RIBO 1 QUESTIONS AND ANSWERS

RIBO 1 d) The law of large numbers always tells a good underwriter which specific risks will have losses - Answer-Which of the following statements is not correct? a) With pure risk there is a chance of loss but not a chance of profit b) with speculative risk there is a chance of either loss and or profit c) There are a number of ways to deal with the risk that are not insurance d) The law of large numbers always tells a good underwriter which specific risks will have losses a) A peril is an event which may cause a loss to occur - Answer-Which of the following is correct? a) A peril is an event which may cause a loss to occur b) A hazard can cause a loss to be less severe c) An example of physical hazard is the obsolescence of plant and machinery d) Moral hazard is easier to detect and correct than physical hazard a) The premium or type of policy available - Answer-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 b) Agreement, genuine intention, consideration, capacity to contract, legality of purpose. - Answer-A contract is an agreement enforceable at law. Which one of the following answers lists all the necessary requirements that must exist? a) Agreement, genuine intention, utmost good faith b) Agreement, genuine intention, consideration, capacity to contract, legality of purpose. c) Agreement, considerations, capacity to contract, utmost good faith d) Agreement, capacity to contract, utmost good faith d) Put the insured back into the same financial position he was in at the time the loss occurred. - Answer-In general when an insurance company indemnifies an insured it tries to: (select the most correct) a) Put the insured back into the same financial position he was when he purchased the policy. b) Put the insured back into the same financial position he was in when his values were the highest. c) Better the financial position of the insured. d) Put the insured back into the same financial position he was in at the time the loss occurred. 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 - Answer-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) A physical characteristic of a risk, which may give rise to a loss - Answer-A physical hazard is: a) A type of peril b) The same as a moral hazard c) A physical characteristic of a risk, which may give rise to a loss d) The possibility of a loss due to the nature of the insured d) Subrogation is a legal principle - Answer-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) Dry Cleaning stores - Answer-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 c) When a fire leaves the place provided for it and ignites something outside, the original fire is a hostile fire - Answer-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 a) The Insurance Statute Law Amendment Act of 1990 - Answer-The Ontario Insurance Commission was created by: a) The Insurance Statute Law Amendment Act of 1990 b) The Highway Traffic Act c) The Provincial Minister of Finance d) The Free Trade Act c) The financial stability of federally licensed insurance companies - Answer-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 insuranc