RIBO Practice Exam Two

Question 1 of 74

Which one of the following statements is not correct:

With pure risk, there is a chance of loss but no chance of profit
With speculative risk, there is a chance of either loss or profit.
There are a number of ways to deal with risk other than by insurance.
The law or large numbers can tell a good underwriter, which specific risks will have losses.

Question 2 of 74

Which one of the following could result in an Absolute Liability law situation:

Jim Smith forgot to renew his driver's license
Jim Smith refused to take the breath analyzer test
Jim Smith was charged with impaired driving, but the case was dismissed in court
Jim Smith was charged with impaired driving & was convicted in court.

Question 3 of 74

The Comprehensive Homeowner Policy:

Provides limited coverage on tools that pertain to a business, but coverage is limited to $2000 & only while the loss takes place on the insured premises.
Has no limitation on jewellery, provided the loss is caused by Theft
Will only pay the depreciated value on jewellery that is lost, unless the insured can substantiate the value of the lost item, in which case it will pay full value.
Will not pay for water damage caused by the accidental overflow of water from a sink. if it was the result of the lnsured's carelessness.

Question 4 of 74

Which statement is correct:

Builder's Risks policies are written for a minimum amount and adjusted as the building progresses
The key-underwriting factor with Contractors Equipment Floaters is how the equipment will be used.
Bailees are people who give goods to Sailors.
Surprising though it is, Jewellers Block policies are often provided based on very limited application information.

Question 5 of 74

Direct Compensation – Property Damage under OAP1 policy coverage can only apply:

If the accident takes place in Ontario
As for (a) but also, provided both cars are insured by Insurers licensed to transact business in Ontario.
If the accident takes place in Ontario or Quebec
If the accident takes place in Ontario, Quebec & Manitoba.

Question 6 of 74

Which one of the following is correct:

A peril is an event, which may cause a loss to occur.
A hazard can cause a loss to be less severe.
An example of physical hazard is obsolescence of plant & machinery.
Moral hazard is easier to detect and correct than physical hazard.

Question 7 of 74

Which of the following is not true:

Under Auto Third Party liability coverage, the Insured can choose his lawyer
Auto Third Party Liability coverage will pay for emergency medical expense even if the Insured is not legally liable.
The Insured agrees to repay the Insurer for any sums paid out when the Insurer has to pay by reason of the law, even though the Insured has violated the policy
There are situations where the policy may pay over and above the policy limits on Auto Third Liability coverage.

Question 8 of 74

If an Insured goes South for a couple of months in the winter, which of the following is correct:

The Standard Homeowner will not pay for any losses after 30 days unless the Insured has arranged for someone to come in on a dally basis to check the home.
Only the peril of Water escape may be affected by this situation
Only the perils of Water escape, Vandalism & Glass may be affected by this situation
Sewer back-up damage will only be covered for the first 30 days.

Question 9 of 74

Which statement is incorrect:

Glass Insurance covers damage from all causes except Fire, Windstorm, & Nuclear Damage.
Boiler & Machinery Insurance provides a free inspection service as part of an accident prevention program.
The major exposure with boilers & pressure vessels is explosion.
The major exposure with machinery is breakdown.

Question 10 of 74

Which of the following is true as far as Statutory Conditions are concerned:

If the at fault owner/driver causes damage to another person or their property, the at fault owner/driver is required to forward all writs received to their Insurer.
If there is loss or damage caused to the lnsured's car, the car must be taken into the garage for repairs within 21 days of the accident.
The loss must be paid within 30 days of receipt of the Proof of Loss.
If an Insured violates a Statutory Condition, the Insured forfeits all rights to claims benefits.

