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Under the OAP1 (Ontario Automobile Policy) Owners policy, certain accident benefits limits can be increased or extended at the option of the insured. However, one of these benefits cannot be changed.

The correct answer is:
D) Disability benefit after age 65

Explanation:

• Death and Funeral Benefits (A), Income Replacement Benefit (B), and Caregiver Benefit for Catastrophic Injuries (C) can all be increased or extended if the insured chooses to pay a higher premium.

• Disability Benefit after Age 65 (D), however, cannot be increased or extended. This benefit is subject to a strict limit and terminates at age 65, with no option to extend coverage beyond that age.

Thus, the correct answer is D.

Explanation:

Standard property insurance policies (e.g., homeowners or commercial property) cover specific named perils or operate on an all-risks basis (excluding only listed exceptions).

• Falling objects (e.g., trees, debris, aircraft parts) are a commonly insured peril, typically included in basic policies.

• Coverage usually applies to direct physical damage (e.g., a tree falling on a roof).

Why Not the Other Options?

• A) War or invasion – Excluded universally (uninsurable due to catastrophic scale).

• B) Nuclear incidents – Excluded by law (e.g., Nuclear Liability Act).

• C) Criminal acts by the insured – Never covered (insurance does not protect against illegal behavior).

Policy Insight:

Even “all-risks” policies exclude war, nuclear hazards, and intentional/criminal damage. Falling objects are a standard covered peril.

The correct answer is:

A) Tell the insured that this must be declared immediately to the insurer

Explanation:

When a change occurs in the insured’s medical condition or treatment, especially increasing medication dosage, it is a material change that must be disclosed to the insurer immediately.

• Failure to disclose material changes can lead to denial of coverage or claims.
• The insurer may reassess the risk and adjust coverage or premiums accordingly.
• Prompt disclosure maintains good faith and compliance with policy terms.

Why the other options are incorrect:

• B) Telling the insured to say nothing is unethical and may void the policy.
• C) Doing nothing ignores the insured’s duty to disclose material changes.
• D) Cancellation might be a result but is not the first step; disclosure is required first.

✅ Correct Answer: A) Tell the insured that this must be declared immediately to the insurer

The correct answer is:

C) you must provide an application for completion and forward it to an insurer

Explanation:

Under RIBO regulations and the Compulsory Automobile Insurance Act in Ontario:

• Every individual has a right to obtain automobile insurance, even if they have a poor driving record.
• As a broker, you are not obligated to bind coverage immediately, especially if payment has not been made.
• However, you are required to assist the client by providing an application and submitting it to an insurer (often through the Facility Association if no standard insurer will accept the risk).
• The insurer—not the broker—decides whether and when to provide coverage.

Why the other options are incorrect:

• A) is incorrect: There is no 21-day automatic obligation to provide coverage.
• B) is incorrect: Brokers do not need to notify FSRA to cancel for non-payment, and they are not obligated to provide immediate coverage without payment.
• D) is incorrect: While RIBO can provide guidance, you are not required to report every difficult case to them; instead, you’re expected to follow standard procedures, including offering to submit an application.

✅ Correct Answer: C) you must provide an application for completion and forward it to an insurer

Explanation:

Risk transfer involves shifting the financial burden of a potential loss to another party. Key methods include:

1. Insurance (Option D) – The most direct form of risk transfer, where the insurer assumes the risk in exchange for premiums.

2. Contractual Agreements (Option C) – While some contracts (e.g., indemnity clauses) transfer risk, a generic “agreement of purchase and sale” does not inherently transfer risk unless specific terms are included.

Why Not the Other Options?

• A) Monitored security system – This is risk reduction (mitigates loss likelihood/severity), not transfer.

• B) Self-insurance – This is risk retention (accepting and funding losses internally).

• C) Agreement of purchase and sale – Without explicit risk-shifting terms (e.g., indemnification), this is neutral—it may or may not transfer risk.

Key Distinction:

Insurance is a clear, intentional risk transfer mechanism, while other options either retain, reduce, or ambiguously address risk.

The correct answer is:

B) it suspends certain coverages while the vacancy exists

Explanation:

When a vacancy permit is granted on a dwelling policy, it allows the property to remain vacant without voiding the policy, but it does not provide full coverage.

• Certain perils, such as vandalism, glass breakage, water escape, or theft, are typically suspended or excludedduring the vacancy period.
• The insurer issues a vacancy permit to acknowledge the vacancy while limiting their exposure to higher-risk situations.

Why the other options are incorrect:

• A) None – incorrect, because coverage is affected.
• C) It permits the property to be vacant without affecting the coverage – incorrect, it does permit vacancy, but some coverage is reduced or excluded.
• D) It introduces co-insurance conditions to the policy – incorrect, vacancy permits are unrelated to co-insurance requirements.

Let me know if you’d like to see a sample vacancy permit clause.

The correct answer is:

C) Personal Liability (Coverage E)

✅ Explanation:

Under a Tenant’s Comprehensive Policy, the Liability Section provides several types of coverage, and in this case, the correct one is:

🔹 Coverage E – Personal Liability

• Covers: Bodily injury or property damage to others caused by the insured’s negligence.

• In this scenario, the tenant negligently caused a fire, resulting in damage to other apartments and common areas.

• These are third-party property damage claims, which are exactly what Coverage E is designed for.

❌ Why the other options are incorrect:

• A) Voluntary Property Damage (Coverage G): Only covers damage to property not legally required to be paid— used for goodwill payments, not negligence-based claims.

• B) Not covered: Incorrect — this type of negligent third-party damage is covered.

• D) Loss Assessment (Coverage I): Applies mostly in condominium unit owner policies, not tenant policies.

✅ Summary:

Damage to others’ property due to the tenant’s negligence is covered under Personal Liability (Coverage E).

Correct Answer: C

The correct answer is:

C) It is a change material to the risk and failure to notify the insurer could impair the coverage.

Explanation:

A homeowners insurance policy is designed for residential use, not commercial activities like running a restaurant. Converting part of the home into a business introduces new risks (e.g., increased foot traffic, cooking hazards, liability exposures), which are material changes to the original risk the insurer agreed to cover.

Key Implications:

• Material Change: Operating a restaurant significantly alters the property’s risk profile, making it non-compliant with standard homeowners policy terms.

• Duty to Notify: The insured must inform the insurer of this change. Failure to do so could result in denial of claims or policy cancellation.

• Coverage Impact: The insurer may:

  • Exclude business-related claims,

  • Require a commercial endorsement, or

  • Recommend a separate business policy.

Why Not the Other Options?

• A) By-Law Endorsement: This refers to coverage for costs due to zoning-law changes (e.g., rebuilding to new codes), not business-use exclusions.

• B) Fire Protection Equipment: While safety upgrades may be required for a restaurant, they don’t address the core issue of policy eligibility.

• D) Replacement Cost Clause: This applies to property valuation, not the permissibility of commercial use.

