RIBO EXAM QUESTIONS WITH
COMPLETE SOLUTIONS
Insurable Interest - ANSWER-A person who stands to lose if a loss occurs.
Bailee - ANSWER-A person or party to whom goods are delivered for a purpose,
such as custody or repair, without transfer of ownership.
Indemnify mean - ANSWER-The insured is compensated for the actual cash value
for what they have lost, so that they neither gain, nor lose as a result of the loss.
What 3 key principals must be applied for the concept of indemnity to work? -
ANSWER-Salvage;
Contribution;
Subrogation.
Salvage - ANSWER-The property saved or recovered after a loss if it is safe to do
so.
OR
Taking steps to reduce the amount of loss.
Contribution - ANSWER-Sharing the loss or liability between two or more insurance
companies covering the same risk.
Subrogation - ANSWER-An insurers right to "step into the policyholders shoes" and
recover their loss from a responsible third party.
(ie. Your insurance company will go through another's insurance company to
subrogate.)
Utmost Good Faith - ANSWER-A higher standard of honesty between two parties.
What two key principals are required to be understood in order for Utmost Good
Faith to work? - ANSWER-Material Fact & Misrepresentation.
Material Fact - ANSWER-The information about the risk that would change the
underwriting decision. It can either cause the risk to be refused or changed to a
higher premium.
Misrepresentation - ANSWER-When the client provides information that, if known,
would affect or change the agreement between the company and themselves on the
policy, either by lying or withholding certain information.
Void Contract - ANSWER-A contract which is considered to never have existed.
Voidable Contract - ANSWER-When the contract is void to the wrongdoer, however
the wronged party is able to elect whether or not to void the contract.
,What are 3 methods of change to an existing contract? -
ANSWER-Endorsements/Riders;
Floaters;
Separate Policies.
Endorsement - ANSWER-An acknowledgement of a change in the terms of a
contract.
What is a Rider? - ANSWER-An addition of additional coverage to an existing policy.
What is a Floater? - ANSWER-An insurance document used to provide coverage for
property having a high degree of mobility.
(Ie. a Photographer's Camera.)
What does Termination mean? - ANSWER-Insurance contracts (policies) can be
terminated at the request of the insurer, the insured, or have a set expiry date.
What are the Roles of the Federal Government in relation to insurance? - ANSWER-
Insurers must be federally licensed;
Insurers must meet the standards established by the Office of the Superintendent of
Financial Institutions in order to obtain a license;
Insurers are monitored on an ongoing basis.
What is Reinsurance? - ANSWER-When an insurance company purchases
insurance from another insurance company that will will only take effect if money set
aside from the self-insured company is exhausted.
What are the two methods of reinsurance? - ANSWER-Facultative & Treaty.
Facultative Reinsurance is arranged: - ANSWER-Per case.
Treaty Reinsurance is arranged: - ANSWER-In advance with reinsurers to be
available automatically to cede all risks within a specific class of insurance policies to
the reinsurance company.
What is a Retrosessionaire? - ANSWER-A reinsurer of a reinsurer.
What is a Contract? - ANSWER-An agreement between two or more persons which
is enforceable by law, which creates an obligation to do or not to do a particular
thing.
An Insurance Agency/Broker Contract: - ANSWER-Provides brokers with the
authority to contractually obligate or bind an insurer to a risk.
What are the 5 standard contract components? - ANSWER-Agreement;
Consideration;
Legality;
Legal Capacity of Parties to Contract;
Genuine Intention.
, What is an Agreement? - ANSWER-The unconditional acceptance of an offer that
has been made.
Consideration - ANSWER-The exchange of something of value between two parties.
Legality of Object - ANSWER-The purpose of the contract is not contrary to the
public good - the object has to be legal.
Legal Capacity of Parties to Contract - ANSWER-The parties involved must be
competent to enter the contract.
Incompetent - ANSWER-An individual that does not have the Legal Capacity to
Contract.
What are the four incompetents? - ANSWER-Minors (Under 18);
Mental Incompetents;
Persons under the influence;
Legal Entities.
Genuine Intention - ANSWER-The idea that the parties had actually intended to
enter into a contract.
Genuine Intention includes parties that are not effected by four things: - ANSWER-
Fraud;
Duress;
Concealment;
Mistakes.
What are the 3 elements of Insurance Contracts? - ANSWER-Insurable Interest;
Indemnity;
Utmost Good Faith.
What are the roles of the Provincial Government in relation to insurance? -
ANSWER-Supervise the terms and conditions on insurance contracts;
Ensure credible licensing of insurers;
To monitor the financial stability of provincially licensed insurers.
What is the Property and Casualty Insurance Compensation Corporation (PACICC)?
- ANSWER-The administrative body created to pay all valid claims when an insurer
goes bankrupt.
What is the total amount that can be claimed through the Property and Casualty
Insurance Compensation Corporation (PACICC)? - ANSWER-$250,000 Maximum
from a single occurrence.
70% refund of unearned premiums, subject to a maximum of $700 per policy.
What is a Fiduciary? - ANSWER-A legal or ethical relationship of trust between two
or more parties. Typically, a fiduciary takes care of money for another person.
