Quiz Questions Difficult Flashcards
1
Q
What does fortuitous mean?
a) Fortunate
b) Accidental
c) In the future
d) Compensatory
A
B) Accidental
2
Q
- Who is the first party of an insurance contract?
a) Insured
b) Insurer
c) Claimant
d) None of the Above
A
A) Insured
3
Q
- Which of the following is an express contract?
a) The parties have acted in such a way that it is understood that an agreement exists
b) Confirmation of insurance coverage is given and can be written or oral
c) All terms have been specifically stated and agreed by both parties
d) One party, in return for a consideration, agrees to indemnify another party
A
c) All terms have been specifically stated and agreed by both parties
4
Q
- How is an unearned premium reserve fund used?
a) Gives money back to a claimant if there is a dispute in a claim
b) Pays if an insurer refuses to pay for a claim
c) Pays claims if an insurer goes bankrupt
d) Pays an insured the unearned premium in case policies are cancelled
A
d) Pays an insured the unearned premium in case policies are cancelled
5
Q
- What is proximate cause?
a) The first cause in a chain of events that results in a loss
b) The suspected cause of a loss
c) The cause that sets a remote cause into motion
d) The immediate and effective cause of a loss
A
d) The immediate and effective cause of a loss
6
Q
15. Statutory Conditions in a Fire Policy are primarily to protect the rights of which of the following? a) The insured b) The insurer c) The broker d) Both the insured and the insurer
A
d) Both the insured and the insurer
7
Q
- Who can an insured employ to represent their interest during a claim?
a) Telephone adjuster
b) Staff adjuster
c) Independent adjuster
d) Public adjuster
A
d) Public adjuster
8
Q
- Which of the following is NOT the subject of a Statutory Condition?
a) Premium
b) Misrepresentation
c) Material change in risk
d) Termination of the policy
A
a) Premium
9
Q
- Who is protected by a mortgage clause in a property insurance policy?
a) The one who lends the money and the insurer of the property
b) The insured
c) The insurer of the property
d) The one who borrows the money
A
a) The one who lends the money and the insurer of the property
10
Q
- In arranging an insurance contract the broker must always:
a) Have an application signed
b) Collect the full premium at the time of the inception date
c) Disclose the commission on every policy
d) Pass on the insurer all relevant information whether requested or no
A
d) Pass on the insurer all relevant information whether requested or no
11
Q
- Your insured request that his automobile policy be cancelled part way through the term. The
refund due to the insured would be calculated on:
a) The basis of a full refund of the entire premium
b) A pro rata basis
c) A short rate basis
d) A pro basis provided the insured agreed to sign a cancellation receipt enabling the insurer to
avoid the expense of issuing a registered letter of termination and the conquest delay in the
effective date of the termination
A
c) A short rate basis
12
Q
- Of the following persons or organizations who could have an insurable interest in a piece of
real property (real estate)
a) Executor of a will
b) Tenant in an apartment building
c) A bailee
d) The individual to whom that property has been promised in 5 years time
A
a) Executor of a will
13
Q
- Pure premium is the:
a) Premium required to meet the inflated anticipated losses
b) Premium required to meet the losses that occur
c) Rate or premium required
d) Total premium required by the insurance company
A
b) Premium required to meet the losses that occur
14
Q
- A binder:
a) Is an all inclusive insurance package
b) Cannot be terminated
c) Is a temporary insurance undertaking
d) Must always be in writing
A
c) Is a temporary insurance undertaking
15
Q
- With respect to salvage:
a) It belongs to the insurer when a claim has been made and nothing can change that
b) It always belong to the insured
c) It consists of the useless debris of a total loss
d) Disposition can be negotiated between the insured and the insurer
A
d) Disposition can be negotiated between the insured and the insurer
16
Q
- An independent agent or broker must maintain a trust account:
a) Into which all commission amounts are transferred
b) From which all business expenses are paid
c) From which net premiums are paid to insurers
d) Into which amounts are transferred to meet emergencies
A
c) From which net premiums are paid to insurers
17
Q
- An insurer wishing to terminate an insurance policy may do so by:
a) Ordering the broker to issue a registered letter of cancellation
b) Giving the insured 15 days notice by registered mail and refunding the unearned premium
c) Refunding the entire policy premium
d) Ordering the insurance broker to pick up the policy from the insured
A
b) Giving the insured 15 days notice by registered mail and refunding the unearned premium
18
Q
- The insured, under a Fire Policy, goes bankrupt and there is loss shortly afterward. Which
one (1) of the following statements are true?
a) As the insured is bankrupt, the policy is void
b) The loss would be paid by the trustee in Bankruptcy
c) Bankruptcy is a material change is risk and the policy is therefore void
d) The insurer is liable to pay the loss to the Trustee in Bankruptcy
A
d) The insurer is liable to pay the loss to the Trustee in Bankruptcy
19
Q
- The Standard Mortgage Clause approved by the Insurance Bureau of Canada and generally
used throughout the insurance industry outlines:
a) The terms and conditions of the agreement between the insured and the mortgagee in
relation to their financial arrangement
b) The rights of the insurer, the obligations of the mortgagee, and the rights of the mortgagee
c) The coverage benefit of the mortgagee
d) That the insurer shall give fifteen (15) days written notice to the mortgagee if the insurer fails
to offer a renewal policy
A
b) The rights of the insurer, the obligations of the mortgagee, and the rights of the mortgagee
20
Q
- Improvements and Betterments made to a Condominium Unit by its owner are:
a) Under the Blanket Feature of the Condominium Corporation’s Master Policy
b) Under Coverage A3 of the individual Unit Owners Comprehensive Policy
c) Under the Building coverage of the Condominium Corporation Master Policy
d) Under Coverage C of the Unit Owners Comprehensive Policy
A
b) Under Coverage A3 of the individual Unit Owners Comprehensive Policy
21
Q
- Additional Living Expense under a Homeowners Comprehensive policy is payable when the
premises become unfit for occupancy in which one (1) of the following circumstances?
a) The insured’s home is sprayed for insects
b) The insured is having his home renovated
c) The insured’s home has suffered severe smoke damage
d) During a rainstorm, drains in the insured’s basement backed up, causing severe water
damage
A
c) The insured’s home has suffered severe smoke damage
22
Q
- The Condominium Unit Owners Comprehensive Policy includes which one (1) of the
following?
a) It provides additional coverage for the owner of the Condominium unit if the Condominium
Corporation’s insurance is inadequate or is not effective
b) It adds the Condominium Corporation as an additional named insured with respect to liability
coverage
c) It amends the Tenants Comprehensive policy to include that which is usual to a
Condominium
d) It provides additional insurance protection for the Condominium Corporation in the event of
an uninsured loss
A
a) It provides additional coverage for the owner of the Condominium unit if the Condominium
Corporation’s insurance is inadequate or is not effective
23
Q
Your client has a $100 000 Homeowners Comprehensive policy with a $200 deductible.
They are planning to build a new garage and begin to buy the necessary building materials.
$2000 worth of materials is stored in their backyard and $3000 worth in the brother’s garage
two blocks away. The brother’s garage is totally destroyed by fire, along with your client’s
materials stored there. How much can your client collect under their own policy?
a) Nothing
b) $2800
c) $3000
d) $2400
A
a) Nothing
24
Q
A dwelling valued at $100 000 is owned and insured by three persons. The first person has
$50 000 invested. The second person has $25 000 invested and the third person has $25
000. The first person resides in the house. It is insured for $60 000. The building is
demolished by a tornado. How much would the second person receive from the insurers?
a) $15 000
b) $25 000
c) $12 000
d) $11 250
A
a) $15 000
25
53. Which one (1) of the following coverages under a Homeowners Comprehensive policy
including Inflation Protection is NOT automatically increased in amount at the anniversary of
the policy?
a) Additional Living Expensive coverage
b) Dwelling Building coverage
c) Liability Coverage
d) Personal Property Coverage
c) Liability Coverage
26
54. The “pair and sets” clause in an insurance policy means:
a) Settlement of a loss with respect to an article which is part of a set, shall be based upon the
basis that the entire set has been destroyed or damaged
b) The insurer will only pay one-half of the insurance if one of the pair is destroyed or damaged
c) Settlement of a loss with respect to an article which is part of a set, shall be based upon a
reasonable proportion of the value of the set, but not the entire set
d) The insurer will not pay for loss of a pair of precious stones unless they are properly set in
the setting containing them
c) Settlement of a loss with respect to an article which is part of a set, shall be based upon a
reasonable proportion of the value of the set, but not the entire set
27
55. In Section 2 Liability Coverage of the Homeowners Comprehensive policy, coverage is
provided for Voluntary Payment for Damage to Property in which one of the following
situations?
a) Property of others damaged intentionally by the insured’s 10 year old son, for which he is not
legally liable.
b) Damage to a ride-on lawn mower rented from a local rent-all establishment.
c) Damage caused by a guest, who backed an automobile into a portable barbeque which the
insured had borrowed from a neighbour.
d) Loss by theft from insured’s premises of a shotgun on loan from a local sporting goods store.
a) Property of others damaged intentionally by the insured’s 10 year old son, for which he is not
legally liable.
