1
RIBO Insurance Exam Questions and Answers Latest
Version (2024/2025) Already Passed
What makes pure risk insurable while speculative not? - (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.
Pure Risk - (ANSWER)A situation involving a chance of loss without a chance of
gain. Example: property damage
Speculative Risk - (ANSWER)A situation where the possibility of either financial
loss or gain exists. This is not accepted by insurances. Example: gambling
Insurance - (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 - (ANSWER)the chance of loss (the possible loss or destruction of property or
incurring of a liability).
Direct Loss - (ANSWER)losses that are involving damage to or destruction of the
property insured. Example: replacing a stolen stereo
, 2
Indirect Loss - (ANSWER)losses that occur because of direct losses. Example: loss
of income from a tenant due to a building burning down.
Peril - (ANSWER)the event that caused a loss covered by the policy. Example: fire.
(WHISLER acronym)
What is WHISLER stand for? - (ANSWER)Wind, Hail, Impact, Smoke, Lightning,
Explosion and Riot
Hazard - (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? - (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)
What is a liability insurance peril? - (ANSWER)It includes negligence - when you
are doing or not doing something that is expected by a reasonable person.
, 3
Proximate Cause - (ANSWER)is the immediate and effective cause of the loss in a
chain of events leading to the loss, but is not necessarily the last event before the
occurrence
Immediate Cause - (ANSWER)last link in the chain of events
Remote Cause - (ANSWER)is separate from the proximate cause in the chain of
events leading to a loss (what could've been)
Indemnify - (ANSWER)compensate for loss, damage, or injury; reimburse; repay.
It is to bring the insured person back to the point they previously were (no gain,
no loss).
Pooling Funds for Loss - (ANSWER)A group of people will pay out for insurance to
insure the few that are injured. Losses of a few are shared by the many.
What is the role of an insurance broker? - (ANSWER)Bring in two parties together
in a contractual relationship
, 4
What is spread of risk and how can it be done? - (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? - (ANSWER)Insurance money is a
source of capital. it is invested in large amounts of capital to low risk investments.
What is insurable interest? - (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)? - (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? -
(ANSWER)Actual cash value (ACV) and replacement value (cost)
What is replacement value? What is guaranteed replacement cost? -
(ANSWER)Replacement value is the current market value to replace. Guaranteed
RIBO Insurance Exam Questions and Answers Latest
Version (2024/2025) Already Passed
What makes pure risk insurable while speculative not? - (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.
Pure Risk - (ANSWER)A situation involving a chance of loss without a chance of
gain. Example: property damage
Speculative Risk - (ANSWER)A situation where the possibility of either financial
loss or gain exists. This is not accepted by insurances. Example: gambling
Insurance - (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 - (ANSWER)the chance of loss (the possible loss or destruction of property or
incurring of a liability).
Direct Loss - (ANSWER)losses that are involving damage to or destruction of the
property insured. Example: replacing a stolen stereo
, 2
Indirect Loss - (ANSWER)losses that occur because of direct losses. Example: loss
of income from a tenant due to a building burning down.
Peril - (ANSWER)the event that caused a loss covered by the policy. Example: fire.
(WHISLER acronym)
What is WHISLER stand for? - (ANSWER)Wind, Hail, Impact, Smoke, Lightning,
Explosion and Riot
Hazard - (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? - (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)
What is a liability insurance peril? - (ANSWER)It includes negligence - when you
are doing or not doing something that is expected by a reasonable person.
, 3
Proximate Cause - (ANSWER)is the immediate and effective cause of the loss in a
chain of events leading to the loss, but is not necessarily the last event before the
occurrence
Immediate Cause - (ANSWER)last link in the chain of events
Remote Cause - (ANSWER)is separate from the proximate cause in the chain of
events leading to a loss (what could've been)
Indemnify - (ANSWER)compensate for loss, damage, or injury; reimburse; repay.
It is to bring the insured person back to the point they previously were (no gain,
no loss).
Pooling Funds for Loss - (ANSWER)A group of people will pay out for insurance to
insure the few that are injured. Losses of a few are shared by the many.
What is the role of an insurance broker? - (ANSWER)Bring in two parties together
in a contractual relationship
, 4
What is spread of risk and how can it be done? - (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? - (ANSWER)Insurance money is a
source of capital. it is invested in large amounts of capital to low risk investments.
What is insurable interest? - (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)? - (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? -
(ANSWER)Actual cash value (ACV) and replacement value (cost)
What is replacement value? What is guaranteed replacement cost? -
(ANSWER)Replacement value is the current market value to replace. Guaranteed