Question 11 of 74

The Provincial Insurance Acts require written applications are usually required for the following classes of insurance except one. Which one is that:

Bonds
Liability
Valued Items
Homeowners

Question 12 of 74

If you are injured in a car accident:

You may have to make the choice of accepting Accident Benefits compensation or launching a lawsuit
You must go to your own car insurer for Accident Benefits coverage when knocked down crossing the street, even though your own car was not involved in the accident
Your Accident Benefits coverage will compensate you for pain & suffering but not for economic loss.
Your Accident Benefits coverage will be reduced by your degree of being at fault

Question 13 of 74

Which of the following statements is not correct as far as the Standard Homeowner policy is concerned:

If a camcorder worth S1000 is stolen from your picnic table it will be covered.
If a camcorder worth $1000 is stolen from your unlocked car at the shopping mall, it will be covered unless there is evidence of break-in
If the wind blows down your neighbour's tree into your vinyl lines swimming pool doing extensive damage, it is covered.
If lightning strikes your home doing extensive damage to your TV, it is covered.

Question 14 of 74

Which statement is incorrect:

The three main types of business interruption policies are very similar as far as coverage is concerned.
A fast food establishment probably does not require Profits Form business interruption coverage.
Extra Expense insurance can be used in at least two main ways.
Earnings Insurance is generally written subject to 50% or 80% coinsurance.

Question 15 of 74

If a snowmobile sinks through thin ice, only one of the following coverages will pay for this damage. Which one will pay:

Specified Perils
All Perils
The OPCF 20 Loss of Use Endorsement
The OPCF 32 Recreational Vehicle

Question 16 of 74

A material fact is one that could affect:

The premium or type of policy available
The term of the policy
The premium payment arrangements
The Statutory Conditions

Question 17 of 74

You live alone & do not own a car You are hit on a dark country road by a vehicle that does not stop & are very seriously injured. Which of the following is correct:

You will be able to approach the Motor Vehicle Accidents Claims Fund for both Accident Benefits & also launch a lawsuit against that same fund for your serious injuries.
You will only be able to claim for Accident Benefits
You will be unable to claim for either
None of the above are correct

Question 18 of 74

The main reason for moving to All Risks coverage from Named Perils coverage is:

It covers more perils
It covers more perils & shifts the onus onto the Insurer to deny the claim if not covered rather than have the Insured prove the loss was caused by a peril of the policy.
It would include damage done by your own vehicle to your own home.
It would include scorching damage done to countertops.

Question 19 of 74

Which is incorrect as far as commercial crime insurance policies are concerned:

May cover exposures from both external & internal crime.
The Commercial Crime Insurance policy can cover all non-fidelity exposures under one policy.
In a crime policy, burglary requires evidence of break-in to or breakout from the premises.
Safe burglary would include losses from a safe caused by someone who knew the combination.

Question 20 of 74

There are certain exclusions that apply to All Perils Auto coverage. Which of the following does not belong here:

Any kind of damage to tires, however caused.
Damage caused by the voluntary parting of the title of ownership.
Damage to the contents of trailers
Damage to tapes detached from the tape player in a car

Question 21 of 74

The main purpose of Co-insurance is:

To ensure that the Insured shares in losses, if the Insured does not meet the Co insurance percentage figure.
To encourage full insurance on the building being insured.
To force the Insured to share in all losses, regardless of the amount of insurance carried.
None of the above.

Question 22 of 74

As far as Section 7, Loss or damage to vehicle, of the OAP 1 policy is concerned:

If you are not at fault when your car is damaged, there is no need for Collision coverage.
You will only be able to claim for Accident Benefits
You will be unable to claim for either
None of the above are correct

Question 23 of 74

Which of the following is correct about Additional Living Expenses coverage:

It will pay for all expenses incurred if you have to move out of your home because of one of the perils of the policy.
It will pay for all additional living expenses incurred if you have to move out of your home when your home or neighbouring properties are damaged by one of the perils of the policy
If you are forced out of your home for a reason other than an insured peril, you require special coverage for this.
This coverage is limited to two weeks.