28
Your client has a Comprehensive Condominium policy through your brokerage subject to a
$500 deductible. The common areas of the building suffer severe damage which is not
covered by the Condominium Corporations Master Policy. The loss is covered under your
client’s policy. The Corporation has assessed your client $2,000 of the damages. How would
your clients policy respond?
a) $1,500
b) $2,000
c) $0 because the Master policy does not cover the loss.
d) Would depend on number of unit owners involved in the assessment
a) $1,500
29
57. The liability section of a Homeowners Comprehensive policy does NOT provide coverage for
which one of the following properties?
a) Family cemetery plots
b) Vacant land you own or rent for personal use
c) Premises where you reside temporarily
d) Newly acquired farm premises
d) Newly acquired farm premises
30
59. To what extent does A2 Loss Assessment Coverage in the Comprehensive Condominium
Unit Owners policy cover an assessment against a Unit owner?
a) Any assessment made by the Corporation
b) Any assessment made by the Corporation as long as it is not from the Master policy
deductible.
c) Any assessment up to $50,000
d) Any covered assessment that is valid under the Corporation, insured by the Unit owners
policy and to a limit of $10,000
d) Any covered assessment that is valid under the Corporation, insured by the Unit owners
policy and to a limit of $10,000
31
60. Your client has closed their seasonal residence for the winter and is not intending to return
until spring. What is the status of the premises?
a) Unoccupied
b) Vacant
c) Vacant and unoccupied
d) No material change has taken place
a) Unoccupied
32
1. Which of the following best describes a Comprehensive Tenant Package policy?
a. It only covers theft.
b. It only covers theft provided there are visible signs of break in.
c. It is the same as Homeowners policy but does not cover building or outbuilding.
d. It covers the building, summer cottage and contents of both.
c. It is the same as Homeowners policy but does not cover building or outbuilding.
33
2. Under a Basic Fire policy, the Insured will receive:
a. The amount applicable to the item.
b. The interest of the insured in the property.
c. The actual cash value.
d. The least of the above three options.
d. The least of the above three options.
34
3. Your insured intends to renovate his bungalow and will have to vacate his home for six
months to do this. His coverage for additional living expense will:
a. Not provide any coverage.
b. Provide coverage for a maximum of two weeks.
c. Pay all extra expense incurred in the six month period.
d. Provide coverage only if a loss occurs in those six months
a. Not provide any coverage.
35
4. A Condominium Unit Owners Package policy covers:
a. The entire building and the unit owner’s contents and outbuildings.
b. The contents of the unit and the improvements and betterments.
c. The unit, the entire building and improvements and betterments.
d. Only the contents of the unit
b. The contents of the unit and the improvements and betterments.
36
5. Your client is selling her house and moving to a low rise condominium and calls you to
ask what she should do with her current homeowners policy. How would you advise your
client?
a. Endorse the current policy to the new address but delete the building and liability
because those coverage’s are picked up by the Master policy of the
Condominium.
b. All the building coverage’s for the new condominium are picked up by the Master
policy so she only needs a Tenants package in her name.
c. Make no change as the Homeowners policy is just as good as a Condo package
so you just need to change the address.
d. The Homeowners must be replaced by a Condominium Unit Owners policy which
gives certain extra coverages she will need as a unit owner
d. The Homeowners must be replaced by a Condominium Unit Owners policy which
gives certain extra coverages she will need as a unit owner
37
6. Replacement Cost Coverage means:
a. The same as Actual Cash Value.
b. The cost of settling the claim based on the price paid for the property.
c. The cost of settling the claim based on today’s price without depreciation.
d. Remove the dollar limitation on certain property.
c. The cost of settling the claim based on today’s price without depreciation.
38
7. Which of the following is not true in reference to Physical Hazard?
a. Slippery floors and loose tiles.
b. Decks and railings that have not been properly maintained.
c. Improper storage of flammables.
d. Poor financial results
d. Poor financial results
39
9. Is loss or damage caused by an earthquake insurable?
a. Yes, it is one of the insured perils usually covered in a property insurance policy.
b. No, it is not available under a property policy.
c. Being an “Act of God” it is never insurable.
d. Yes, it can be added to a property policy for an additional premium.
d. Yes, it can be added to a property policy for an additional premium.
40
10. Your insured has rented the same seasonal dwelling for 20 years for two months. They
bring all their clothes, bedding and supplies worth $4000. Unfortunately a fire destroys
the building in the first week and all is lost. Your insured has a $50,000 Comprehensive
Tenants package. How much would his policy pay above the $500 deductible?
a. Nothing
b. $1800
c. $3500
d. $4000
c. $3500
41
11. Which of the following is not a part of the insuring agreement?
a. The exclusions.
b. The Premium.
c. The Perils.
d. Circumstances under which insured receive insurance proceeds.
b. The Premium.
42
12. A very expensive Waterford Crystal vase would usually be insured under:
a. A fine arts floater.
b. A comprehensive homeowners policy
c. A personal articles floater.
d. A valuable papers rider.
a. A fine arts floater.
43
13. Your insured’s woodworking hobby has become a retirement business and he has
converted his garage to a shop. How would you advise him on the affect to his
Comprehensive Homeowners policy?
a. It would not affect the policy as the garage is an extension of the building portion
of the policy.
b. Congratulate him on his entrepreneurship and wish him well.
c. You must advise the insurer immediately and arrange separate coverage.
d. You make a note on the file to re-inspect the risk on renewal and see if you client
is still in business
c. You must advise the insurer immediately and arrange separate coverage.
44
15. An All Risk policy covers:
a. Any kind of loss.
b. Fire, Extended Coverage and Earthquake.
c. Fire, Extended Coverage, Earthquake and Sewer Backup.
d. Any kind of loss subject to exclusions.
d. Any kind of loss subject to exclusions.
45
16. The Mortgage clause:
a. Provides better rights to the mortgagee than the insured.
b. Provides the same rights to the mortgagee as the insured.
c. Provides the same rights to the mortgagee as to a loss payee.
d. Provides better rights to the insured than to the mortgagee.
b. Provides the same rights to the mortgagee as the insured.
46
17. The Fire and E/C Secondary and Seasonal Residence forms are:
a. Identical.
b. The Secondary covers more Perils.
c. The Seasonal covers more Perils.
d. Both automatically include burglary coverage
b. The Secondary covers more Perils.
47
18. Which one of the following statements best describes the term “subrogation”?
a. It is the disposition of the salvage by the insurer after paying a total loss.
b. It is the amount of damage agreed upon by the insurer and the insured.
c. It deems that the right to claim has expired one year after the date of a loss.
d. It is the insurer’s right to recover a loss they have paid from the person
responsible for it
d. It is the insurer’s right to recover a loss they have paid from the person
responsible for it
48
19. Water damage coverage on the Comprehensive Homeowners Policy covers losses
caused by:
a. Water that backed up from a sewer.
b. Accidental overflow, bursting of pipes or freezing.
c. Intentional overflow, bursting of pipes or freezing.
d. Bursting of pipes, freezing or seepage.
b. Accidental overflow, bursting of pipes or freezing.
