RIBO INSURANCE EXAM QUESTIONS &
CORRECT ANSWERS | LATEST 2026/2027
UPDATE (GUARANTEED PASS) GRADED A+.
What is spread of risk and how can it be done? - CORRECT ANSWER
>>>Spreading of risk is a way to achieve balance between premiums
collected versus losses paid. It is done through volume (large number of
risks), diversity of risk (different risk classifications) and diversity of
location (not all risks in one location).
What does the insurance money get used for? - CORRECT ANSWER
>>>Insurance money is a source of capital. it is invested in large
amounts of capital to low risk investments.
What is insurable interest? - CORRECT ANSWER >>>You must
own the item that you are insuring. You must benefit from its existence
and suffer from its loss. You cannot insure your neighbour's house.
What is actual cost value (ACV)? - CORRECT ANSWER
>>>determined in one of three ways:
cost to repair, fair market value or consideration of evidence of value
What are the two most popular forms of valuation in indemnification? -
CORRECT ANSWER >>>Actual cash value (ACV) and replacement
value (cost)
1|Page
, What is General Insurance? - CORRECT ANSWER >>>General
insurance includes property and casualty insurance. It is also referred to
as P&C insurance. Property is the loss or loss of income caused by a
covered peril. Causality refers to areas not covered by fire, life or auto
which would be burglary or liability.
What is replacement value? What is guaranteed replacement cost? -
CORRECT ANSWER >>>Replacement value is the current market
value to replace. Guaranteed replacement pays for replacement cost
without depreciation and can exceed the amount of insurance on the
dwelling.
What is value contracts? - CORRECT ANSWER >>>It is an
alternative calculation method where a predetermined amount is agreed
upon by the insure and insured at the time the contract is made. It is
usually done on items where it is difficult to determine a true value after
loss.
What are the four groups of insurers? - CORRECT ANSWER >>>1)
For profit - stock companies
2) Co-operative - mutuals & reciprocals
3) Government - worker's compensation
4) Captive - policy holders limited to parent company and subsidiaries
2|Page
,What makes pure risk insurable while speculative not? - CORRECT
ANSWER >>>Pure risk insurance is a situation involving a chance of a
loss without a chance of gain. Insurance will accept situations where
there is no potential for gain.
Insurance - CORRECT ANSWER >>>A contract in which one party,
the insurer, for monetary consideration agrees to reimburse another, the
insured, for loss or liability for a loss by specified hazards or perils
Risk - CORRECT ANSWER >>>the chance of loss (the possible loss
or destruction of property or incurring of a liability).
Direct Loss - CORRECT ANSWER >>>losses that are involving
damage to or destruction of the property insured. Example: replacing a
stolen stereo
Indirect Loss - CORRECT ANSWER >>>losses that occur because of
direct losses. Example: loss of income from a tenant due to a building
burning down.
Pure Risk - CORRECT ANSWER >>>A situation involving a chance
of loss without a chance of gain. Example: property damage
3|Page
, Peril - CORRECT ANSWER >>>the event that caused a loss covered
by the policy. Example:
fire. (WHISLER acronym)
Speculative Risk - CORRECT ANSWER >>>A situation where the
possibility of either financial loss or gain exists. This is not accepted by
insurances. Example: gambling
What is WHISLER stand for? - CORRECT ANSWER >>>Wind, Hail,
Impact, Smoke, Lightning, Explosion and Riot
Hazard - CORRECT ANSWER >>>condition that may cause a peril to
occur or make the loss more severe - divided into physical and moral
hazards. Physical hazards' example is slippery floors. Moral hazard
example would be mental attitudes about risk.
What are the three classes of insurance? - CORRECT ANSWER
>>>The classes of insurance include personal and commercial lines as
well as specialty risks. Example: personal (jewelry), commercial (owned
businesses) and specialty (airports or high risk industry)
Immediate Cause - CORRECT ANSWER >>>last link in the chain of
events
4|Page
CORRECT ANSWERS | LATEST 2026/2027
UPDATE (GUARANTEED PASS) GRADED A+.
