of loss. Which one of the following is not a peril

Gasoline
Fire
Burglary
Negligence

Question 11 of 24

Pure premium is the

Rate or unit of premium required
Total premium required by the insurance company
Premium required to meet the inflated anticipated losses
Premium required to meet the losses after that occurs

Question 12 of 24

The unearned premium reserve fund is a fund for the protection of the public that

Gives money back to a claimant if there is a dispute in a claim
Pays if an insurer refuses to pay for a claim
Pays claims if an insurer goes bankrupt
Pays an insured the unearned premium if an insurer goes bankrupt or becomes insolvent

Question 13 of 24

An independent agent/broker must maintain a trust account

Into which commission amounts are transferred
From which all business expenses are paid
From which net premiums are paid to insurers
Into which amounts are transferred to meet emergencies

Question 14 of 24

The Federal Department of Insurance is most interested in which of the following

Insurance Brokers Trust Funds
The licensing of insurance adjusters
The financial stability of federally licensed Insurance companies
The qualifications and licensing of agents and brokers in each province

Question 15 of 24

When we speak of General Insurance, we mean

All types of insurance except surety
Insurance other than Life & Health
Any and all kinds if insurance
Property, Liability and Automobile Insurance

Question 16 of 24

The legal process by which an insurer, who has paid a loss, pursues any rights of recovery against a responsible third party is called

Indemnification
Consideration
Subrogation
Contribution

Question 17 of 24

An express contract is one which

The parties have acted in such a way that it is understood that an agreement exists
Confirmation of insurance coverage is given and can be written or oral
All terms have been specifically stated and agreed by both parties
One party, in return for a consideration agrees to indemnify another party

Question 18 of 24

An act of legislature declaring or prohibiting something is called

Civil Law
A Precedent
Codified Law
A Statute

Question 19 of 24

An implied contract is one which

The parties have acted in such a way that it is understood that an agreement exists
Confirmation of insurance coverage is given and can be written or oral
All terms have been specifically stated and agreed by both parties
One party, in return for a consideration agrees to indemnify another party

Question 20 of 24

A material fact is

Information that is helpful in rating a risk, though the insured is not obligated to supply it
Must be divulged only if the underwriter specifically asks for the information
Any fact that relates to the subject of insurance
Any fact that might cause the underwriter to apply conditions when accepting the risk

Question 21 of 24

A broker

Is an independent business person who places business with a number of insurers
Represents one company as either an independent business person or employee
Is a person who has charge of a company’s business for a province or provinces
Acts solely on behalf of clients in arranging insurance contracts with insurers

Question 22 of 24

When someone is placed back in the same financial position that they were in just prior to a loss, that is

Indemnity
Contribution
Actual Cash Value
Consideration

Question 23 of 24

An agent

Works solely on behalf of clients with arranging insurance contracts with insurers
Is a person who has charge of a company’s business for a province(s)
Represents one company either as an independent business person or as an employee
Is an independent business person who places business with a number of insurers

Question 24 of 24

Actual Cash Value is

The current market value
The replacement cost at the time of loss less depreciation
The cost to repair or replace the damages property
The original purchase price less depreciation reflecting the age and use of the damaged property

RIBO Licensing Exam Package Quiz 2 Copy

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