RIBO INSURANCE COURSE PRACTICE
QUESTIONS WEEK 3 WITH CORRECT
ANSWERS
What is a main benefit of having an insurance application completed in writing and
signed by the applicant?
Select one:
a. Provides accurate documentation of the coverage requested and confirms the
accuracy of the information.
b. Is less costly for the insurer to underwrite written applications than oral applications
c. Allows the insured to get a premium discount of fifteen percent
d. Allows the insured to choose which questions to answer and which to leave blank -
Correct Answers -a. Provides accurate documentation of the coverage requested and
confirms the accuracy of the information. The benefit of a written application is that it
provides accurate documentation of what was requested, and indicates the intentions of
the parties at the time the application was made—particularly if the client signs it, as the
signature attests to the accuracy of the information.
What other types of supplemental applications might an intermediary add to a standard
application?
Select one:
a. Home business and oil tank
b. Overland water and criminal history
c. Rental supplements and pre-existing damage
d. Wood heat and sewer back up - Correct Answers -a. Home business and oil tank. In
addition to the introductory client profiles form, the intermediary may use other specific
application forms for wood heat, rental supplements, oil tanks, overland water, or
business in the home.
What can result from an agent/broker's failure to advise insurers of all information
material to a risk during the application process?
Select one:
a. The agent/broker will have their license suspended.
b. The agent/broker may be found liable for losses that may occur.
c. The agent/broker will be required to return any commission earned from the sale.
,d. The agent/broker may have to pay a fine to the insurer. - Correct Answers -b. The
agent/broker may be found liable for losses that may occur. Agents/brokers acting on
behalf of insurance companies and their clients have a duty to advise insurers of all the
information material to the risk.
Which national association is a main resource for and has a key initiative to create
industry-standard application forms?
Select one:
a. Financial Services Regulatory Association (FSRA)
b. Insurance Bureau of Canada (IBC)
c. Financial Services Regulatory Authority (FSRA)
d. Centre for Study of Insurance Operations/Centre D'Étude de la Pratique D'Assurance
(CSIO/CEPA) - Correct Answers -d. Centre for Study of Insurance Operations/Centre
D'Étude de la Pratique D'Assurance (CSIO/CEPA). A number of different application
forms are in use. The CSIO is a national association of property and casualty insurers
and independent insurance brokers working together to achieve electronic business
solutions for the insurance industry. One of its projects is the creation of industry-
standard application forms.
For which type of policy must a named-peril give rise to direct loss or damage for
coverage to apply?
Select one:
a. Farm policy
b. Broad policy
c. Basic homeowners policy
d. Comprehensive homeowners policy - Correct Answers -c. Basic homeowners policy.
The basic homeowners policy is the only policy that requires a named-perils to be the
direct cause of loss to both contents and buildings. The comprehensive policy provides
all-risk coverage that is limited by the exclusions. The broad policy provides all-risk for
buildings and named-perils for contents.
What type of risk may an insurer wish to insure using a basic homeowners policy?
Select one:
a. A commercial property
b. A farm property
c. A substandard dwelling
d. A newly built home - Correct Answers -c. A substandard dwelling. Insurers use a
basic homeowners policy to insure substandard dwellings or seasonal locations.
Policy exclusions in a basic homeowners policy are divided into which two (2) groups?
Select one:
a. Property not insured; and loss or damaged not insured
, b. Loss or damage covered on an all-risk basis; and property on a named perils basis
c. Property subject to a deductible; and property subject to a limit
d. Property covered on an all-risk basis; and loss or damage covered on a named-perils
basis - Correct Answers -a. Property not insured; and loss or damaged not insured.
Policy exclusions in a basic homeowners policy are divided into two groups, property
not insured and loss or damage not insured.
Who is the person or firm that requests insurance?
Select one:
a. The insurer
b. The applicant
c. The underwriter
d. The loss adjuster - Correct Answers -b. The applicant. An applicant is a person or
firm requesting insurance. The applicant completes and signs written application forms
that contain personal statements.
What does an underwriter watch for when there are more than one loss payees named
on an insurance application?
Select one:
a. Financial hardship, poor property maintenance, and temptation for fraud
b. Increased severity of loss, slow service, and a temptation for fraud
c. Financial success, slow service, and a temptation for fraud
d. Increased frequency of loss, poor property maintenance, and slow service - Correct
Answers -a. Financial hardship, poor property maintenance, and temptation for fraud.
Most insurers have criteria that indicate an underwriter must investigate an application
with multiple loss payees, as it could mean financial challenges, improper property
maintenance, and a temptation to stage a loss.
Why do insurers ask for prior insurance on an application?
Select one:
a. Confirm claim history and check for any lienholders
b. Confirm loss history and identify the loss payees
c. Identify previous declinations or cancellations and the amount of coverage
d. Confirm loss history and identify any gaps in coverage - Correct Answers -d. Confirm
loss history and identify any gaps in coverage. Applicants are asked for prior insurers
names, policy numbers and policy expiry dates; and this information is used to check
loss history, identify any gaps, and potential moral hazard.
In ratemaking, what does the validity of statistics on past losses depend on?