49
20. If your neighbour lets a bonfire get out of control and the smoke from it blackens the
newly painted exterior of your home, your Fire and Extended Coverage policy will pay
under which of the following perils?
a. Fire.
b. Smoke.
c. Vandalism.
d. Liability.
a. Fire.
50
21. Should this same bonfire get totally out of control and burns down your garage including
your uninsured classic car plus your gas barbecue and lawnmower, your comprehensive
Homeowner policy will pay for:
a. The car and lawnmower.
b. The lawnmower and BBQ.
c. The car and BBQ.
d. All of the above
b. The lawnmower and BBQ.
51
22. If Tom, Dick and Harry each own one third of a $300,000 dwelling and Harry insures it in
his name alone for $300,000 and there is a $90,000 loss, how much will Tom be paid
under the Fire Policy?
a. $90,000.
b. $100,000.
c. Nothing.
d. 80% of $300,000
c. Nothing.
52
23. Which one of the following describes a “Valued” policy?
a. The policy issued by the insurer to a client of a valued broker.
b. The value of the investment dollars earned on premiums by an insurer to offset
underwriting loss. .
c. A policy which states the subject matter is valued at and insured for a stated
amount.
d. A policy that pays the full policy limit for all losses
c. A policy which states the subject matter is valued at and insured for a stated
amount.
53
24. The Condominium Unit Owners policy:
a. Provides no coverage for wall to wall fitted carpeting.
b. Always provides coverage for the fitted broadloom.
c. May provide coverage for kitchen cabinets.
d. Covers everything within the unit whether moveable or fixed.
d. Covers everything within the unit whether moveable or fixed.
54
25. In the property policy, which section describes the insured property?
a. The Statutory conditions.
b. The conditions.
c. The insuring agreement.
d. The extended coverage endorsement
c. The insuring agreement.
55
26. Under a Comprehensive Homeowners policy, how can increased costs of repairs due to
the operation of a local bylaw regulating zoning be insured?
a. They are uninsurable.
b. They are automatically covered as an extension of 15% of the building value.
c. They are automatically covered if the home is under 20 years of age.
d. They are excluded unless a special endorsement is added to the policy.
d. They are excluded unless a special endorsement is added to the policy.
56
27. When a claim is made under a policy which insures property, the insured person is
provided with a Proof of Loss to Complete. Why is this done?
a. The document is necessary to take to an appraiser to determine the amount of
the damage to the property in question.
b. The completed document must be retained by the insurer for 12 months for audit
purpose by the Provincial Department of Insurance.
c. The onus is on the insured to prove their loss and to prevent fraudulent claims.
d. To document the replacement value of the property damaged or lost
c. The onus is on the insured to prove their loss and to prevent fraudulent claims.
57
28. Your client advises you that they are renovating their condo unit and their contents will
be put in storage for 2 months. They have a Comprehensive Condo policy and want to
know if they have to make any special provisions for coverage. How do you advise
them?
a. All coverage continues for 30 days. After that only theft is covered.
b. Only fire and theft coverage applies to property in storage.
c. All coverage’s under their present policy will apply.
d. There is not coverage at the storage location.
a. All coverage continues for 30 days. After that only theft is covered.
58
29. What will an insurer do if a loss occurs under an insurance binder before a policy has
been issued?
a. The insurer will pay the claim in accordance with the coverages bound.
b. The insurer will cancel the binder by registered letter and deny the claim.
c. The insurer will demand the broker cover the loss.
d. The insured will await policy issuance before responding to confirm coverages
are properly in place.
a. The insurer will pay the claim in accordance with the coverages bound.
59
30. Nearly every insurance policy has Policy Conditions which are common to all policies
issued in a particular class. Some policies contain Statutory Conditions. Which one of
the following classes of insurance contains Statutory Conditions?
a. Liability insurance policy.
b. Burglary insurance policy
c. Fire Insurance policy.
d. Marine Insurance policy
c. Fire Insurance policy.
60
31. What is the purpose of the “pair and set” clause in a Property insurance policy?
a. It obliges the insurer to pay a total loss if any item of a pair or set is lost or
damaged.
b. It limits the liability of the insurer to not more than 20% of the total value of a pair
or set that is lost or damaged.
c. It protects the insurer from having to pay for a total loss when only part of a pair
or set is lost or damaged.
d. It warrants that diamond earring are properly set and inspected otherwise no loss
will be paid.
c. It protects the insurer from having to pay for a total loss when only part of a pair
or set is lost or damaged.
61
32. Which one of the following statements is true regarding Replacement Cost insurance?
a. A professional appraisal is required by insurers before they will insure any
property for its replacement cost.
b. Most insurers do not require and insured to replace a damaged property as a
condition to be indemnified for its Replacement cost.
c. Only commercial properties can be insured on their Replacement cost.
d. A condition of this coverage is that Replacement must be with materials of similar
kind and quality
d. A condition of this coverage is that Replacement must be with materials of similar
kind and quality
62
33. Your insureds decide to build a deck at the back of the house. The local Lumber
Company delivers $2500 in materials late one evening. While outside on the driveway
overnight, they were stolen. What would the Homeowners Comprehensive policy pay?
a. Nothing - as the materials were not part of the building at the time of loss.
b. A maximum of 10% of the building insurance carried.
c. The full loss subject to special policy limit of $2000.
d. The full loss subject to the deductible.
a. Nothing - as the materials were not part of the building at the time of loss.
63
34. Both Vacancy and Unoccupied can have an impact on coverage under a Homeowners
policy. Which of the following is true?
a. Vacancy has the greatest impact.
b. Unoccupied has the greatest impact.
c. They both have the same impact in the heating season.
d. They both have the same impact in the non-heating season
a. Vacancy has the greatest impact.
64
2. Rules and agreements concerning binding of insurance coverage by brokers are:
a. Laid out in the Insurance Act of Ontario
b. Set by RIBO and are uniform and apply to every insurance broker firm in Ontario
c. Set and agreed upon between each insurance company and the broker office
d. Enforced by the Department of Insuranc
c. Set and agreed upon between each insurance company and the broker office
65
4. No insurer shall use a form of application, policy, endorsement or renewal
or continuation certificate in respect to automobile insurance other than:
a. A form created by FSCO
b. A form published by RIBO
c. A form approved by the Superintendent
d. A form approved by the Lieutenant Governor
c. A form approved by the Superintendent
66
5. A member who places insurance with an insurer unlicensed to trade insurance in
Ontario must:
a. Arrange for the insurer to be licensed before the coverage is placed.
b. Ensure no additional taxes are charged to the expense of the insured.
c. Obtain the written consent of the member of the public whom the broker services
to the effect that they are aware their coverage will be carried by an unlicensed
insurer in the province
d. Obtain written guarantees from the insurer that they will abide by the legal
requirements under the Insurance Act of the province.
c. Obtain the written consent of the member of the public whom the broker services
to the effect that they are aware their coverage will be carried by an unlicensed
insurer in the province
67
6. An Insurance broker:
a. Acts in any manner in soliciting, negotiating, or procuring the making of any
contract of insurance or reinsurance
b. Does not provide risk management
c. Holds his/her employees out as insurance consultants
d. Only advises
a. Acts in any manner in soliciting, negotiating, or procuring the making of any
contract of insurance or reinsurance
68
. The amount of Error and Omissions and Fidelity insurance every member must maintain is:
a. $200,000 & $500.000
b. $100,000 & $250,000
c. $3,000,000 & $100,000
d. $500,000 & $500,000
. $3,000,000 & $100,000
69
9. The Registered Insurance Brokers Act of Ontario requires an individual to be registered
if they:
a. Are licensed under the Insurance Act to write business on behalf of a single insurer
b. Advise their friends to buy insurance from their insurance broker
c. On behalf of another negotiate an insurance contract and receive compensation
d. Are a Risk Manager for their employe
c. On behalf of another negotiate an insurance contract and receive compensation
70
10. A car salesman in your city has arranged to pass you leads whenever he sells a home
and in return asks you to give him some premium consideration when his policy is up for
renewal. You consult the RIBO Act and realize that:
a. Contrary to popular belief you can reduce the premium but only up to the amount of
your commission.