COMPLETE SOLUTIONS
Insurable Interest - ANSWER-A person who stands to lose if a loss occurs.
Bailee - ANSWER-A person or party to whom goods are delivered for a purpose,
such as custody or repair, without transfer of ownership.
Indemnify mean - ANSWER-The insured is compensated for the actual cash value
for what they have lost, so that they neither gain, nor lose as a result of the loss.
What 3 key principals must be applied for the concept of indemnity to work? -
ANSWER-Salvage;
Contribution;
Subrogation.
Salvage - ANSWER-The property saved or recovered after a loss if it is safe to do
so.
OR
Taking steps to reduce the amount of loss.
Contribution - ANSWER-Sharing the loss or liability between two or more insurance
companies covering the same risk.
Subrogation - ANSWER-An insurers right to "step into the policyholders shoes" and
recover their loss from a responsible third party.
(ie. Your insurance company will go through another's insurance company to
subrogate.)
Utmost Good Faith - ANSWER-A higher standard of honesty between two parties.
What two key principals are required to be understood in order for Utmost Good
Faith to work? - ANSWER-Material Fact & Misrepresentation.
Material Fact - ANSWER-The information about the risk that would change the
underwriting decision. It can either cause the risk to be refused or changed to a
higher premium.
Misrepresentation - ANSWER-When the client provides information that, if known,
would affect or change the agreement between the company and themselves on the
policy, either by lying or withholding certain information.
Void Contract - ANSWER-A contract which is considered to never have existed.
Voidable Contract - ANSWER-When the contract is void to the wrongdoer, however
the wronged party is able to elect whether or not to void the contract.
,What are 3 methods of change to an existing contract? -
ANSWER-Endorsements/Riders;
Floaters;
Separate Policies.
Endorsement - ANSWER-An acknowledgement of a change in the terms of a
contract.
What is a Rider? - ANSWER-An addition of additional coverage to an existing policy.
What is a Floater? - ANSWER-An insurance document used to provide coverage for
property having a high degree of mobility.
(Ie. a Photographer's Camera.)
What does Termination mean? - ANSWER-Insurance contracts (policies) can be
terminated at the request of the insurer, the insured, or have a set expiry date.
What are the Roles of the Federal Government in relation to insurance? - ANSWER-
Insurers must be federally licensed;
Insurers must meet the standards established by the Office of the Superintendent of
Financial Institutions in order to obtain a license;
Insurers are monitored on an ongoing basis.
What is Reinsurance? - ANSWER-When an insurance company purchases
insurance from another insurance company that will will only take effect if money set
aside from the self-insured company is exhausted.
What are the two methods of reinsurance? - ANSWER-Facultative & Treaty.
Facultative Reinsurance is arranged: - ANSWER-Per case.
Treaty Reinsurance is arranged: - ANSWER-In advance with reinsurers to be
available automatically to cede all risks within a specific class of insurance policies to
the reinsurance company.
What is a Retrosessionaire? - ANSWER-A reinsurer of a reinsurer.
What is a Contract? - ANSWER-An agreement between two or more persons which
is enforceable by law, which creates an obligation to do or not to do a particular
thing.
An Insurance Agency/Broker Contract: - ANSWER-Provides brokers with the
authority to contractually obligate or bind an insurer to a risk.
What are the 5 standard contract components? - ANSWER-Agreement;
Consideration;
Legality;
Legal Capacity of Parties to Contract;
Genuine Intention.
, What is an Agreement? - ANSWER-The unconditional acceptance of an offer that
has been made.
Consideration - ANSWER-The exchange of something of value between two parties.
Legality of Object - ANSWER-The purpose of the contract is not contrary to the
public good - the object has to be legal.
Legal Capacity of Parties to Contract - ANSWER-The parties involved must be
competent to enter the contract.
Incompetent - ANSWER-An individual that does not have the Legal Capacity to
Contract.
What are the four incompetents? - ANSWER-Minors (Under 18);
Mental Incompetents;
Persons under the influence;
Legal Entities.
Genuine Intention - ANSWER-The idea that the parties had actually intended to
enter into a contract.
Genuine Intention includes parties that are not effected by four things: - ANSWER-
Fraud;
Duress;
Concealment;
Mistakes.
What are the 3 elements of Insurance Contracts? - ANSWER-Insurable Interest;
Indemnity;
Utmost Good Faith.
What are the roles of the Provincial Government in relation to insurance? -
ANSWER-Supervise the terms and conditions on insurance contracts;
Ensure credible licensing of insurers;
To monitor the financial stability of provincially licensed insurers.
What is the Property and Casualty Insurance Compensation Corporation (PACICC)?
- ANSWER-The administrative body created to pay all valid claims when an insurer
goes bankrupt.
What is the total amount that can be claimed through the Property and Casualty
Insurance Compensation Corporation (PACICC)? - ANSWER-$250,000 Maximum
from a single occurrence.
70% refund of unearned premiums, subject to a maximum of $700 per policy.
What is a Fiduciary? - ANSWER-A legal or ethical relationship of trust between two
or more parties. Typically, a fiduciary takes care of money for another person.