Bottom Line:

The insured must disclose the change to avoid coverage gaps. The insurer may adjust the policy or decline coverage, but silence jeopardizes protection.

Answer: C is correct.

The correct answer is:

D) respond to the claim in accordance with the coverage bound by the broker

Explanation:

When a broker binds coverage on behalf of an insurer, the coverage is considered in effect — even if the premium has not yet been paid, as long as the broker had binding authority and acted within it.

• Insurance contracts are based on good faith and become legally enforceable once the coverage is bound.
• The insurer must honour the coverage that was bound, including responding to claims, even if the premium was to be paid later.
• The failure to pay the premium may result in cancellation later, but it does not invalidate coverage retroactively, especially for losses that occurred during the effective period.

Why the other options are incorrect:

• A) Waiver of subrogation is unrelated here — it refers to an agreement to not pursue recovery rights from a third party, not a condition of claim handling.
• B) Denying a claim solely because no premium was paid is incorrect if the coverage was already bound — that’s a breach of contract.
• C) Investigating but taking no further action contradicts the insurer’s obligation once coverage is legally in effect.

✅ Correct Answer: D) respond to the claim in accordance with the coverage bound by the broker

The correct answer is:

A) short rate refund of a portion of the premium

Explanation:

When an insured requests mid-term cancellation of a policy, insurers typically apply a short rate refund rather than a pro-rata refund.

• A short rate refund means the insurer retains a penalty amount to cover administrative costs and potential loss of profit.
• This refund is less than a pro-rata refund (which would be a straight proportional return based on the unused time).
• The short rate refund applies unless the policy or insurer specifically states otherwise.

Why the other options are incorrect:

• B) Pro-rata refund – Usually applies when the insurer cancels the policy, not when the insured cancels.
• C) Incorrect description; refund is based on cancellation type, not difference between minimum retained and full premium.
• D) Incorrect; refunds are generally given on mid-term cancellations, but typically short rate.

✅ Correct Answer: A) short rate refund of a portion of the premium

The correct answer is:

A) The amount of the claim less the deductible.

Explanation:

The insured’s Comprehensive Coverage (also called “All Perils” or “Specified Perils” depending on the policy) includes protection for non-collision-related damage, such as:

• Fire, theft, vandalism, falling objects, and “other perils” (e.g., sinking through ice).

Key Points:

1. Coverage Applies – Since the car was not in motion (not a collision) and the peril (falling through ice) is unforeseen and accidental, it falls under Comprehensive Coverage.

2. Deductible Applies – The insurer pays the repair or actual cash value (ACV) of the loss, minus the policy’s comprehensive deductible.

3. No Public Highway Requirement – Comprehensive coverage applies anywhere (not just on roads), unlike liability or DCPD.

Why Not the Other Options?

• B) Incorrect – Comprehensive claims always subtract the deductible.

• C) Incorrect – The peril is covered under Comprehensive.

• D) Incorrect – The “public highway” rule applies to liability/DCPD, not Comprehensive.

Policy Insight:

Comprehensive is the broadest physical damage coverage, protecting against risks beyond driving accidents.

Final Answer: A) – The insurer pays the claim amount minus the deductible.

The correct answer is:

C) it covers only loss caused by mechanical breakdown of the freezer or accidental outside power interruption

Explanation:

Freezer Foods Coverage (also known as Frozen Food Endorsement) under a Homeowners or Tenants policy provides coverage for the spoilage of food in a freezer due to:

• Mechanical breakdown of the freezer
• Accidental interruption of electrical power (e.g., utility outage not due to non-payment)

This endorsement typically:

• Requires an extra premium
• May be subject to a deductible
• Is not all-risk and applies only to specific causes of loss

Why the other options are incorrect:

• A) It is provided on an all risk basis – ❌ Incorrect. It is not all-risk; it only applies to specific perils.
• B) It covers actual cash value at current market prices up to $5000 less deductible – ❌ Incorrect. The limit and valuation method vary by policy, and it doesn’t always default to $5,000 or current market value.
• D) It excludes loss due to interruption of Hydro service – ❌ Incorrect. It includes accidental interruption of Hydro (power) service, unless the interruption was due to non-payment or planned maintenance.

✅ Correct Answer: C) it covers only loss caused by mechanical breakdown of the freezer or accidental outside power interruption

B) One who manages money or property in trust for another.

Explanation:

A fiduciary is a person or entity legally obligated to act in the best interest of another party, particularly in managing assets or property on behalf of a beneficiary. This relationship is based on trust, confidence, and a high standard of care, often seen in roles like trustees, executors, or financial advisors.

• Option A (“faithfully performing duties”) is partially correct but too broad—many roles require faithfulness, but not all are fiduciary.

• Option C (“unswerving loyalty”) describes an ideal trait but doesn’t define the legal responsibility of managing assets.

• Option D (“appointed to oversee another”) could apply to various roles (e.g., supervisors) but lacks the specific financial/trust element of a fiduciary.

Thus, B is the most precise and legally accurate choice.

The correct answer is:

B) business interruption insurance

Explanation:

Business Interruption Insurance is specifically designed to indemnify a business for loss of income that results from a covered loss, such as damage to the building, stock, or equipment. It typically covers:

• Lost income or profits during the period of restoration
• Fixed expenses (like rent or utilities)
• Sometimes even extra expenses incurred to keep the business operating (like temporary relocation)

This coverage is typically added as an endorsement to a commercial property policy, not sold standalone.

Why the other options are incorrect:

• A) Accident and sickness insurance: Covers medical expenses or income loss due to illness/injury of individuals, not business operations.
• C) Property insurance: Covers physical damage to the building, equipment, or stock — not loss of income.
• D) Liability insurance: Covers legal liability for injuries or damages to others, not the business’s own loss of income.

Let me know if you’d like an example of how business interruption claims are calculated.

An insurance broker registered with the restriction “Acting Under Supervision” in Ontario is only permitted to act under the direction of their Principal Broker. They have limited authority and cannot independently:

• Control or operate a trust bank account for client premiums
• Serve as a Principal Broker
• Prepare and sign official documents like RIBO reports or forms

However, they are allowed to solicit insurance from the public, provided they operate under the direction and supervision of their Principal Broker .

✅ So, which activity is permitted?

✔️ Solicit insurance from members of the public anywhere in Ontario, as long as it’s done under supervision by the Principal Broker.

🚫 Why the others are not allowed:

• Prepare and sign RIBO position reports – signing official documents counts as independent activity, which restricted brokers are not permitted to do .
• Operate a trust bank account – restricted brokers cannot handle trust funds .
• Act as Principal Broker – this role requires an unrestricted registration and additional qualifications .

Final answer:

Solicit insurance from members of the public anywhere in Ontario is permitted, provided the broker remains under the direction and supervision of a Principal Broker.

The correct answer is:

A) A change in the broker’s earnings.