b. You cannot pay him anything directly but you can pay a finder’s fee to the Real
Estate Firm which equals the first year premium.
c. Finder’s fees can be paid but only to persons who are registered as insurance
intermediaries
d. No cash can be exchanged. However, there is nothing to prohibit you from
purchasing a barbecue or other things of value as recognition for his assistance.
c. Finder’s fees can be paid but only to persons who are registered as insurance
intermediaries
71
11. When an insurance broker moves from a brokerage firm and begins working for a
different firm, the individual must advise:
a. The Department of Insurance as soon a practicable.
b. RIBO at the time their new employer submits the next financial position report
c. RIBO within 30 days of the change
d. RIBO at the time the individual renews his/her registration certificate
c. RIBO within 30 days of the change
72
12. As per section 14.7 of regulation 991 (RIB Act), “a member shall not act as
insurance broker in accordance with the code of conduct”:
a. By acting as an insurance agent
b. In a manner consistent with the code
c. By jeopardizing the member’s integrity, independence or competence
d. With courtesy and good faith
c. By jeopardizing the member’s integrity, independence or competence
73
13. As an insurance broker “restricted to act under supervision”:
a. You may sell and solicit insurance and provide consultation to the general public
only within the community where your office is located
b. You may solicit insurance only from individuals who call to or visit your office
c. You may not act as a sole proprietor, control trust funds, or act as a designated
individual
d. You may control a trust account under the supervision of the designated individual
c. You may not act as a sole proprietor, control trust funds, or act as a designated
individual
74
14. If you are employed as a general insurance broker, you are required to be RIBO licensed
if you:
a. Are a receptionist and you refer clients to a producer
b. Are filing claims information, policy declarations and endorsement forms
c. Collect and receipt insurance premiums from the general public
d. Discuss with the general public their insurance needs.
d. Discuss with the general public their insurance needs.
75
15. Brokers may act in a manner that could be considered a conflict of interest if they:
a. Are acting on behalf of the client while accepting payment on behalf of the insurer.
b. Offer advice regarding the type of insurance most suitable to their client’s needs and
this is also in the best interests of the insurer.
c. Act in a manner that is above reproach from both the clients and insurers
perspective.
d. Represent both the client and the insurer at the same time.
d. Represent both the client and the insurer at the same time.
76
16. In which of the following situations would you be guilty of rebating?
a. You quoted you client a premium of $1500 and the policy was issued with a premium
of $1575. You call the insurance company and arrange to decrease your commission
by $75 to make up the difference.
b. You have a quote from your insurance company for $1000. The competition
quotes $750 and you decide you really want the business so you match the
reduced premium and contribute $250 yourself.
c. The insurer issues a policy with a premium of $1200 for your client. You realize that a
mistake has been made on the application that increased the charge substantially. You
explain the situation to your client and contact the company to rerate the policy.
d. All of the above.
b. You have a quote from your insurance company for $1000. The competition
quotes $750 and you decide you really want the business so you match the
reduced premium and contribute $250 yourself.
77
17. Rebating is?
a. Sharing the commission with someone who has helped secure the business.
b. Offering the company business that it does not desire.
c. Charging an insured less than the premium shown on the policy.
d. Sharing the commission with someone who does not hold a brokers license.
a. Sharing the commission with someone who has helped secure the business.
78
3. A material fact is one that could affect:
a. The premium or type of policy available
b. The term of the policy
c. The premium payment arrangements
d. The statutory conditions
a. The premium or type of policy available
79
6. Actual cash value most clearly means: (select the most correct)
a. The settlement on a replacement cost basis
b. Replacement cost less accumulated depreciation that has been agreed upon in
advance
c. Replacement cost less accumulated depreciation or plus appreciation which
include consideration of likely resale value, degree of deterioration,
obsolescence, age and general condition of the property involved
d. The actual cost of replacing or repairing the damaged or destroyed property at
the time it was insured
c. Replacement cost less accumulated depreciation or plus appreciation which
include consideration of likely resale value, degree of deterioration,
obsolescence, age and general condition of the property involved
80
8. Referring to the term subrogation, which of the following is correct?
a. Subrogation states the insured pay for the claim
b. Subrogation cannot be enacted if someone else’s negligence caused the
damage
c. Subrogation does not apply to contracts of indemnity
d. Subrogation is a legal principle
d. Subrogation is a legal principle
81
9. Which of the following do not have a fiduciary relationship with their clients?
a. Trust Companies
b. Banks
c. Insurance companies
d. Dry Cleaning stores
d. Dry Cleaning stores
82
10. Which of the following is not true?
a. A friendly fire is a fire intentionally set in a place provided for it
b. Fires unintentionally set and occurring in places where they should not be are
also known as hostile fires
c. When a fire leaves the place provided for it and ignites something outside, the
original fire is a hostile fire
d. When a fire leaves the place provided for it and ignites something outside, the
secondary fire is a hostile fire
c. When a fire leaves the place provided for it and ignites something outside, the
original fire is a hostile fire
83
11. The Federal Department of Insurance is most interested in which of the following?
a. The qualification and licensing of insurance agents and brokers in each province
b. The licensing of insurance adjusters
c. The financial stability of federally licensed insurance companies
d. Interprovincial wordings of automobile insurance policie
c. The financial stability of federally licensed insurance companies
84
12. What is a binding authority?
a. To sign the application on behalf of the insured
b. An oral agreement
c. Confirmation that insurance coverage is in effect
d. All of the above
d. All of the above
85
13. Which of the following statements is true?
a. A joint stock company is profit-making organization and is owned by its
shareholders.
b. Mutual insurance companies are required to be RIBO licensed
c. Lloyd’s is a type of co-operative insurance company founded by Sir George
Lloyd in London England
d. A mutual insurance company does not rely on its policyholders for the money to
operate its affairs
a. A joint stock company is profit-making organization and is owned by its
shareholders.
86
14. On the subject of Reinsurance, which statement is not correct?
Content copyright IBAO 2022
a. The sole reason for reinsurance is to share the Insurer’s risks
b. Treaty reinsurance is automatic
c. Facultative reinsurance is arranged on individual risks
d. The two methods of reinsurance are proportional and non-proportional
a. The sole reason for reinsurance is to share the Insurer’s risks
87
16. If a broker knowingly does not advise the insurer of the client’s previous losses when
required to do so, he has violated an essential principle of the insurance contract. The
principle is?
a. Legality of object of the contract
b. Utmost good faith
c. Insurable interest
d. Indemnity
b. Utmost good faith
88
17. Rules or agreements concerning binding of insurance coverage by brokers are:
a. Laid out in the Insurance Act of Ontario
b. Set by RIBO and are uniform and apply to every insurance brokerage firm in
Ontario
c. Set and agreed upon by contract between each insurance company and the
brokerage office
d. Enforced by the Superintendent of Insurance
c. Set and agreed upon by contract between each insurance company and the
brokerage office
89
18. Before an insured can recover a loss under a fire insurance policy, it is necessary that:
a. The premium be paid and the policy delivered to the insured
b. The policy be countersigned by both company president and broker
c. The insurable interest exists
d. The insured prove that fraud had not been committed
c. The insurable interest exists
90
19. The Statutory Conditions are set out by:
a. The Federal Insurance Act
b. The Provincial Insurance Act
c. Individual insurers
d. Both the federal and provincial insurance department
b. The Provincial Insurance Act
91
1. Out of province Travel Insurance is available to:
a. Only those travelers who are retired or semi-retired.
b. All travelers who reside in any province of Canada except Quebec
c. All travelers regardless of province
d. All travelers who are registered with the OHIP Out of Canada benefits dept.
c. All travelers regardless of province
92
2. Generally OHIP ceases to cover your health care if you are absent from Ontario for over:
a. 60 days
b. 90 days
c. 212 days
d. 730 day
c. 212 days
93
A pre-existing condition is defined as:
a. A medical condition which existed prior to the effective or departure date
b. A condition the applicant was born with.
c. A medical condition which is stable and any change in medication was a
decrease
d. A condition that affect only the cardiac and respiratory systems.
a. A medical condition which existed prior to the effective or departure date
94
4. In regard to Government Health Insurance Plan (GHIP):
a. Group Insurance may pay claims after GHIP benefits are exhausted or GHIP did
not provide the coverage.
b. GHIP will pay outside of Canada only if you do not have other coverage.
c. GHIP covers residents while outside Canada only.
d. GHIP will pay inside Ontario but Group Insurance pays whether you are inside or
out of Province.
a. Group Insurance may pay claims after GHIP benefits are exhausted or GHIP did
not provide the coverage.