Question 24 of 74

All of the fallowing except one are correct as far as a certificate of insurance is concerned. Which one does not apply:

It may be a liability card
It may be a modified form of policy.
It certifies the existence of insurance.
When such certificates are issued, the Insurer agrees to notify the interested party of the cancellation of the insurance.

Question 25 of 74

Which of the following statements is true about Temporary Insurance:

It should be cancelled in the same way as permanent insurance.
It is acceptable to advise your client verbally that the insurance company will not accept the risk.
A Binder is issued by a Broker.
A Binder should show the premium being charged.

Question 26 of 74

A contract is an agreement, enforceable at law. Which one of the following answers lists all of the necessary requirements that must exist:

Agreement. genuine intention, utmost good faith
Agreement, genuine intention, consideration, capacity to contract. legality of purpose.
Agreement, consideration, capacity to contract, utmost good faith
Agreement capacity to contract, legality of purpose

Question 27 of 74

Which of the statements is not correct about the Optional Loss Settlement clause:

Gives the Insured the choice of claiming damages to the building & detached private structures, on a depreciated or a non depreciated basis
May not benefit the Insured if he carries less than 80% of replacement cost
Has special requirements about the type of building & rebuilding location
Is not available on the Standard Homeowner but is on the Broad & Comprehensive form Homeowner.

Question 28 of 74

Which of the following coverages would usually be automatically covered by a Broad Form Homeowner policy:

Sewer Back-up
Earthquake
By-Laws coverage
Chandelier falling on tile floor

Question 29 of 74

Which of the following is not true about the Mortgage Clause:

A Mortgage Clause is the same as a Loss Payee Clause.
The Mortgage Clause is an agreement between the Insurer & the Mortgagee, quite separate from the agreement between the Insurer & the Insured.
If an Insured violates a policy condition, the Mortgagee may still be paid for a loss, while the Insured would not be paid for that same loss.
There are certain obligations under the Mortgage Clause, which apply to the Mortgagee

Question 30 of 74

There are three insurance principles that help reinforce the principle of indemnity and these are:

Salvage, subrogation, & contribution
Subrogation, consideration & contribution
Salvage, contribution, consideration
Contribution, consideration, & utmost good faith

Question 31 of 74

In the case of Condominiums there are shared insurance responsibilities between the entire building & individual units. Which of the following is incorrect:

Fire damage to kitchen cabinets should be covered under the Condominium Corporation's policy unless the cabinets are up grades from the original equipment.
If there is a loss to the common elements that results in an assessment against the unit owners, the loss will only be paid under the unit owner's loss assessment coverage, if the unit owner's policy provides coverage for the peril that caused the loss.
If there is inadequate coverage on the actual unit building, the loss assessment coverage may help out.
Most basic unit owners ' policies may be inadequate & the unit owner should consider optional additional coverages.

Question 32 of 74

Which is incorrect as far as Surety Bonds are concerned:

Bonds are similar to insurance but differ in several ways
Bonds generally guarantee performance
The person who purchases the Bond is not protected by it
A Bond is in force until the Insurer or Bond purchaser decide to cancel it.

Question 33 of 74

Comprehensive Homeowners policies cover most types of losses but not all. Which one of the following would not be covered:

Collapse of the roof at the seasonal dwelling from weight of ice or snow.
The upset of a pot of hot coffee on an expensive antique table.
The severe scratching of hardwood floors following a party.
Lightning damage to a computer.

Question 34 of 74

Which of the following is true about deductibles:

Some deductibles disappear if the loss exceeds a certain dollar amount.
If you carry a $200 deductible and you have a $5000 jewellery theft and the policy has a limit on jewellery of $2000, the policy will pay $1800.
Deductibles apply separately to each item stolen.
On a Homeowners policy, the deductible on fire losses is waived.