✅ Explanation:

Under RIBO (Registered Insurance Brokers of Ontario) regulations, brokers and brokerage firms must report certain changes within 30 days, including:

• Changes in employment (broker leaving or joining a firm)
• Changes in brokerage firm staff (new brokers employed)
• Changes in the brokerage firm’s contact information, ownership, or structure

Why the other options require reporting:

• B) Broker-employee leaving a firm must be reported.
• C) Broker changing employment from one firm to another must be reported.
• D) New broker employed by a firm must be reported.

Why A) is NOT reported:

• Changes in a broker’s earnings are private financial details and are not required to be reported to RIBO.

✅ Summary:

Changes to a broker’s income do not require notification to RIBO.

Correct Answer: A

he correct answer is:

D) Gasoline

✅ Explanation:

In insurance terminology:

• A peril is the actual cause of loss — an event or occurrence that can cause damage to property or injury.

• An exposure is a condition or situation that increases the likelihood of a peril causing a loss.

🔹 Let’s break down the options:

• A) Fire – ✅ Peril

• B) Windstorm – ✅ Peril

• C) Burglary – ✅ Peril

• D) Gasoline – ❌ Not a peril

  • Gasoline is a hazard or exposure, not a direct cause of loss. It may contribute to a fire, but it is not the peril itself.

✅ Summary:

Gasoline is a hazard or exposure, not a peril — it increases the risk but isn’t itself a direct cause of loss.

Correct Answer: D

The correct answer is:

A) Insure the items by means of a Fine Arts coverage under their Homeowners policy.

✅ Explanation:

Antique candlesticks with historical significance and high value (e.g., $2,500 each) are considered fine art or valuable collectibles. These types of items are best insured with a Fine Arts endorsement or floater, which provides:

• Coverage for breakage, theft, or mysterious disappearance
• Agreed value or appraised value coverage
• Protection against depreciation disputes
• Broader coverage than standard contents insurance

❌ Why the other options are incorrect:

• B) Increasing the contents limit does not specifically protect valuable or unique items like antiques. They are often subject to sub-limits.
• C) A Personal Effects Floater is typically used for portable personal belongings (e.g., laptops, cameras), not fixed valuables like antique candlesticks.
• D) Adding Replacement Cost Coverage to contents still won’t remove sub-limits or ensure proper valuation for rare or antique items.

✅ Summary:

Because of their value and nature, the candlesticks should be covered by a Fine Arts endorsement.

Correct Answer: A

The correct answer is:

B) it specifies the amount in excess of which an insurer will pay a loss

✅ Explanation:

A deductible in an insurance policy is the amount the insured must pay out-of-pocket before the insurer will cover the remaining loss. It applies on a per-claim basis and is a key part of most property and auto insurance policies.

🔍 Example:

If there’s a $1,000 deductible and the loss is $5,000, the insurer pays $4,000, and the insured pays $1,000.

❌ Why the other options are incorrect:

• A) A deductible is not waived just because the property is insured to value.
• C) A disappearing deductible is a rare and specialized clause, not standard in most policies.
• D) Valued policies (which agree on a fixed payout) typically do not involve deductibles.

✅ Summary:

A deductible clause defines the amount of loss the insured must bear before the insurer pays.

Correct Answer: B

The correct answer is:

A) Travel health policies may limit coverage and benefits for sickness or injury which does not relate directly to an emergency

Why This is the Key Feature to Highlight:

1. Emergency-Focused Coverage:

   • Most travel health insurance policies are designed for sudden, unexpected emergencies (e.g., heart attacks, accidents, or acute infections).

   • They often exclude or limit coverage for non-emergency care (e.g., routine check-ups, chronic condition flare-ups, or pre-existing conditions without stability clauses).

2. Consumer Awareness:

   • Many travelers mistakenly assume their policy covers all medical expenses, leading to denied claims for non-urgent issues.

   • Explicitly explaining this limitation helps clients avoid gaps in coverage.

Why the Other Options Are Incorrect or Less Critical:

• B) Incorrect: Many travel policies do include accidental death benefits (often as an optional add-on).

• C) Misleading: Elective surgeries (e.g., cosmetic procedures) are almost never covered under standard travel health insurance.

• D) False: While seniors may face higher premiums or medical screenings, they can purchase travel insurance without family accompaniment.

Practical Takeaway:

Always clarify that travel health insurance is primarily for emergencies—not general healthcare. This manages expectations and reduces claim disputes.

✅ Correct Answer: A

To solve this, we use the co-insurance formula:

Given:

• Insured amount: $90,000
• Actual value of contents: $200,000
• Co-insurance requirement: 90%
• Loss amount: $20,000
• Deductible: $2,500

Step 1: Calculate required insurance amount under co-insurance clause

Required insurance=90%×200,000=180,000

Step 2: Apply the co-insurance formula

Claim payout (before deductible)=(90,000180,000)×20,000=0.5×20,000=10,000

Step 3: Subtract the deductible

Final payout=10,000−2,500=7,500

✅ Correct Answer: A) $7,500

The correct answer is:

C) It is the cost to replace it with a similar item in similar condition.

✅ Explanation:

Actual Cash Value (ACV) is a method of valuation used by insurers to determine the amount payable for damaged or destroyed property. It reflects the depreciated value of the item at the time of loss.

ACV is generally calculated as:

Actual Cash Value=Replacement Cost−Depreciation

This means the cost to replace the item today, with a similar one, minus a deduction for age, wear and tear, or obsolescence.

❌ Why the other options are incorrect:

• A) This describes Replacement Cost, not Actual Cash Value.
• B) Selling price can vary widely and does not accurately reflect insured value.
• D) Original purchase price doesn’t reflect the item’s value at the time of loss.

✅ Summary:

ACV is the cost to replace the item with one of similar kind and condition, accounting for depreciation.

Correct Answer: C

The correct answer is:

B) Lightning

✅ Explanation:

Under Section 7 – Loss or Damage Coverages of the O.A.P. 1 Owner’s Policy, most types of physical damage (such as collision, theft, vandalism, windstorm, etc.) are subject to a deductible — except for some specific perils.

🔹 Lightning is one of the few perils where:

• The deductible is typically waived.
• This applies under Specified Perils or Comprehensive Coverage when the loss is directly caused by lightning.

❌ Why the other options are incorrect:

• A) Vandalism – Subject to the deductible under Comprehensive coverage.
• C) Windstorm – Also subject to the deductible.
• D) Flood – Generally excluded under standard auto policies; when covered by endorsement or otherwise, a deductible applies.

✅ Summary:

Lightning damage is an exception where no deductible applies under Section 7 of OAP 1.

Correct Answer: B

The correct answer is:

C) Obtain an O.A.P. 1 Owner’s Policy to cover all the exposures to be insured.

✅ Explanation:

In Ontario, a snowmobile is considered a motor vehicle under the law and must be insured with an automobile policy, similar to a car or motorcycle.