95
5. Visitors to Canada need travel health insurance because:
a. Hospitalization costs to non-residents in Canada can reach as high as $2800 per
day.
b. Visitors to Canada are not covered by the provincial health plans.
c. In some provinces newly landed immigrants are subject to a waiting period
before they are eligible for provincial health coverage.
d. All of the above
d. All of the above
96
6. You client is going to Daytona Beach for a week and is planning on doing some scuba
diving. You should look for coverage with:
a. No pre-existing condition
b. No limitation or exclusion
c. No maximum age limit
d. No sports restriction
d. No sports restriction
97
7. Your client is an executive who frequently goes on business trips and is a cross border
shopper. What sort of insurance do you sell him/her?
a. An annual policy for traveling Canadians
b. Visitors travel health insurance
c. A short term per trip plan for traveling Canadians
d. No insurance - the trips are so short that he does not need it.
a. An annual policy for traveling Canadians
98
8. Pre pricing allows which of the following?
a. The insured to obtain the lowest possible premium for the policy
b. The insured to shop the market for the best policy at the lowest price
c. The carrier to obtain the best rate at the time of claim
d. The carrier to negotiate the best rate prior to the claim
d. The carrier to negotiate the best rate prior to the claim
99
9. Your client will be travelling outside of Canada for a period longer than coverage under
the GHIP will provide for “out of country”. You recommend:
a. Return to Canada before the GHIP coverage terminates because all travel
insurance plans work as a supplement to GHIP coverage.
b. The client buys supplementary (secondary) coverage while he/she is covered
under the GHIP programme and then primary cover for the remainder of the trip
after GHIP terminates
c. Buy travel health insurance while the GHIP is in effect and then go without any
insurance for the last part of the trip
d. The client buys primary travel health insurance from day one of the trip so he/she
does not have to access the GHIP at all.
b. The client buys supplementary (secondary) coverage while he/she is covered
under the GHIP programme and then primary cover for the remainder of the trip
after GHIP terminates
100
10. The examination of existing coverage is necessary because:
a. Additional insurance may not be required if existing insurance covers all travel
risks.
b. Most companies won’t allow double billing on claims but will pro-rate the payment
c. OHIP has put serious limitations on out-of-Canada coverage & failure to provide
adequate additional coverage could result in financial disaster
d. All of the above
d. All of the above
101
11. Most travelers can feel confident regardless of what travel insurance they buy because:
a. They all offer the same benefits
b. An insurance company’s ability to pay claims is guaranteed by law
c. Most claims would be covered by OHIP anyway
d. None are true
d. None are true
102
12. A client, who has just been discharged from hospital following serious illness, decides to
take an extended trip with his wife while convalescing. He phones you to arrange travel
health insurance for both of them. Which one of the following policy conditions should
you draw to his attention?
a. Coverage can be applied only to himself for accidents that occur during the trip
only.
b. Coverage for any sickness he may have during the trip is limited to $50,000
c. There may be no coverage or limitations of coverage for the condition of sickness
for which he was hospitalized.
d. He must sign a Waiver of Claim in respect of his recent illness
c. There may be no coverage or limitations of coverage for the condition of sickness
for which he was hospitalized.
103
13. You have obtained a Travel Health policy for a client who will be starting a trip in 10
days. You later discover that the dosage of medication prescribed by the physician and
declared in the policy application has been increased since the policy was applied for.
What action should you take as the broker?
a. Tell the insured that this must be declared immediately to the insurer.
b. Tell the insured to say nothing about it if there is a claim.
c. Do nothing.
d. Ask that the policy be returned for cancellation.
a. Tell the insured that this must be declared immediately to the insurer.
104
14. Which one of the following statements is true about Travel Health Insurance policies?
a. Benefits are payable for certain elective surgery procedures.
b. Senior citizens are only eligible for travel health insurance if they have not sought
medical treatment within the proceeding 12 months.
c. Coverage for continuing medical treatment may be excluded if the insured is
medically fit to return to Canada following emergency treatment.
d. They do not provide benefits in the event of accidental death.
c. Coverage for continuing medical treatment may be excluded if the insured is
medically fit to return to Canada following emergency treatment.
105
. Which of the following provinces offer only government compulsory auto insurance?
a) Alberta, Quebec and Saskatchewan
b) Saskatchewan, Quebec and Manitoba
c) British Columbia, Manitoba and Saskatchewan
d) Ontario and Nova Scotia
c) British Columbia, Manitoba and Saskatchewan
106
Of the following, the person who most clearly has an insurable interest in an automobile
is….
a) The person who actually owns the automobile
b) The person whose name appears on the auto insurance policy
c) A person who has a lien on the auto
d) A person who can legally drive the insured auto
a) The person who actually owns the automobile
107
. When there is an auto loss, the insured is required to:
a) Abandon the automobile to the possession of the insurer
b) Protect the automobile from further loss
c) Try to settle any claim with a third party amicably
d) Submit proof of loss within 60 days.
b) Protect the automobile from further loss
108
4. The minimum limit of automobile liability allowable by law in the Province of Ontario is
$200,000. In the even of claims for both bodily injury and property damage which
exceeds the limit, the money will be apportioned:
a) $195,000 BI, $5000 PD
b) $190,000 BI, $10,000 PD
c) $180,000 BI, $20,000 PD
d) $150,000 BI, $50,000 PD
b) $190,000 BI, $10,000 PD
109
```
5. Lawsuits for non-economic loss due to an automobile accident are subject to which of
the following?
a) $15,250 per person deductible
b) $10,250 per person deductible
c) $25,140 per person deductible
d) $36,140 per person deductible
```
d) $36,140 per person deductible
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6. Under the OAP 1 the Statutory Condition, Termination does not state:
a) Who may cancel the policy
b) How much notice must be given
c) The actual amount of premium to be refunded
d) How the notice must be give
c) The actual amount of premium to be refunded
111
7. Which of the following would be considered “persons insured” under the uninsured
Automobile Coverage?
a) The spouse of the insured when hit by an uninsured vehicle while walking the
dog.
b) The owner of the uninsured automobile
c) Anyone who drives your vehicle
d) All of the above
a) The spouse of the insured when hit by an uninsured vehicle while walking the
dog.
112
8. Which of the statements is not true pertaining to terminating an Auto Policy?
a) The insurer is required to provide 15 days written notice by registered mail
b) The insurer can terminate coverage by providing 5 days written notice which is
personally delivered.
c) The insured can terminate coverage anytime subject to returned premium on a
pro-rata basis.
d) Same as answer c except on a short rate basis
c) The insured can terminate coverage anytime subject to returned premium on a
pro-rata basis.