Question 35 of 74

The Basic fire policy:

Covers Fire, Explosion & Lightning
Covers Fire, Smoke, Lightning, & Explosion
Excludes losses when the dwelling is Vacant for more than 30 days but has no such exclusion if the dwelling is merely Unoccupied for more than 30 days
Is quite popular today with those wanting to save money

Question 36 of 74

Which of the following statements is not true about Seasonal Residence Fire policies:

Theft coverage is not provided but burglary coverage is automatically provided on all Fire & EC for Seasonal Residences.
Although vandalism coverage is one of the extended coverages, it does not automatically apply to seasonal dwelling Fire & EC policies.
There is no exclusion on fire coverage if the dwelling is unoccupied for more than 30 days.
None of the above

Question 37 of 74

Which is correct as far as Surety Bonds are concerned:

A Bid Bond is required as evidence that the construction job will be properly carried out in accordance with the construction specifications.
A Labour & Materials Bond is provided by suppliers of labour & material on a project to ensure they are both there in a timely fashion.
An Administration Bond falls under the general category of a Fiduciary Bond.
Examples of Fiduciaries would include contractors.

Question 38 of 74

If an applicant makes a false statement on an application that is considered to be material, the Insurer:

Can charge a premium up to the point of cancellation but can also deny any claim made.
Can void the policy.
Must void the policy.
Must non renew the policy.

Question 39 of 74

Which of the following is correct with regard to the assignment of insurance policies:

Policies must be assigned if requested by the Insured to the Insurer and the request is made in writing.
Policies can never be assigned since they're personal in nature.
Some policies may be assigned automatically.
Assignment of claims proceeds requires the consent of the Insurer.

Question 40 of 74

The Extended Coverage Endorsement

Does not affect the Basic Fire Policy perils but does add new perils
Does not increase the dollar amount of coverage on the Basic Fire policy.
Is very important since it provides Theft coverage
Provides coverage if a frame home has to be replaced with a brick home.

Question 41 of 74

Which statement is not true about Liability insurance:

Liability insurance is designed to pay only when the insured is legally liable.
The number of people in the household does not have a bearing on the premium charged.
Special damages are only awarded for small dollar amounts such as out of pocket expenses.
Punitive damages are generally not covered by a liability policy.

Question 42 of 74

On the subject of Claims which statement is not true:

Public Adjusters work on behalf of the public.
Telephone adjusters specialize in contacting Third Party claimants by phone
Independent adjusters take on assignments from many different Insurers
Claims examiners are senior claims people who scrutinize the work of outside independent adjusters.

Question 43 of 74

When a mini van is used as a school bus which one of the following is correct:

This is not allowed.
Coverage will apply if the policy is properly endorsed.
Coverage will apply if the fact is mentioned on the policy & the premium is paid In full at the beginning of the policy term.
None of the above.

Question 44 of 74

Which of the following is a correct statement:

If a policy is cancelled by the Insurer, the Insurer must give advance notice and provide a short rate premium refund.
If a policy is voided by the Insurer the entire premium has to be refunded to the Insured.
Statutory Conditions do not apply to Accident & Sickness policies.
All insurance applications must be signed.

Question 45 of 74

Damage caused by a chimney fire would be covered under:

A Fire Policy
A Standard Homeowner policy
A Broad Form Homeowner policy
All of the above

Question 46 of 74

Which statement is true about the Commercial General Liability policy:

It is a flexible policy, designed to take care of most commercial liability exposures.
It can be written or either a Claims Made or an Occurrence basis.
It has an Aggregate & an Each Occurrence limit.
It covers Tenant Legal Liability for any kind of loss to rented premises for which the Insured is legally liable.

Question 47 of 74

On the subject of reinsurance which statement is not correct:

The sole reason for reinsurance is to share the Insurer 's risks
Treaty reinsurance is automatic
Facultative reinsurance is arranged on individual risks
The two methods of reinsurance are proportional and non-proportional

Question 48 of 74

No fault Auto insurance sought to achieve a number of objectives. Which one of the following was not one of these objectives:

More efficient use of premiums.
Vehicle damage compensation regardless of fault.
More timely compensation for injuries.
Restrictions on lawsuits.