The correct way to insure it is with an:

🔹 Ontario Automobile Policy (O.A.P. 1 – Owner’s Policy)

This policy can be used to cover:

• Third Party Liability
• Accident Benefits
• Direct Compensation – Property Damage (DCPD)
• Loss or Damage Coverage (Collision, Comprehensive, Specified Perils, or All Perils)

❌ Why the other options are incorrect:

• A) O.A.P. 1 plus an Inland Marine Floater is not necessary; O.A.P. 1 can cover all exposures directly.
• B) A Homeowners or Tenants policy does not provide liability coverage for motorized vehicles like snowmobiles.
• D) A “Snowmobile Floater” is not a standard or recognized method of providing both liability and damage coverage in Ontario.

✅ Summary:

A snowmobile must be insured with an O.A.P. 1 Owner’s Policy, which is designed to meet all legal and coverage requirements.

Correct Answer: C

The correct answer is:

B) bare electrical wires

Explanation:

In insurance terminology, a hazard is a condition that increases the chance of a loss occurring or makes the loss more severe. There are different types of hazards:

• Physical hazard: A physical condition that increases risk (e.g., bare electrical wires).
• Moral hazard: Related to a person’s behavior or attitude.
• Morale hazard: Indifference to risk because of the presence of insurance.

Bare electrical wires are a clear physical hazard because they:

• Increase the risk of fire or electric shock,
• Create a dangerous condition that makes a loss more likely.

Why the other options are incorrect:

• A) a claims-free history: This indicates reduced risk, not a hazard.
• C) plans to computerize the office: This is not inherently risky or a hazard unless poorly implemented.
• D) car drivers under the age of 25: While statistically higher risk, this refers to a risk factor, not a hazardous condition.

Let me know if you’d like examples of moral vs. physical hazards too!

The correct answer is:

D) it includes a certain amount of coverage for accidental damage to the insured’s automobile provided the owner or the driver of the uninsured automobile is identified

✅ Explanation:

Under the Uninsured Automobile Coverage section of the OAP 1 (Ontario Automobile Policy), the following applies:

• The coverage primarily protects against bodily injury or death caused by an uninsured or unidentified motorist (e.g., hit-and-run).

• Accidental damage to the insured’s automobile is also covered — but only if:

  • The uninsured driver and/or owner is identified.

  • There is no optional collision or all perils coverage on the vehicle (otherwise, those coverages apply instead).

❌ Why the other options are incorrect:

• A) Liability to others when forgetting to renew is not covered — driving uninsured is illegal.

• B) The policy can cover accidental damage — but only under specific conditions, as in option D.

• C) A hit-and-run with unidentified driver/owner does not provide vehicle damage coverage — only bodily injury.

✅ Summary:

Uninsured Automobile Coverage under the OAP 1 does include damage to your car, but only if the at-fault uninsured driver is identified.

Correct Answer: D

Explanation:

Under the OAP 1 (Ontario Automobile Policy), Section 4 – Accident Benefits, the Income Replacement Benefit (IRB) is:

• Calculated as 70% of the insured’s gross income, but capped at $400 per week (unless optional coverage is purchased to increase the limit).

The correct answer is:

A) The insurer will pay the claim in accordance with the coverages bound

Explanation:

An insurance binder is a temporary contract of insurance providing coverage until a formal policy is issued. If a loss occurs during the binder period:

• The insurer is obligated to pay claims according to the coverage that was bound.
• The binder is legally binding and provides the insured with coverage.
• The insurer cannot deny coverage just because the formal policy has not yet been issued.

Why the other options are incorrect:

• B) Incorrect: The insured should report the claim promptly; coverage is effective under the binder.
• C) Incorrect: The broker is not responsible for paying claims; the insurer pays claims.
• D) Incorrect: The insurer cannot cancel the binder after a loss has occurred and deny liability without valid cause.

✅ Correct Answer: A) The insurer will pay the claim in accordance with the coverages bound

Let’s solve this using the co-insurance formula:

Given:

• Value of building (replacement cost) = $500,000

• Amount insured = $300,000

• Co-insurance clause = 90%

• Loss amount = $200,000

Step 1: Calculate the required insurance amount based on co-insurance

$$\text{Required insurance}=90\%\times 500,000=0.90\times 500,000=450,000$$

Step 2: Check if the insured meets the co-insurance requirement

• Actual insurance: $300,000

• Required insurance: $450,000

Since $300,000 < $450,000, the insured is underinsured.

Step 3: Calculate the payout

Payout=(Amount InsuredRequired Insurance)×Loss AmountPayout=(Required InsuranceAmount Insured​)×Loss Amount=(300,000450,000)×200,000=23×200,000=133,333.33=(450,000300,000​)×200,000=32​×200,000=133,333.33

Answer:

D) $133,333.33

The correct answer is:

D) the insured files it to “prove” the loss occurred and establish the value of the property damaged or destroyed.

✅ Explanation:

A Proof of Loss form is a sworn statement submitted by the insured after a loss (such as a fire). It is a formal requirement under most property insurance policies and serves several key purposes:

• Confirms that a loss occurred

• Details the amount being claimed

• Identifies the property lost or damaged

• States the value of that property

• Outlines any other relevant details of the loss

The insurer uses this form to evaluate the claim and determine how much, if anything, is payable under the policy.

❌ Why the other options are incorrect:

• A) None — incorrect; it is a required and important document.

• B) It is not filed with the Fire Marshal; it is filed with the insurer.

• C) Notice of claim is usually given earlier — the Proof of Loss is part of the claim substantiation, not just notice.

✅ Summary:

The Proof of Loss allows the insured to formally state and verify the details and value of their loss.

Correct Answer: D

The correct answer is:

✅ Migratory birds flying into and breaking picture windows in a unit.

✅ Explanation:

Under a Condominium Unit Owners Comprehensive Policy (also referred to as an “all-risk” or “comprehensive” policy), coverage is provided for accidental, direct physical loss or damage, except for excluded perils.

Damage caused by birds accidentally flying into windows is generally considered accidental and sudden, and is not excluded under standard comprehensive wordings. Therefore, it is covered.

❌ Why the other options are not covered:

• Vandalism or malicious acts or glass breakage occurring while the unit is vacant
  → ❌ Not covered if the unit is vacant for more than 30 consecutive days without notifying the insurer. Most policies suspend coverage for vandalism/glass breakage after this vacancy period.
• Repeated seepage from an air conditioning system
  → ❌ Not covered because it is considered gradual damage, not sudden or accidental. Gradual seepage is specifically excluded under most policies.
• Smoke from agricultural smudging or industrial operations
  → ❌ Specifically excluded under standard policies. Damage from this kind of smoke is not considered a covered peril.

📝 Summary:

The only option listed that represents an accidental, direct physical loss not specifically excluded is:

✅ Migratory birds flying into and breaking picture windows in a unit.