113
9. Which of the following losses is covered under the specified perils section of the policy?
a) Damages caused by radioactive contamination
b) Tapes stolen from the front car seat
c) Damage caused when water freezes in the radiator
d) Hail damage to the roof of the automobile
d) Hail damage to the roof of the automobile
114
10. If you have comprehensive coverage with the standard $300 deductible, the deductible
will apply to all of the following losses except:
a) The theft of your auto’s CD player
b) Scratches to the side of your auto caused by some type of blunt object while your
auto is parked illegally in a no parking zone
c) Lightning damage to your vehicle
d) A broken window or damage to the instrument panel of your auto as a result of
attempted theft
c) Lightning damage to your vehicle
115
11. In which of the following situations would your policy apply if an accident occurred?
a) Your 15 year old on takes the family car for a drive without permission
b) A valet parking attendant parks you car at a hotel
c) A mechanic take you car for a road test after a repair
d) A Taxi driver friend borrows your vehicle with permission to take his children to
schoo
d) A Taxi driver friend borrows your vehicle with permission to take his children to
school
116
12. Which of the following statements about Direct Compensation Property Damage (DCPD)
is true?
a) Under DCPD, you recover damages from a third party insurer
b) Under DCPD, a standard deductible of $1000 applies
c) Liability must be established with respect to who is at fault
d) You only recover under DCPD if you were responsible for the accident
c) Liability must be established with respect to who is at fault
117
13. The main purpose of the Family Protection Endorsement (OPCF 44) is to provide
coverage:
a) For all passengers of the insured auto
b) When the insured and his/her spouse are the occupant of a non-owned auto
c) For an insured person and his/her dependant family when a third party is at fault
but is uninsured or inadequately insured to cover the insured’s claim
d) To cover any family member who may be injured while walking or riding a
bicycle
c) For an insured person and his/her dependant family when a third party is at fault
118
14. Mr. White is involved in a two car collision in which the other driver is determined to be
80% at fault. Mr. White requires extensive medical treatment for his injuries. Who will
pay for the medical treatment?
a) The at-fault driver’s insurance company
b) The Facility Association
c) Mr. White
d) Mr. White’s insurance company
d) Mr. White’s insurance company
119
15. Veh#1 collided with Veh#2. At the scene of the accident, it was determined that Veh#1
was completely at fault, but did not have insurance. Veh#2 was insured under an OAP1.
The owner of the Veh#1 sustained severe bodily injuries. Vehicle#1 owner will obtain
payment for medical, rehabilitation and attendant care from:
a) No one as veh#1 has no insurance
b) The provincial government claim fund
c) The insurance policy of veh#2
d) The owner of vehicle #1 past expired policy
c) The insurance policy of veh#2
120
16. Your insured gets in touch with you to let you know that a close friend from Nova Scotia
who is licensed to drive there will be visiting you for about a week. The insured expects
the friend will likely be driving the insured car during the visit. You advise the insured the
following:
a) Add an endorsement to extend coverage to the friend for the additional premium
b) The visitor cannot drive the vehicle unless they pass a test for the Ontario drivers
license
c) Ask the insured to send you a letter to be passed to the insurer
d) The policy coverage protects the visitor so long as he/she has a valid driver’s
license in Nova Scotia and your insured gives consent to the visitor to drive
his/her auto
d) The policy coverage protects the visitor so long as he/she has a valid driver’s
license in Nova Scotia and your insured gives consent to the visitor to drive
his/her auto
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17. The insured for reasons of his own sold his auto and contacts you by phone as to what
should be done about his OAP policy. You should advise the following:
a) Send the insured a cancellation form or a lost policy voucher, instructing him to
insert the effective cancellation date, sign it and return it to your office for a prorata refund.
b) Tell him the premium, due to the sale of the car is fully earned and he can
discard the policy
c) Send the insured a cancellation form or lost policy voucher or ask him to sign off
the policy, with the effective date of cancellation and return it to your office to be
passed along to the insurer for a short rate refund of the unearned premium
d) Advise the insured you will send him an immediate refund
c) Send the insured a cancellation form or lost policy voucher or ask him to sign off
the policy, with the effective date of cancellation and return it to your office to be
passed along to the insurer for a short rate refund of the unearned premium
122
18. Which one of the following is the correct way to insure a snowmobile?
a) Buy a Snowmobile Floater to cover all the exposures of the insured.
b) Buy an OAP1 policy to cover the exposures of the insured.
c) Buy an endorsement to a Homeowners/Condo/Tenants policy to cover third party
liability and a Personal Articles Floater for the physical damage to the snowmachine.
d) Buy an OAP1 policy to cover the liability and accident benefits and an inland
marine floater to cover the physical damage to the snow-machine.
b) Buy an OAP1 policy to cover the exposures of the insured.
123
19. Your insured has bought a replacement snowmobile and has called to advise you that
his 14 year old daughter will also be driving the new machine. Your insured has an
existing OAP1 policy for the snowmobile. What do you advise your insured regarding
this new information?
a) You will add OPCF 44 Family Protection to provide enhanced coverage for the
daughter as operator.
b) You will add OPCF 32 which provides coverage for unlicensed operators when
driving the snowmobile off a public road.
c) The daughter is fully covered as long as she takes a Snowmobile Association
approved operators course.
d) There is no coverage as a person that young should not be driving a dangerous
machine.
b) You will add OPCF 32 which provides coverage for unlicensed operators when
driving the snowmobile off a public road.
124
20. Which one of the following is correct about Uninsured Automobile Coverage?
a) It covers third parties who sustain bodily injury and the insured has breached a
Statutory Condition.
b) It is only available by endorsement to an OAP1 Owners policy.
c) It only covers bodily injury, but never third party property damage.
d) It covers accidental damage to the insured’s automobile provided the uninsured
owner or driver of the other vehicle is identified
d) It covers accidental damage to the insured’s automobile provided the uninsured
owner or driver of the other vehicle is identified
125
1. A new client comes to your office and request automobile insurance. You are somewhat
concerned that this person may not be acceptable to any one of your insurers. Under the
Compulsory Automobile Insurance Act what are you required to do?
a) Do nothing and advise the person that you have just sold your last auto policy
and he should go to another broker who may have more.
b) Bind coverage with one of your companies and send a completed application to
that company.
c) Provide an application for auto insurance and if properly completed submit it to
an insurance company
d) Collect the premium in cash and deposit it before submitting the application to
the insurance company.
c) Provide an application for auto insurance and if properly completed submit it to
an insurance company
126
22. Which one of the following statements correctly describes the purpose of OPCF 44RFamily Protection endorsement for your policyholder?
a) It indemnifies an insured up to the limit of the insured’s policy for an amount they
are legally entitled to recover for bodily injury and death from an inadequately
insured third Party.
b) It provides additional third party liability insurance if the insured is involved in an
accident in a state or province where the statutory minimum limits are higher than
those being carried.
c) It protects the insured for liability for injuries to any passengers if the insured’s
coverage limits are inadequate to cover them fully.
d) It provides flexibility in the insured’s coverage in case it is inadequate to meet the
costs resulting from the use or operation of the insured vehicle.
a) It indemnifies an insured up to the limit of the insured’s policy for an amount they
are legally entitled to recover for bodily injury and death from an inadequately
insured third Party
127
23. Which one of the following statements regarding DCPD Coverage is incorrect?
a) It covers damage to the automobile, certain unscheduled trailers, their equipment
and contents caused by another automobile in Ontario, including loss of their
use.
b) The policy on the other vehicle must be issued by an Ontario licensed insurer or
one that has filed with the Financial Services Commission of Ontario to provide
this cover.
c) The accident may occur anywhere in Canada and at least one other automobile
involved is insured under a motor vehicle liability policy.
d) The insured collects from their own insurer even though the operator of the other
vehicle was not entirely at fault for the accident.
c) The accident may occur anywhere in Canada and at least one other automobile
involved is insured under a motor vehicle liability policy.
128
24. Your insured does not own and has never owned an automobile but occasionally rents
one while on vacation. He expresses concern to you that the various rental agencies
may not carry sufficient limits to properly protect him. What should you do?
a) Issue an OAP 1 Owners policy.
b) Issue an OPF6 Non-Owned auto form.
c) Issue an OAP 2 Drivers form.
d) Advise him that all rental firms carry lots of policy limit and he should trust them
to provide proper coverage
c) Issue an OAP 2 Drivers form.
129
25. Your insured hires a babysitter on a regular basis and part of the compensation is the
pick up and return of the sitter to her home by your insured. Since this is part of a
compensation package what would you do to confirm to your client that he has adequate
coverage for any claim that may arise from injury to the babysitter in an accident?
a) Add the change form “Permission to carry paying passengers”.
b) Add “passenger hazard” change form.
c) Reclassify the risk business use and charge more premium.
d) Advise that no endorsement or change is required as coverage is included in the
OAP1 Owners policy.
d) Advise that no endorsement or change is required as coverage is included in the
OAP1 Owners policy.