Question 49 of 74

Which statement is correct:

In Quebec, the certain compulsory auto coverage is provided by the government & certain by private industry.
The only provinces & territories that have private industry insurance are NWT, the Yukon, Nova Scotia, Nfld., & Ontario
In B.C. & Alberta the Government provides the auto insurance
There are 5 coverage sections to the OAP 1 Auto policy.

Question 50 of 74

If your dog is accidentally left too long at home by itself & does extensive damage by chewing the door frames, the filled broadloom & some of the furniture, this damage will be covered by:

A Fire & EC policy
A Standard Homeowner Policy
A Comprehensive Homeowner policy
None of the above

Question 51 of 74

Which of the following is not correct with regard to Umbrella Liability Policies:

They may be useful when worldwide liability coverages are required.
They either require other underlying liability coverage in place or if they become the primary payer, a large deductible will most likely apply.
The main purpose of them is to supply high liability limits
They are written on Claims made or an Occurrence basis.

Question 52 of 74

The OPF4 Garage Policy can provide coverage for all of the following situations except one. Which one is not covered:

A customer of the garage slips on a patch of oil breaking his leg
An employee of the garage is test-driving a customer's car when he knocks down & severely injures a pedestrian
Three garage owned cars that are going to be sold, are destroyed by fire
A customer's car is destroyed by fire while left on the garage premises

Question 53 of 74

Which of the following is not covered under Specified Perils coverage:

Vandalism
Fire
Earthquake
The sinking of a vessel on which your car is being carried

Question 54 of 74

Which one of the following would not be an example of insurable interest:

Someone who is leasing a car
Someone who expects to inherit a house
Someone who borrows property
Someone who lent money for someone else to buy a car.

Question 55 of 74

People schedule jewellery onto their Homeowner’s policies to:

Obtain better coverage
Eliminate any dollar limitations on the Homeowners Policy
Eliminate the deductible
All of the above

Question 56 of 74

All but one of the following are examples of Conditions that apply to liability claims. Which one does not:

The Insured cannot voluntarily make any payment or assume any obligation or incur expense other than for necessary first aid expense.
Any documents received by the Insured concerning the claim must be immediately sent to the Insurer.
Bodily Injury caused unintentionally by the Insured may be covered.
Claims arising from the transmission of a communicable disease are covered.

Question 57 of 74

The OPF2 Drivers Policy:

Provides coverage for uninsured drivers who may use your car with your permission.
Provide coverage for someone who does not own a car but may borrow a car that may or may not have insurance on it.
Provides coverage when a person is renting a car while on vacation in Europe
Provides coverage for a car owner who is driving passengers for compensation.

Question 58 of 74

Under the OAP1 Auto policy:

There are 3 compulsory coverage sections.
Direct Compensation Property Damage is not shown as part of the Third Party Liability coverage.
Vehicle damage is subject to a $5000 deductible
Lawsuits are not allowed.

Question 59 of 74

An example of a Third Party Liability claim in Ontario would be:

You lose control of your car & damage your neighbour's fence
You lose control of your car & hit your own garage door
You cause minor injury to a passenger when you stop suddenly in your car
You lose control on black ice, roll your car & break you back

Question 60 of 74

If a $200,000 residential dwelling and the detached garage are burned down the following is true, with regards to building damages:

A Standard Homeowner would pay a maximum of $200,000.
A Broad Form Homeowner would pay a maximum of $220,000
A Fire policy would pay a maximum of $210,000
None of the above is correct

Question 61 of 74

Which statement is incorrect:

Commercial Property policies may be written on a Fire & EC, Named Perils, or an All Risks basis
Building coverage includes growing plants used for decorative purposes when the Insured owns the building.
Equipment includes fittings, fixtures, tools, & contents of every description except stock.
Stock includes merchandise of every description but excludes packaging, wrapping, & advertising materials.