Select one:
a. A larger sample group and longer time observed
b. A smaller sample group and shorter time observed
QUESTIONS WEEK 3 WITH CORRECT
ANSWERS
What is a main benefit of having an insurance application completed in writing and
signed by the applicant?
Select one:
a. Provides accurate documentation of the coverage requested and confirms the
accuracy of the information.
b. Is less costly for the insurer to underwrite written applications than oral applications
c. Allows the insured to get a premium discount of fifteen percent
d. Allows the insured to choose which questions to answer and which to leave blank -
Correct Answers -a. Provides accurate documentation of the coverage requested and
confirms the accuracy of the information. The benefit of a written application is that it
provides accurate documentation of what was requested, and indicates the intentions of
the parties at the time the application was made—particularly if the client signs it, as the
signature attests to the accuracy of the information.
What other types of supplemental applications might an intermediary add to a standard
application?
Select one:
a. Home business and oil tank
b. Overland water and criminal history
c. Rental supplements and pre-existing damage
d. Wood heat and sewer back up - Correct Answers -a. Home business and oil tank. In
addition to the introductory client profiles form, the intermediary may use other specific
application forms for wood heat, rental supplements, oil tanks, overland water, or
business in the home.
What can result from an agent/broker's failure to advise insurers of all information
material to a risk during the application process?
Select one:
a. The agent/broker will have their license suspended.
b. The agent/broker may be found liable for losses that may occur.
c. The agent/broker will be required to return any commission earned from the sale.
,d. The agent/broker may have to pay a fine to the insurer. - Correct Answers -b. The
agent/broker may be found liable for losses that may occur. Agents/brokers acting on
behalf of insurance companies and their clients have a duty to advise insurers of all the
information material to the risk.
Which national association is a main resource for and has a key initiative to create
industry-standard application forms?
Select one:
a. Financial Services Regulatory Association (FSRA)
b. Insurance Bureau of Canada (IBC)
c. Financial Services Regulatory Authority (FSRA)
d. Centre for Study of Insurance Operations/Centre D'Étude de la Pratique D'Assurance
(CSIO/CEPA) - Correct Answers -d. Centre for Study of Insurance Operations/Centre
D'Étude de la Pratique D'Assurance (CSIO/CEPA). A number of different application
forms are in use. The CSIO is a national association of property and casualty insurers
and independent insurance brokers working together to achieve electronic business
solutions for the insurance industry. One of its projects is the creation of industry-
standard application forms.
For which type of policy must a named-peril give rise to direct loss or damage for
coverage to apply?
Select one:
a. Farm policy
b. Broad policy
c. Basic homeowners policy
d. Comprehensive homeowners policy - Correct Answers -c. Basic homeowners policy.
The basic homeowners policy is the only policy that requires a named-perils to be the
direct cause of loss to both contents and buildings. The comprehensive policy provides
all-risk coverage that is limited by the exclusions. The broad policy provides all-risk for
buildings and named-perils for contents.
What type of risk may an insurer wish to insure using a basic homeowners policy?
Select one:
a. A commercial property
b. A farm property
c. A substandard dwelling
d. A newly built home - Correct Answers -c. A substandard dwelling. Insurers use a
basic homeowners policy to insure substandard dwellings or seasonal locations.
Policy exclusions in a basic homeowners policy are divided into which two (2) groups?
Select one:
a. Property not insured; and loss or damaged not insured
, b. Loss or damage covered on an all-risk basis; and property on a named perils basis
c. Property subject to a deductible; and property subject to a limit
d. Property covered on an all-risk basis; and loss or damage covered on a named-perils
basis - Correct Answers -a. Property not insured; and loss or damaged not insured.
Policy exclusions in a basic homeowners policy are divided into two groups, property
not insured and loss or damage not insured.
Who is the person or firm that requests insurance?
Select one:
a. The insurer
b. The applicant
c. The underwriter
d. The loss adjuster - Correct Answers -b. The applicant. An applicant is a person or
firm requesting insurance. The applicant completes and signs written application forms
that contain personal statements.
What does an underwriter watch for when there are more than one loss payees named
on an insurance application?
Select one:
a. Financial hardship, poor property maintenance, and temptation for fraud
b. Increased severity of loss, slow service, and a temptation for fraud
c. Financial success, slow service, and a temptation for fraud
d. Increased frequency of loss, poor property maintenance, and slow service - Correct
Answers -a. Financial hardship, poor property maintenance, and temptation for fraud.
Most insurers have criteria that indicate an underwriter must investigate an application
with multiple loss payees, as it could mean financial challenges, improper property
maintenance, and a temptation to stage a loss.
Why do insurers ask for prior insurance on an application?
Select one:
a. Confirm claim history and check for any lienholders
b. Confirm loss history and identify the loss payees
c. Identify previous declinations or cancellations and the amount of coverage
d. Confirm loss history and identify any gaps in coverage - Correct Answers -d. Confirm
loss history and identify any gaps in coverage. Applicants are asked for prior insurers
names, policy numbers and policy expiry dates; and this information is used to check
loss history, identify any gaps, and potential moral hazard.
In ratemaking, what does the validity of statistics on past losses depend on?
Select one:
a. A larger sample group and longer time observed
b. A smaller sample group and shorter time observed