130
26. A client phones you from his car to tell you that he has just installed a high end stereo
system in his Mazda 3 and it costed him $5000. What would you advise him to do?
a) Not to do anything as there is automatic coverage for new equipment on a
vehicle.
b) There is not coverage available unless he also adds a high end security system.
c) Send you a copy of the invoice so you can endorse the policy to cover the full
value as there is a limit on the policy for electronic equipment.
d) Coverage only applies if it is shown the vehicle was locked at the time of loss.
c) Send you a copy of the invoice so you can endorse the policy to cover the full
value as there is a limit on the policy for electronic equipment.
131
27. Under “What Automobiles are Covered” section of OAP1 Owners form, a newly acquired
automobile is automatically covered for 14 days. This automatic coverage is limited to:
a) A vehicle which replaces an existing vehicle on the policy and not to additional
vehicles
b) Private passenger vehicles which are chiefly used for pleasure purposes
c) Private passenger vehicles and no other types of vehicles.
d) Those coverages which applied to the vehicle replaced or to all of the insured’s
vehicles if it is an additional vehicle.
d) Those coverages which applied to the vehicle replaced or to all of the insured’s
vehicles if it is an additional vehicle.
132
1. All but one of the following are examples of conditions that apply to liability claims.
Which one does not?
a) The insured cannot voluntarily make any payment or assume any obligation or
incur expense other than for necessary first aid expense.
b) Any documents received by the insured concerning the claim must be
immediately sent to the insurer.
c) Bodily injury claims cause unintentionally by the insured may be covered
d) Claims arising from the transmission of a communicable disease are covered.
d) Claims arising from the transmission of a communicable disease are covered.
133
2. Which statement is not true about Liability insurance?
a) Liability insurance is designed to pay only when the insured is legally liable.
b) The number of people in the household does not have a bearing on the premium
charged.
c) Special damages are only awarded for small dollar amounts such as out of
pocket expenses
d) Punitive damages are generally not covered by a liability policy
c) Special damages are only awarded for small dollar amounts such as out of
pocket expenses
134
3. Which of the following statements is correct?
a) Most policies cover loss or damage to the Insured’s property whereas liability
policies include insured and Third party property.
b) Liability policies protect the insured by paying damages for which he is legally
liable.
c) Liability policies cover goodwill payments, which a firm might like to make to keep
clients happy.
d) Payments are never made under a liability policy until a court judgment is
received.
b) Liability policies protect the insured by paying damages for which he is legally
liable.
135
5. Under automobile Third Party liability the insurer does not agree to:
a) Investigate, negotiate and settle claims
b) Reimburse the insured for physiotherapy and other medical costs
c) Defend civil actions against the insured
d) Reimburse insured for related out of pocket expenses
b) Reimburse the insured for physiotherapy and other medical costs
136
6. Under the Third party liability coverage, the insured is entitled to:
a) Select his own counsel if sued if within the policy limits
b) Claim for medical expenses incurred on vacation in Banff
c) Claim for medical expenses if he injures himself on the insured premises
d) Court costs even if they are paid over the policy limits
d) Court costs even if they are paid over the policy limits
137
7. The general purpose of Section E of the Homeowners Liability Coverage section is to
give the insured protection for:
a) Injuries caused to others when the insured is negligent and held legally liable
b) Careless use of others peoples property which the insured borrows
c) Claims for injuries done to others whether or not the insured is negligent
d) Negligently caused damage to his /her own property
a) Injuries caused to others when the insured is negligent and held legally liable
138
8. Product Liability covers:
a) Bodily injury but not property damage caused by the insured products
b) Claims caused by products on the insured premises
c) Property damage resulting from some work carried out by the insured
d) When the product is away from the insured’s premises and in the possession of
someone else
d) When the product is away from the insured’s premises and in the possession of
someone else
139
10. If children visiting an insured's property without the insured’s knowledge are injured,
is the insured liable? Select the best answer.
a) Yes, the insured is liable because children lack the mature judgment to avoid
risk, and therefore the occupier of property must ensure that the premises are
safe from any danger whatsoever
b) No, the insured is not liable because children are the responsibility of their
parents and must therefore be properly supervised
c) No, the insured is not liable because the children were on the premises without
the knowledge or permission of the insured.
d) None of the above
a) Yes, the insured is liable because children lack the mature judgment to avoid
risk, and therefore the occupier of property must ensure that the premises are
safe from any danger whatsoever
140
11. When an insured's dog bites for the first time, is the insured liable for any of the
damages committed by the dog? Select the best answer.
a) Yes - the insured is liable for any and all damages
b) Yes - the insured is liable for some damages, if the dog was restrained at the
time
c) No - the insured is not liable because there is a "first bite" allowance in civil law.
d) Yes - although the insured is only liable if the “first bite” takes place on the
insured premises
a) Yes - the insured is liable for any and all damages
141
12. Your insured is driving a rental 18ft Mastercraft 160hp inboard/outboard ski boat
while on holiday in Parry Sound. He has never driven a boat this powerful before. He
has a 10hp outboard on a 14 ft boat of his own properly covered on his own homeowner
policy. While waterskiing with his children out among the islands of the bay, he
accidentally drives over a canoe loaded with kids from a summer camp on a day trip. He
was acting both as driver and spotter. The propeller from the insured’s boat badly cuts
two of the children and the canoe and all the equipment is lost.
Your insured’s policy:
a) Covers all damage regardless of limits
b) Excludes operation and damage to watercraft under 26 feet
c) Includes damage to the canoe and equipment above the deductible but excludes
damage to the insured’s own boat
d) Covers liability up to the limits of the insured’s policy
d) Covers liability up to the limits of the insured’s policy
142
13. An Insurance broker agreed to bind liability coverage, the premium for which the
applicant promised to pay the following week. Before any payment was made, a claim
was made by a third party. What special action, if any, would the insurer take?
a) Investigate the claim but take no further action.
b) Respond to the claim in accordance with the coverage bound by the broker.
c) Obtain a signed “Waiver of Subrogation” from the applicant/insured.
d) Deny the claim because no premium had been paid
b) Respond to the claim in accordance with the coverage bound by the broker.
143
14. Liability Coverage of the Homeowners Comprehensive policy provides coverage
for Voluntary Property Damage when property is damaged unintentionally by an insured
person. In which one of the following situations would this extension of coverage not
apply?
a) The damage occurs away from the insured premises.
b) The damage property is rented from an establishment which rents
i. equipment on a daily basis.
c) The insured person is under the age of 12 years.
d) The insured person is over the age of twelve years.
b) The damage property is rented from an establishment which rents
i. equipment on a daily basis.
144
15. Your insured is a tenant in an apartment building and has a Tenants Comprehensive
policy you placed last year. Due to her negligence, a fire occurs and severely
damages her apartment as well as smoke damage to many apartments on the same
floor. Which section of the policy would pay for damage to her apartment.
a) No coverage as property was rented and in her care, custody and control.
b) Not applicable. The loss would be covered under the property Section i of her
Tenants Comprehensive policy.
c) Personal liability – Section E
d) Voluntary payment for damage to property –Section G
c) Personal liability – Section E
145
16. Your insured owns a moped, dirt bike, motorized wheelchair and snowmobile and
asks which one is covered under the liability section of the Homeowners Comprehensive
policy. What is your response?
a) The moped.
b) The dirt bike.
c) The motorized wheel chair
d) The snowmobile
c) The motorized wheel chair
146
17. The liability section of the Comprehensive Homeowners policy contains coverage
for certain financial obligations of the insured. Against which one of the following
obligations would the insured be protected?
a) Liability to pay a fine under a municipal by-law.
b) Liability of the insured assumed under contract with another individual regarding
the activities of that other individual.
c) Costs of investigation fees and defense of claims made against the insured for
compensatory damage even if the claim is groundless.
d) Liability for damage by burglary to a summer cabin he rents and resulting from
his negligence.
c) Costs of investigation fees and defense of claims made against the insured for
compensatory damage even if the claim is groundless.
147
If an insured suffers a business lost on a personal property (home business), how much is there to cover?
1. 1000
2. 5000
3. none
4. 2000
4. 2000
148
Automobile insurance in Ontario, mini-snowmobiles are treated the same as _____
Regular snowmobiles
149
Which of the following is NOT covered on a personal line liability policy?