Explanation:

Under RIBO (Registered Insurance Brokers of Ontario) regulations, brokers must adhere to strict anti-rebating and inducement rules. Key points:

1. No Rebates or Discounts – Offering a 20% discount or any form of financial incentive (e.g., cash, fee, or refund) to the builder in exchange for business is prohibited. This would be considered an inducement, which violates RIBO’s ethical standards.

2. No Contingent Commissions – A premium refund based on claims history (Option D) is also unacceptable, as it could be seen as an improper incentive.

3. Strict Compliance Required – Even small discounts or flat fees (Options A and B) are not permitted unless explicitly allowed under insurance laws (which they are not in this case).

Why Not the Other Options?

• A) Incorrect – Any discount (even 5%) is unlawful rebating.

• B) Incorrect – A flat fee is still an inducement and violates RIBO rules.

• D) Incorrect – A claims-based refund is a form of contingent compensation, which is prohibited.

Legal Basis:

RIBO’s Code of Conduct prohibits brokers from offering anything of value to secure business unless it is a lawful practice (e.g., standard broker services).

Final Answer: C) – The only compliant response is to refuse any payment or discount to the builder.

The correct answer is:

A) their tenants comprehensive policy will cover all their property in the storage warehouse for 30 days but only against theft after that period if requested in writing

Explanation:

Most Tenant Comprehensive Insurance Policies in Canada include temporary off-premises coverage when belongings are moved to a storage facility. The standard practice is:

• Full coverage for up to 30 days while in transit or temporarily stored,
• After 30 days, coverage is usually limited to theft only, and only if the insurer is notified in writing and agrees to extend coverage.

This allows some flexibility during moves but requires the insured to update the insurer on changes to the risk.

Why the other options are incorrect:

• B) is incorrect — full coverage does not automatically continue indefinitely while in storage.
• C) is incorrect — property in a storage warehouse can be insured, at least partially.
• D) is incorrect — the policy does not need to be cancelled and rewritten just because the insured is moving or storing items temporarily.

Let me know if you’d like help drafting a sample notification to an insurer for this situation.

The correct answer is:

✅ C) You must advise the insurer and arrange separate coverage immediately

✅ Explanation:

When a homeowner opens a business—such as a welding shop—in their private garage, it represents a material change in risk under the Homeowners Policy. Welding introduces increased fire and liability hazards, and commercial activities are generally excluded under standard personal homeowners policies.

As a broker or agent, your duty is to:

• Immediately inform the insurer of the change in use of the premises
• Arrange appropriate commercial coverage (e.g., a Commercial General Liability policy or Commercial Property policy)

Failing to do so may lead to:

• Denial of a future claim (due to non-disclosure)
• Cancellation of the policy for misrepresentation or material change in risk

❌ Why the other options are incorrect:

• A) “It does not affect the policy…”
  → Incorrect. Running a business does affect the policy—especially one with high fire risk like welding.
• B) “Call back in three months…”
  → Incorrect and unprofessional. Coverage must be adjusted immediately, not after evaluating success.
• D) “Make a note in the file to re-issue the policy at renewal”
  → Incorrect. You cannot delay action; the risk exists now.

📝 Summary:

Operating a welding business from a home garage requires immediate action: notify the insurer and arrange proper commercial insurance. Hence, the correct response is:

C) You must advise the insurer and arrange separate coverage immediately.

The correct answer is:

C) It may decrease the amount to be paid by the insurer.

✅ Explanation:

A co-insurance clause in property insurance requires the insured to carry insurance equal to a certain percentage (usually 80%, 90%, or 100%) of the actual value of the insured property. If the insured fails to meet this requirement and suffers a partial loss, the insurer may apply a penalty, reducing the payout.

🔍 Example:

• Property value: $500,000
• Co-insurance requirement: 90% → must insure for $450,000
• Insured amount: $300,000
• Loss: $100,000

Payout=(300,000450,000)×100,000=66,667

So, the insured receives less, due to underinsuring.

❌ Why the other options are incorrect:

• A) Co-insurance never increases the payout — it’s a penalty clause.
• B) It does not apply to liability claims — only to property insurance.
• D) It does not affect liability coverage — only applies to property losses.

✅ Summary:

A co-insurance clause can reduce the payout if the property is underinsured at the time of loss.

Correct Answer: C

The correct answer is:

A) The mortgagee is entitled to the proceeds of the insurance to the extent of its financial interest in the property.

Explanation:

When a mortgagee (lender) is named on an insurance policy, they have a secured financial interest in the insured property. In the event of a loss:

1. Mortgagee’s Rights – The mortgagee is entitled to insurance proceeds up to the amount still owed on the mortgage (their financial interest). This ensures the lender is repaid even if the property is damaged or destroyed.

2. Standard Mortgage Clause – Most policies include this clause, protecting the mortgagee even if the insured (borrower) violates policy terms (e.g., fraud or non-payment of premiums).

3. Remaining Funds – Any proceeds beyond the mortgage balance go to the insured (property owner).

Why Not the Other Options?

• B) Incorrect – The mortgagee only receives proceeds up to their financial interest, not the full payout (unless the debt equals the full loss).

• C) Incorrect – The insurer, not the insured and mortgagee, determines payout amounts based on policy terms.

• D) Incorrect – The insurer must pay the mortgagee directly (per the mortgage clause), not rely on the insured to repay the loan.

Key Takeaway:

The mortgagee’s protection is limited to their outstanding loan balance, ensuring their financial stake is covered without overcompensating.

Final Answer: A)

The correct answer is:

D) Coverage would depend upon whether or not they were legally liable.

✅ Explanation:

The Liability section of a Tenant’s Comprehensive Policy (or any personal liability policy) provides coverage for:

• Property damage to others’ property when the insured is legally liable for the damage.

In this scenario:

• The furniture and supplies were rented, so they are property of others.

• The damage occurred while the insured was handling the property, not through voluntary acts.

• Coverage under the liability section would apply only if the insured is found legally liable for the damage.

Why the other options are incorrect:

• A) Voluntary Property Damage coverage is limited in amount and generally excludes property in the care, custody, or control of the insured (which rented property usually is).

• B) Liability claims typically don’t have a deductible — that’s for property claims.

• C) There may be coverage — if the insured is legally liable, so it’s not an outright exclusion.

✅ Summary:

Liability coverage depends on legal responsibility for the damage.

Correct Answer: D

C) A mutual insurance company is owned by its policyholders

Explanation:

• Mutual insurance companies are owned by their policyholders, not by shareholders. Policyholders may receive dividends or have voting rights in company decisions.

• Joint stock companies (Option A) are owned by shareholders, not policyholders.

• Lloyd’s of London (Option B) is not owned by descendants of Edward Lloyd; it operates as a marketplace where underwriters (members, or “Names”) provide insurance, not as a family-owned business.

• Farm mutual insurance companies (Option D) are typically mutuals, meaning they are owned by policyholders, not shareholders.

Why Not the Other Options?

• A) Incorrect – A joint stock company is owned by shareholders, not policyholders.