Question 62 of 74

The OPF6 Non-Owned Auto Policy is designed to:

Protect employers when employees use their own (or others) cars on employers' business
Protects employees who may have to use their own cars on employers' business.
Provides coverage should you rent a car from Hertz.
Provides coverage for long-term car lessees.

Question 63 of 74

Agents may act in a manner that could be considered a conflict of interest if they:

Are acting on behalf of the client while accepting payment from the insurer.
Offer advice regarding the type of insurance most suitable to the client's needs & this is also in the best interests of the insurer.
Act in a manner that is above reproach from both the client's & the Insurer's perspective.
Represent both the client & the Insurer at the same time.

Question 64 of 74

Which of the following is true:

The Facility operates in Ontario
The Facility Association is an Association of Insurers that provides a market for high-risk automobile risks.
Under special circumstances, the Facility Association will handle high-risk property risks.
The rates charged by the Facility Association vary from one carrier to another carrier.

Question 65 of 74

The Homeowner policy has the following number of sections to it:

One
Two
Three
Four

Question 66 of 74

Which statement is not true with regard to Farm Insurance:

A farm policy generally insures both the farm dwelling residence & other farm buildings on the same policy
The coverage on a farm policy for water damage is broader on the farm buildings than it is on the farm residence.
Farm policies are usually subject to a Rebuilding Clause – Deferred Payment.
The Rebuilding Clause – Deferred Payment provides that if an insured building is damaged to more than two thirds of its value, the policy will initially only pay 50% of the total payable.

Question 67 of 74

Which of the following is correct as far as Income Replacement is concerned under Accident Benefits coverage:

If you earn $2000 Net income a week & have no other benefits, the auto policy will pay $400/week (after the 1 week deductible).
The same as (a) but if your company plan pays $1200 per week when you cannot work. then your auto policy will pay nothing,
In both (a) & (b), your auto policy will top you up to $2000/week.
None of the above.

Question 68 of 74

Coinsurance clauses exist because:

People who are usually honest are dishonest when it comes to insurance
Applicants need assistance in deciding the limit of insurance they require
Many property policies are now written on a replacement basis
Rates are based on the assumption that total values are insured.

Question 69 of 74

The concept of Priority of Payment applies when:

There is insufficient money to satisfy both Bodily Injury & Property Damage claims.
The damaged vehicle has been struck by someone who is uninsured.
There is a choice between claiming for Accident Benefits or launching a lawsuit.
There is disagreement who is at fault in the accident

Question 70 of 74

If a Fire policy covers a dwelling for $100,000, which one of the following is correct:

If the property is jointly owned by Bob & Jim & insured in Bob's name, then if there is a $40,000 loss, the policy will pay Bob $20,000

Question 71 of 74

Actual Cash Value means:

The cost of replacing the property with a similar piece of property today taking into account accumulated depreciation.
The original cost of the property.
Today's cost of the property without depreciation
80% of the replacement cost today.

Question 72 of 74

When a car knocks a pedestrian down:

The driver is presumed to be at fault
The pedestrian is presumed to be at fault
Neither are presumed to be at fault
None of the above are correct

Question 73 of 74

If a Fire policy covers a dwelling for $100,000, which one of the following is correct:

If the property is jointly owned by Bob & Jim & insured in Bob's name, then if there is a $40,000 loss, the policy will pay Bob $20,000
The same as (a) but the policy will pay $40,000
The policy will be treated as void & will pay nothing
The policy will initially pay $20,000 & on proof of Jim's part ownership, will pay the other $20,000

Question 74 of 74

The Ontario Insurance Commission was created by:

The Insurance Statute Law Amendment Act of 1990.
The Highway Traffic Act
The Fault Determination Rules.
Tied selling is considered an unfair act or practice & consequently is a prohibited practice.

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