RIBO PRACTICE EXAM 2 QUESTIONS
AND ANSWERS
A baby food manufacturer has a CGL giving them $5,000,000 in products and
completed operations coverage. Their policy runs from February to February. In June,
glass is found in a batch of apple sauce and $2,000,000 is paid out to children who
were injured/cut when they ate it. In September, there is another recall on the squash,
which had gone moldy. Several children became critically ill after eating it, and one child
died as a result of a food allergy that kicked in when he ate it. A total of $3,500,000 was
awarded to the families. The CGL paid only $3,000,000. This is an example of: - Correct
Answers -Aggregate limit.
A legal concept that states if a person by their actions or lack of actions, show that they
are not going to exercise a legal right allowed them, then later they are not able to
exercise that right. This is an example of: - Correct Answers -Estoppel
An insurer does not want to pay out more than $1,000,000 in any one catastrophe like a
hail storm or a tornado. The underwriting department arranges a contract of insurance
with another insurer which agrees that for 2% of the total property premium collected
they will cover any losses over and above $1,000,000 limit. This is an example of: -
Correct Answers -Reinsurance
Statutory Conditions are required on: - Correct Answers -fire, auto and accident and
sickness policies.
Laura has a sewer backup claim in the area of the basement where the baby/child
furniture is stored. Several items are deemed total losses and the insurer offers to
replace them. Laura says she does not need them as the kids are all young teenagers
and she does not plan to extend her family. The insurance company adjuster offers
Laura the cost to replace the furniture less a percentage of depreciation for each year
she has had the furniture. This is an example of: - Correct Answers -Actual cash value.
Following the death of an insured, the policy will protect the heir (successor) to the
insured's estate but not the purchaser of the property should the heir sell. This is an
example of: - Correct Answers -Assignment.
Once the damaged item is replaced or a cash settlement given to the insured, the
insurer gets ownership of the damaged property and may sell it to a wrecker or collector
AND ANSWERS
A baby food manufacturer has a CGL giving them $5,000,000 in products and
completed operations coverage. Their policy runs from February to February. In June,
glass is found in a batch of apple sauce and $2,000,000 is paid out to children who
were injured/cut when they ate it. In September, there is another recall on the squash,
which had gone moldy. Several children became critically ill after eating it, and one child
died as a result of a food allergy that kicked in when he ate it. A total of $3,500,000 was
awarded to the families. The CGL paid only $3,000,000. This is an example of: - Correct
Answers -Aggregate limit.
A legal concept that states if a person by their actions or lack of actions, show that they
are not going to exercise a legal right allowed them, then later they are not able to
exercise that right. This is an example of: - Correct Answers -Estoppel
An insurer does not want to pay out more than $1,000,000 in any one catastrophe like a
hail storm or a tornado. The underwriting department arranges a contract of insurance
with another insurer which agrees that for 2% of the total property premium collected
they will cover any losses over and above $1,000,000 limit. This is an example of: -
Correct Answers -Reinsurance
Statutory Conditions are required on: - Correct Answers -fire, auto and accident and
sickness policies.
Laura has a sewer backup claim in the area of the basement where the baby/child
furniture is stored. Several items are deemed total losses and the insurer offers to
replace them. Laura says she does not need them as the kids are all young teenagers
and she does not plan to extend her family. The insurance company adjuster offers
Laura the cost to replace the furniture less a percentage of depreciation for each year
she has had the furniture. This is an example of: - Correct Answers -Actual cash value.
Following the death of an insured, the policy will protect the heir (successor) to the
insured's estate but not the purchaser of the property should the heir sell. This is an
example of: - Correct Answers -Assignment.
Once the damaged item is replaced or a cash settlement given to the insured, the
insurer gets ownership of the damaged property and may sell it to a wrecker or collector