• B) Incorrect – Lloyd’s of London is not family-owned; it’s a syndicate of underwriters.

• D) Incorrect – A farm mutual is a mutual insurer, meaning it is policyholder-owned, not shareholder-owned.

Final Answer:

C) is correct because mutual insurers are owned by their policyholders, distinguishing them from stock insurers.

✅ Explanation:

In Ontario, Direct Compensation – Property Damage (DCPD) applies when:

1. The accident occurs in Ontario,

2. Both vehicles are insured by companies licensed in Ontario, and

3. At least one other vehicle is involved.

Under DCPD:

• You collect from your own insurer, not the other driver’s.

• Payment is based on degree of fault.

• If both drivers are equally at fault (50/50), each gets 50% of their damages covered under DCPD — but only if the damage is covered under their policy.

Since neither driver has collision coverage, the only compensation available is through DCPD, and only for the portion not caused by their own fault.

Summary:

Each driver will recover 50% of the damage to their own vehicle from their own insurer under DCPD.

✅ Correct Answer: B

The correct answer is:

✅ The insurer would pay the loss but would be unable to subrogate

✅ Explanation:

In this scenario:

• Your insured has a Tenant’s Comprehensive Policy, which provides coverage for personal belongings damaged by insured perils (like fire).
• The insured signed a waiver of liability, releasing the landlord from responsibility for injury or damage.
• A fire occurs, and it’s later found the landlord was responsible.
• Despite that, the waiver prevents the insurer from subrogating (i.e., seeking recovery from the landlord).

🔍 Why this is correct:

Subrogation rights allow an insurer to recover costs from a third party responsible for the loss after the insurer has paid the claim.

However, if the insured signs a waiver of liability before the loss, the insurer’s right to subrogate is also waived, because you can’t transfer a right you no longer have.

Most policies have a clause requiring the insured not to prejudice the insurer’s subrogation rights, but waivers signed prior to the policy period are typically permitted unless otherwise stated.

❌ Why the other options are incorrect:

• “The insured has violated his/her policy by waiving the insurer’s right of recovery”
  → ❌ Incorrect. Most tenant policies allow pre-loss waivers (e.g., lease agreements), and do not consider this a violation.
• “The insurer would pay only 50% of the loss”
  → ❌ Incorrect. This is not a co-insurance situation. The insurer will pay based on the policy terms, subject to limits and deductibles.
• “The insurer would pay the loss and subrogate since the insurer had not waived its rights”
  → ❌ Incorrect. The insured’s waiver of liability affects the insurer’s subrogation rights, regardless of the insurer’s intent.

📝 Summary:

Since your insured signed a waiver releasing the landlord from liability, the insurer cannot subrogate, even though the landlord was at fault.
However, the insurer will still pay the claim, as required by the Tenant’s Comprehensive Policy.

Correct answer:

✅ The insurer would pay the loss but would be unable to subrogate.

A) It is the person to whom the property is leased

Explanation:

A lessee is the tenant—the party who rents or leases property from the owner (the lessor).

• Lessee = Tenant (the one who occupies/uses the property under a lease agreement).

• Lessor = Landlord/owner (the one who leases out the property).

Why Not the Other Options?

• B) Incorrect – This describes the lessor (landlord), not the lessee.

• C) Incorrect – The person receiving rent is the lessor/landlord, not the lessee.

• D) Incorrect – This describes a property manager, not the lessee.

Final Answer:

A) is correct because the lessee is the tenant leasing the property.

The correct answer is:

D) persons who sustain permanent serious injury defined in the statutory accident benefits schedule are entitled to sue for damages

Explanation:

Ontario operates under a no-fault insurance system, but legal action (tort claims) is still permitted in specific circumstances. According to the Insurance Act and the Statutory Accident Benefits Schedule (SABS), an injured party may sue the at-fault driver only if they have:

• Died, or
• Sustained a permanent serious disfigurement, or
• Sustained a permanent serious impairment of an important physical, mental, or psychological function.

These conditions make up the “threshold” for tort claims in Ontario.

Why the other options are incorrect:

• A) Incorrect: Collateral benefits (such as disability plans) do not determine whether someone can sue.
• B) Incorrect: Anyone meeting the threshold test may sue for future income, not just “claimants” in a narrow sense.
• C) Incorrect: You cannot sue for pain and suffering unless the injury meets the threshold defined above.

Let me know if you’d like the exact threshold definition from the Insurance Act or SABS.

The correct answer is:

✅ The loss would only be paid if the policy includes comprehensive or all perils coverage.

Explanation:

This scenario involves a physical loss of a snowmobile — it fell through the ice and was not recovered, which is a type of accidental loss.

Here’s how coverage applies:

• OAP 1 (Ontario Automobile Policy) Owners Policy can insure snowmobiles as recreational vehicles.
• Loss or damage to the vehicle itself is only covered if the policy includes physical damage coverage, such as:
  • Comprehensive coverage, or
  • All Perils coverage

Since there’s no indication of a collision or theft, comprehensive or all perils would be needed for non-collision losses like sinking through ice.

Why the other options are incorrect:

• “The loss could be paid under either specified perils or comprehensive coverage” – ❌ Incorrect, because falling through ice is not covered under specified perils (which usually covers fire, theft, etc.).
• “The loss would not be covered as the son was not accompanied by an adult” – ❌ Incorrect, because an endorsement was added permitting unlicensed drivers, so his age is not an automatic exclusion.
• “The loss could not be covered as it was the son’s stupidity that caused the loss” – ❌ Not valid. Insurance does not deny claims based on accidental poor judgment, unless intentional or excluded.

Summary:
To have coverage for the snowmobile sinking through ice, the policy must include comprehensive or all perils coverage.

The correct answer is A) any increased cost of repair or replacement due to construction by-laws will not be paid.

Here’s a detailed explanation for each option in the context of a replacement cost clause for Improvements and Betterments in a comprehensive condominium unit owner’s insurance policy:

The Question: The question asks which condition does not apply to the replacement cost clause for Improvements and Betterments. This means we are looking for a statement that is generally false in the context of such a clause.

A) any increased cost of repair or replacement due to construction by-laws will not be paid

• Explanation why this does NOT apply (and is the correct answer): This statement is generally false in modern comprehensive condominium unit owner policies. Most comprehensive policies, especially in regions like Ontario, include or offer an endorsement for “Bylaw or Ordinance Coverage.” This coverage is designed specifically to pay for the increased costs of repair or replacement that arise because of updated building codes, zoning laws, or other government regulations that were not in effect when the original construction occurred. Without this coverage, an insured might only be paid to rebuild to the old, non-compliant standard, which isn’t feasible. Therefore, stating that these costs will not be paid is generally incorrect for a comprehensive policy.

