RIBO ACT PRACTICE EVALUATION 2026
HUNDRED PERCENT CORRECT ANSWERS
GRADED A+
⩥ Endorsement. Answer: Document issued by insurer that states a
change in terms & conditions of policy.
⩥ Betterment. Answer: Temporary or permanent improvement that
increases the value.
Ex: new kitchen, hardwood floors
⩥ Guaranteed Replacement Cost (GRC). Answer: Actual cost to repair
or replace without depreciation.
Notes:
Must be at same location.
Insurer will replace with that of like or equal value.
Insured for 100% of original value.
⩥ Replacement Costs. Answer: Actual cost to repair or replace without
depreciation.
Notes:
Insured for 80% of original value or more.
,⩥ Mortgagee. Answer: Individual or entity that provide the mortgage.
Ex: Bank
⩥ Mortgagor. Answer: Person who has the mortgage - usually
homeowner.
⩥ Vacancy. Answer: Unoccupied, empty dwelling. Implies abandonment
+ non-occupancy for any purpose.
⩥ Capacity. Answer: Measure of insurers ability to issue policies. (Max
volume)
⩥ Re-Insurance. Answer: Insurance purchased by insurers to limit the
amount of loss at one time.
2 Types: facultative and treaty
2 Methods: Proportional and Non-Proportional
⩥ Soft Market. Answer: Lots of insurer competition
Rates are lower and more flexible
Insurers are less selective of risks
⩥ Hard Market. Answer: Low profit margins force some insurers out.
, Remaining insurers are selective leading to high rates.
⩥ Insurance Agent. Answer: Authorized to sell for only one insurance
company and represents interests of insurer.
⩥ Mutual Insurance Company. Answer: Owned by Policyholders.
Goal: cover operating costs. Profits are reinvested or distributed to
policyholders.
⩥ Stock Insurance Company. Answer: Owned by shareholders.
Goal to make profit for shareholders.
⩥ Earned Premium. Answer: Difference between premium paid and
portion returned in cancellation.
⩥ Actuary. Answer: Advanced math professional who measures risk and
uncertainty.
Determines rates.
⩥ MGA. Answer: Managing General Agent
Authorized to act and write business on behalf of insurer.
HUNDRED PERCENT CORRECT ANSWERS
GRADED A+
⩥ Endorsement. Answer: Document issued by insurer that states a
change in terms & conditions of policy.
⩥ Betterment. Answer: Temporary or permanent improvement that
increases the value.
Ex: new kitchen, hardwood floors
⩥ Guaranteed Replacement Cost (GRC). Answer: Actual cost to repair
or replace without depreciation.
Notes:
Must be at same location.
Insurer will replace with that of like or equal value.
Insured for 100% of original value.
⩥ Replacement Costs. Answer: Actual cost to repair or replace without
depreciation.
Notes:
Insured for 80% of original value or more.
,⩥ Mortgagee. Answer: Individual or entity that provide the mortgage.
Ex: Bank
⩥ Mortgagor. Answer: Person who has the mortgage - usually
homeowner.
⩥ Vacancy. Answer: Unoccupied, empty dwelling. Implies abandonment
+ non-occupancy for any purpose.
⩥ Capacity. Answer: Measure of insurers ability to issue policies. (Max
volume)
⩥ Re-Insurance. Answer: Insurance purchased by insurers to limit the
amount of loss at one time.
2 Types: facultative and treaty
2 Methods: Proportional and Non-Proportional
⩥ Soft Market. Answer: Lots of insurer competition
Rates are lower and more flexible
Insurers are less selective of risks
⩥ Hard Market. Answer: Low profit margins force some insurers out.
, Remaining insurers are selective leading to high rates.
⩥ Insurance Agent. Answer: Authorized to sell for only one insurance
company and represents interests of insurer.
⩥ Mutual Insurance Company. Answer: Owned by Policyholders.
Goal: cover operating costs. Profits are reinvested or distributed to
policyholders.
⩥ Stock Insurance Company. Answer: Owned by shareholders.
Goal to make profit for shareholders.
⩥ Earned Premium. Answer: Difference between premium paid and
portion returned in cancellation.
⩥ Actuary. Answer: Advanced math professional who measures risk and
uncertainty.
Determines rates.
⩥ MGA. Answer: Managing General Agent
Authorized to act and write business on behalf of insurer.