What is spread of risk and how can it be done? - CORRECT ANSWER
>>>Spreading of risk is a way to achieve balance between premiums
collected versus losses paid. It is done through volume (large number of
risks), diversity of risk (different risk classifications) and diversity of
location (not all risks in one location).
What does the insurance money get used for? - CORRECT ANSWER
>>>Insurance money is a source of capital. it is invested in large
amounts of capital to low risk investments.
What is insurable interest? - CORRECT ANSWER >>>You must
own the item that you are insuring. You must benefit from its existence
and suffer from its loss. You cannot insure your neighbour's house.
What is actual cost value (ACV)? - CORRECT ANSWER
>>>determined in one of three ways:
cost to repair, fair market value or consideration of evidence of value
What are the two most popular forms of valuation in indemnification? -
CORRECT ANSWER >>>Actual cash value (ACV) and replacement
value (cost)
1|Page
, What is General Insurance? - CORRECT ANSWER >>>General
insurance includes property and casualty insurance. It is also referred to
as P&C insurance. Property is the loss or loss of income caused by a
covered peril. Causality refers to areas not covered by fire, life or auto
which would be burglary or liability.
What is replacement value? What is guaranteed replacement cost? -
CORRECT ANSWER >>>Replacement value is the current market
value to replace. Guaranteed replacement pays for replacement cost
without depreciation and can exceed the amount of insurance on the
dwelling.
What is value contracts? - CORRECT ANSWER >>>It is an
alternative calculation method where a predetermined amount is agreed
upon by the insure and insured at the time the contract is made. It is
usually done on items where it is difficult to determine a true value after
loss.
What are the four groups of insurers? - CORRECT ANSWER >>>1)
For profit - stock companies
2) Co-operative - mutuals & reciprocals
3) Government - worker's compensation
4) Captive - policy holders limited to parent company and subsidiaries
2|Page
,What makes pure risk insurable while speculative not? - CORRECT
ANSWER >>>Pure risk insurance is a situation involving a chance of a
loss without a chance of gain. Insurance will accept situations where
there is no potential for gain.
Insurance - CORRECT ANSWER >>>A contract in which one party,
the insurer, for monetary consideration agrees to reimburse another, the
insured, for loss or liability for a loss by specified hazards or perils
Risk - CORRECT ANSWER >>>the chance of loss (the possible loss
or destruction of property or incurring of a liability).
Direct Loss - CORRECT ANSWER >>>losses that are involving
damage to or destruction of the property insured. Example: replacing a
stolen stereo
Indirect Loss - CORRECT ANSWER >>>losses that occur because of
direct losses. Example: loss of income from a tenant due to a building
burning down.
Pure Risk - CORRECT ANSWER >>>A situation involving a chance
of loss without a chance of gain. Example: property damage
3|Page
, Peril - CORRECT ANSWER >>>the event that caused a loss covered
by the policy. Example:
fire. (WHISLER acronym)
Speculative Risk - CORRECT ANSWER >>>A situation where the
possibility of either financial loss or gain exists. This is not accepted by
insurances. Example: gambling
What is WHISLER stand for? - CORRECT ANSWER >>>Wind, Hail,
Impact, Smoke, Lightning, Explosion and Riot
Hazard - CORRECT ANSWER >>>condition that may cause a peril to
occur or make the loss more severe - divided into physical and moral
hazards. Physical hazards' example is slippery floors. Moral hazard
example would be mental attitudes about risk.
What are the three classes of insurance? - CORRECT ANSWER
>>>The classes of insurance include personal and commercial lines as
well as specialty risks. Example: personal (jewelry), commercial (owned
businesses) and specialty (airports or high risk industry)
Immediate Cause - CORRECT ANSWER >>>last link in the chain of
events
4|Page