B) the insurer will pay full replacement cost of the damage without deduction for depreciation provided repair of replacement is made with materials of similar quality within a reasonable time after damage occurs

• Explanation why this DOES apply: This is a fundamental principle of replacement cost coverage. The entire purpose of replacement cost is to provide enough funds to rebuild or replace the damaged property with new materials of similar kind and quality, without reducing the payout for wear and tear (depreciation). The “reasonable time” clause ensures that the insured actually intends to repair or replace and doesn’t sit on the funds indefinitely.

C) the insurer will pay nothing until the property has been repaired or replacement within a stipulated period.

• Explanation why this DOES apply: This describes the common “two-stage” payment process for replacement cost. Insurers often initially pay the Actual Cash Value (ACV) of the loss. The remaining amount (the difference between ACV and full replacement cost) is then paid after the repairs or replacement are completed and verified, typically within a specified timeframe (e.g., 180 days, one year, two years, depending on the policy and jurisdiction). This mechanism encourages the insured to complete the repairs and prevents them from simply receiving a full replacement cost payout without actually rebuilding. While it’s not “nothing,” it means the full replacement cost isn’t paid upfront.

D) the insurer will pay only Actual Cash Value if you decide not to repair or replace the damaged property

• Explanation why this DOES apply: This is another crucial aspect of replacement cost policies. If the insured chooses not to repair or replace the damaged property, the insurer’s obligation is typically limited to paying the Actual Cash Value (ACV). Replacement cost coverage is contingent on the actual repair or replacement of the property. If there’s no repair or replacement, there’s no “replacement cost” incurred, so the payout reverts to the depreciated value.

In summary: Option A describes a scenario (non-payment of bylaw costs) that is typically not true for a comprehensive policy, making it the condition that does not apply. The other options (B, C, and D) accurately describe common characteristics and stipulations of replacement cost clauses.

Explanation:

Under the Registered Insurance Brokers Act (RIBA) of Ontario, the definition of an insurance brokerexcludes certain roles. Specifically:

• Exempt from RIB Act:

  • Direct employees/agents of a single insurer (or affiliated insurers) who do not represent multiple companies.

  • Facility Association representatives (since they operate under a specific mandate for high-risk auto insurance).

  • These individuals are not considered brokers under RIBO because they do not “deal with the public on behalf of multiple insurers.”

Why Not the Other Options?

• A) Incorrect – This describes a typical broker (representing multiple insurers), who must be registered under RIBO.

• B) Incorrect – Risk management/claims assistance can still involve “dealing with the public,” potentially requiring registration.

• C) Incorrect – Consulting/advisory services related to insurance may still fall under RIBO if they involve solicitation or negotiation.

Legal Basis:

RIBA Section 1 defines a broker as someone acting for multiple insurers, excluding captive agents(those tied to one insurer).

The correct answer is:

✅ B) $79,750.00

✅ Step-by-step Explanation:

Your insured has:

• Tenant Comprehensive Policy
• Coverage limit: $80,000
• Deductible: $250
• Total loss inventory: $90,000
  – Includes $7,000 in jewelry and furs (which are typically subject to special limits)

🔍 Step 1: Apply policy limit

• Total loss: $90,000
• Policy covers only up to $80,000 → so the maximum payable is $80,000

🔍 Step 2: Apply special limits (on jewelry and furs)

Tenant Comprehensive policies usually include sub-limits on certain types of property (e.g., $2,000 total for jewelry/furs in a theft loss), but in a fire loss, these limits often do not apply unless specified.

✅ Since this is a fire loss, no sub-limits apply — full value of jewelry and furs is covered up to the overall policy limit.

So, insurer will still consider the entire $90,000 loss, but only up to $80,000 max.

🔍 Step 3: Apply deductible

• Insurer pays: $80,000 (max limit)
• Minus deductible: $250
• Settlement = $80,000 − $250 = $79,750

✅ Final Answer:

B) $79,750.00

This is the correct payout under the policy.

To determine how much the second person (with a 25% interest) would receive from the insurance payout, let’s break it down step by step:

Given:

• Dwelling Value: $500,000

• Insurance Coverage: $400,000 (80% of the value, assuming no coinsurance penalty).

• Ownership Shares:

  • Person 1: 50% interest ($250,000) and lives in the house.

  • Person 2: 25% interest ($125,000).

  • Person 3: 25% interest ($125,000).

• Loss: Total destruction (tornado).

Assumptions:

1. Policy is Valid – The $400,000 coverage is sufficient (no underinsurance penalty).

2. Proportional Payout – Insurance proceeds are distributed based on ownership shares.

Calculation:

1. Total Insurance Payout: $400,000 (since the loss is total).

2. Person 2’s Share (25%):

   $$\$400,000\times 25\%=\$100,000$$

Why Not the Other Options?

• A) $100,000 – Correct (25% of the $400,000 payout).

• B) $125,000 – Incorrect (this is 25% of the property value, not the insurance payout).

• C) $80,000 – Incorrect (assumes an arbitrary reduction).

• D) $60,000 – Incorrect (no basis for this amount).

Key Takeaway:

Even though Person 2’s interest is worth $125,000, the insurance recovery is limited to their share of the policy proceeds ($100,000).

Final Answer: A) $100,000.00

The correct answer is:

C) The homeowners policy must be replaced by a Condominium’s Unit Owners policy, which gives certain extra coverages she needs as a unit owner.

✅ Explanation:

When someone sells a detached home and buys a condominium unit, their insurance needs change significantly. A standard Homeowners policy is no longer suitable. Instead, they need a:

🔹 Condominium Unit Owners Policy (Condo Policy)

This type of policy provides:

• Coverage for contents (personal belongings)
• Improvements and betterments (e.g., upgrades inside the unit)
• Unit owner’s liability
• Loss assessment coverage (in case the condo corporation charges the unit owner for shared losses like damage to common areas)

❌ Why the other options are incorrect:

• A) Incorrect: The master policy only covers common elements and basic unit structure. The unit owner must still insure their contents, upgrades, and personal liability.
• B) Incorrect: Improvements do need to be insured by the unit owner; and a Tenant policy is for renters, not condo owners.
• D) Incorrect: A Homeowners policy can’t be transferred to a condo — it’s the wrong type of coverage.

✅ Summary:

A condo owner needs a Condominium Unit Owners policy, not a Homeowners or Tenant policy.

Correct Answer: C

The correct answer is:

C) the motorized wheelchair

Explanation:

Under a Homeowners Comprehensive policy, coverage under the personal liability section typically excludes motorized vehicles, except for certain specifically allowed types, including:

• Motorized wheelchairs and mobility-assist devices for the disabled
• Self-propelled lawnmowers, snowblowers, and garden-type vehicles used on the insured premises
• Some policies may cover certain recreational vehicles off-premises, but only with specific endorsements

Why the other options are not covered under standard liability:

• A) Moped – Considered a motor vehicle, excluded from liability coverage under a homeowners policy.
• B) Trail bike – Also considered a motor vehicle; not covered under the liability section.
• D) Snowmobile – Requires separate coverage and is excluded from homeowners liability.