1. Compensatory
2. Special
3. General
4. Exemplary
Special
150
Under the RIBO homeowner’s form, if it is necessary to remove property to protect it from loss, which one of these statements is true?
30 days or until policy ends
151
____ acknowledges changes to the terms in the insurance contract
Endorsements and riders
152
In Ontario, the automobile insurance application requires that the insured provide an insurance history for the last _____ years, so that the insurer can assess the risk and determine the premium
6 years
153
Out of Province Travel Insurance is available to ____
All travelers regardless of residence
154
____is essential for contractors and others whose work may result in injury or damage when such work is put to its intended use
a. completed operations coverage
b. E&O
c. Residential insurance endorsements
d. life and longterm disability
Completed operations coverage
155
The RIBO Homeowners form covers the following types of dwellings ____
Any building on the insureds property
small business
Houses condos garages sheds and apartments
dwellings occupied for at least 120 days
Any building on the insureds property
156
A person who is the principle operator of a vehicle and is over 65 years of age, has no earned income, is not operating a business, and has not been employed for the last 26 weeks, may be eligible for a _____ discount
retiree discount
157
_____ guarantee payments of duties or taxes that businesses collect at the time of sale and then submit to the Canadian government. Examples are customs warehouses and distillers
Customs and excise bonds
158
Which of the following items is not insured under Section II –Liability coverage of the homeowners form?
vacant farm land
vacation property rented by insurer for two weeks
two burial plots purchased by the insured
land where an independent contractor is constructing a single family dwelling for the insureds
vacant farm land
159
The broker/agency contract consists of six (6) segments: broker authority, billing procedures, termination, commissions, brokerage exemptions and __
Ownership of operations
fiduciary responsibilities
error and omission liability
the pink slip
Ownership of operations
160
```
RIBO has a committee that oversees complaints and investigations called __
Code of conduct comittee
E&O committee
Public representation committee
Professional Conduct Commitee
```
Code of conduct comittee
161
Floaters cover property having a ____
Higher depreciation rate
Higher Replacement Value
High degree of mobility
Boating equipment
High degree of mobility
162
Mr. Franklin owns a condo in Toronto. His family also owns a cottage New Liskeard, which they visit only in the summer. They have a standard condo homeowner policy, and a seasonal residence policy for the cottage, with no extensions. His son, David, age 20, is going to university in Toronto, and has a G class license. His daughter, Amanda, age 22, is attending the University of Texas for music. She does not drive, but owns a violin worth $5000. The Franklin family own two older cars which have the mandatory coverages and All Perils.
According to the RIBO Policy, which of the following would NOT be covered or NOT fully covered?
7500 handbag
computer brought to cottage and then door wasn't locked
diamond ring 2k
violin
computer
163
The commercial property 3-D policy includes an agreement that covers __
Employee Dishonesty
Depositors Forgery
Money orders and counterfeit paper currency
all answers
all answers
164
Within travel health insurance, pre-existing conditions are covered provided clients receive no treatment, change in medication or medical consultation in the ____ days prior to departure
10 days
20
30
90
90
165
Following items must accompany the written application for a farm insurance policy: a diagram showing the distance between buildings, whether insured or not, and _____
Photographs of specific buildings
166
The RIBO Qualifications and Registration Committee is responsible for establishing and maintaining standards of competence for insurance brokers, including _____ and providing information and assistance to brokers
exams
167
A _____ provides a guarantee that a successful bidder will provide the actual performance of the contract, and that faulty work will be corrected for a period of one year after completion of performance
Surety
bid
labour
performance
performance
168
Which of the following is NOT a statutory condition that must be included in contracts of insurance?
Disruption of service
fraud
termination
salvage
Disruption of service
169
Within the automobile insurance policy, “catastrophic impairment” includes the following injuries; paraplegia, or quadriplegia, total loss of vision in both eyes, or _____
```
Brain impairment defined by approved rating system
loss of use or arm
partial paralysis
brain or memory loss
neck injury
```
Brain impairment defined by approved rating system
170
Your client needs primary health insurance coverage if they are __
visitor to canada and a travelling canadian without provincial health insurance
171
The profits approach to Business Interruption differs from the earning approach in that coverage under the profits form;
ceases when business results are no longer affected or after 12 months
172
two statutory conditions included in contracts of insurance are _____ and _____
fraud and material change
173
The ______ policy insures blanket contractual, contingent employer’s and owner’s and contractor’s protective liability for retail stores, offices and other businesses
Commercial general liability
174
The underwriter’s sources of information regarding the applicant or potential client include the application, the broker and ____
past experience data and inspection reports
175
A surety guarantee made by a contractor when a contractor bids on a tender for construction of a large project is called a __, and it guarantees that the contactor will enter into a contact to perform the work at the tendered price and provide whatever security is specified to ensure performance of the contract
surety security
promissory note
bid bond
bid premium
bid bond
176
____ means that all chance of financial loss has been eliminated.
Avoidance of risk
transfer of risk
catastrophic risk
perilous risk
Avoidance
177
When a loss occurs to an insured property, and involves different types of property, how is the deductible applied to the claim?
Only one deductible will apply to the total amount
each property has a deductible
only the highest deductible will be applied to one of the properties
the deductible will only apply to theft lost
Only one deductible will apply to the total amount
178
In Quebec, the government maintains a monopoly on __for automobile accidents occurring in that province; other coverages may be purchased from private insurers except
collision
personal injury costs
replacement
liability
Personal injury
179
Livestock on farms is usually insured for accidental death by __ as defined under the form, subject to applicable co-insurance
A named peril
180
Liability policies insure the bodily injury and property damage caused by insureds; which of the following are not covered?
nominal damages caused by a civil action
all loss of property due to the unintentional damage by the insured
transfer of communicable disease
death caused by operation of defective products manufactured by the insureds
nominal damages caused by a civil action
181
5. Under automobile Third Party liability the insurer does not agree to:
a) Investigate, negotiate and settle claims
b) Reimburse the insured for physiotherapy and other medical costs
c) Defend civil actions against the insured
d) Reimburse insured for related out of pocket expenses
b) Reimburse the insured for physiotherapy and other medical costs
182
All but one of the following are examples of conditions that apply to liability claims.
Which one does not?
a) The insured cannot voluntarily make any payment or assume any obligation or
incur expense other than for necessary first aid expense.
b) Any documents received by the insured concerning the claim must be
immediately sent to the insurer.
c) Bodily injury claims cause unintentionally by the insured may be covered
d) Claims arising from the transmission of a communicable disease are covered.
d) Claims arising from the transmission of a communicable disease are covered.
183
14. Liability Coverage of the Homeowners Comprehensive policy provides coverage
for Voluntary Property Damage when property is damaged unintentionally by an insured
person. In which one of the following situations would this extension of coverage not
apply?
a) The damage occurs away from the insured premises.
b) The damage property is rented from an establishment which rents
i. equipment on a daily basis.
c) The insured person is under the age of 12 years.
d) The insured person is over the age of twelve years.
b) The damage property is rented from an establishment which rents
i. equipment on a daily basis.
184
5. Your insured is a tenant in an apartment building and has a Tenants Comprehensive
policy you placed last year. Due to her negligence, a fire occurs and severely
damages her apartment as well as smoke damage to many apartments on the same
floor. Which section of the policy would pay for damage to her apartment.
a) No coverage as property was rented and in her care, custody and control.
b) Not applicable. The loss would be covered under the property Section i of her
Tenants Comprehensive policy.
c) Personal liability – Section E
d) Voluntary payment for damage to property –Section G
c) Personal liability – Section E
185
17. The liability section of the Comprehensive Homeowners policy contains coverage
for certain financial obligations of the insured. Against which one of the following
obligations would the insured be protected?
a) Liability to pay a fine under a municipal by-law.
b) Liability of the insured assumed under contract with another individual regarding
the activities of that other individual.
c) Costs of investigation fees and defense of claims made against the insured for
compensatory damage even if the claim is groundless.
d) Liability for damage by burglary to a summer cabin he rents and resulting from
his negligence.
c) Costs of investigation fees and defense of claims made against the insured for
compensatory damage even if the claim is groundless.