✅ Correct Answer: C) the motorized wheelchair

The correct answer is:

C) The accident may occur anywhere in Canada and at least one other automobile involved is insured under a motor vehicle liability policy.
➡️ This statement is INCORRECT.

✅ Explanation:

Section 6 – Direct Compensation–Property Damage (DCPD) of the OAP 1 Owner’s Policy provides coverage only when all of the following conditions are met:

1. The accident occurs in Ontario. ❗
2. At least one other vehicle is involved.
3. The other vehicle is insured by an Ontario-licensed insurer or one that has filed with the Financial Services Regulatory Authority of Ontario (FSRAO).

❌ Why C is incorrect:

• DCPD does not apply outside Ontario.
• So, an accident elsewhere in Canada (e.g., Quebec or Alberta) would not be eligible for DCPD — different coverage rules would apply.

✅ Summary:

• C is the incorrect statement because DCPD only applies to accidents in Ontario.
• All the other options are correct statements about Section 6 of the OAP 1.

✅ Correct Answer: C

The correct answer is:

C) 21 days

Explanation:

According to RIBO Regulations, an insurance broker must provide the insured with the policy or certificate of insurance within 21 days after the insurance has been placed.

• This ensures the insured receives proof of coverage in a reasonable timeframe.
• It also aligns with consumer protection standards and regulatory compliance.

Why the other options are incorrect:

• A) Immediately — Often not practical; the regulation allows a reasonable period.
• B) 10 days — Too short; the regulation allows up to 21 days.
• D) 30 days — Longer than required by RIBO regulations.

✅ Correct Answer: C) 21 days

✅ Explanation:

Robbery is defined as the unlawful taking of property from a person through actual or threatened violence or force. A weapon does not need to be involved — the key element is the threat or use of force.

Let’s review the options:

• A) ✅ Correct – This fits the definition of robbery: theft through threat of violence, even without a weapon.

• B) ❌ Burglary, not robbery – Burglary involves unlawful entry, typically when no one is present.

• C) ❌ Employee theft is typically considered fidelity loss, not robbery.

• D) ❌ Disappearance of goods with no explanation is often treated as mysterious disappearance, not robbery.

✅ Summary:

Robbery requires force or threat of force against a person — which is exactly what occurs in Option A.

Correct Answer: A

The correct answer is:

A) fire insurance policy

Explanation:

In Canada, Statutory Conditions are mandatory legal provisions that are included by law in certain classes of insurance policies. These conditions are established under the provincial Insurance Acts and are specifically required in all fire insurance policies, including those that provide fire coverage as part of a broader policy (e.g., homeowners, commercial property).

Statutory Conditions include rules related to:

• Misrepresentation
• Property loss obligations
• Appraisal process
• Duties after a loss
• Fraud
• Termination

Why the other options are incorrect:

• B) Liability insurance policy – does not contain Statutory Conditions. It contains general policy conditions, but not statutory ones.
• C) Burglary insurance policy – also not subject to Statutory Conditions, even though it may cover property.
• D) Marine insurance policy – governed by different federal or international laws and marine-specific principles, not Statutory Conditions under provincial insurance law.

✅ Correct Answer: A) fire insurance policy

The correct answer is:

C) solicit insurance from members of the public anywhere in Ontario

✅ Explanation:

Insurance brokers whose registration is restricted to “Acting Under Supervision” (commonly known as Level 1 brokers) are permitted to solicit insurance from the public throughout Ontario—but only while under the direct supervision of a Principal Broker. They are not authorized to:

• Operate or control trust bank account(s) for insurance premiums,
• Compile or sign RIBO position reports on behalf of the employing broker, or
• Act as a Principal Broker (as defined in Ontario Regulation 991) themselves

Thus, soliciting insurance (Option C) is the only activity among the provided options that is permitted for a broker with this restricted status.

The correct answer is:

C) A condition of this coverage is that replacement must be with materials of similar kind and quality.

Explanation:

Replacement Cost Insurance covers the cost to repair or replace damaged property without deduction for depreciation, but it includes specific conditions:

1. Similar Kind and Quality – The insured must use materials and methods comparable to the original (e.g., replacing hardwood floors with hardwood, not laminate).

2. Replacement Requirement – Most policies require the insured to actually replace the property to receive replacement cost (after an initial ACV payment).

3. Appraisal Not Always Needed – While insurers may assess value, a professional appraisal isn’t mandatory (Option A is false).

4. Applies to Residential/Commercial – Available for both home and business properties (Option D is false).

Why Not the Other Options?

• A) Incorrect – Insurers often rely on estimates or market data, not mandatory appraisals.

• B) Incorrect – Most insurers do require replacement as a condition for full payout (after an initial ACV payment).

• D) Incorrect – Replacement cost coverage is common for homes, not just commercial properties.

Key Takeaway:

Replacement cost coverage ensures like-for-like restoration, but strict adherence to policy terms is required.

The correct answer is:

D) to explain the policy limitations to the insured

Explanation:

Most travel health insurers require that insured individuals contact their emergency assistance provider immediately when a traumatic or emergency medical situation arises while traveling. This is done so that:

• The assistance provider can explain the policy limitations, exclusions, and conditions of coverage (e.g., pre-approval requirements).
• The insurer can coordinate care, including referring to approved facilities, arranging direct billing, or medical transport.
• The insurer ensures the treatment is medically necessary and within coverage terms.

This reduces the risk of the insured seeking treatment that may later be denied or only partially covered due to policy limitations or use of unapproved facilities.

Why the other options are incorrect:

• A) is incorrect — insurers don’t request contact to reject claims; rather, they aim to manage claims and reduce preventable costs.
• B) is partially true but vague — while they do help stabilize the situation, that’s not the main reason for requiring contact.
• C) is incorrect — travel insurers do not pass claim details to OHIP; OHIP coordination is separate and only partial coverage might apply for out-of-country care.

Let me know if you’d like sample policy wording or more context on travel insurance procedures.

The correct answer is:

C) the standard OAP 1 Owners policy automatically covers the situation, no change is necessary

Explanation:

Under the standard Ontario Automobile Policy (OAP 1):

• The policy automatically provides liability coverage for passengers in the insured vehicle, including passengers carried for social, domestic, or pleasure purposes.
• Occasional carpooling or sharing rides to work is generally covered under personal use, and no special endorsement or change form is needed if the use is infrequent and not for compensation.
• Since your insured only drives one week out of four, and the other members drive the other weeks, this is a shared personal use scenario, not business use.

Why the other options are incorrect:

• A) “Permission to Carry Passengers” form — This form is for vehicles not normally permitted to carry passengers (e.g., commercial vehicles) and is not needed here.
• B) “Passenger Hazard” endorsement — Typically used to increase passenger liability limits or cover passenger liability in specific circumstances; not required for normal carpooling.
• D) Reclassify as business use — Not necessary because carpooling on an occasional basis is considered personal use; business use classification applies to vehicles used regularly for business purposes (e.g., taxi, delivery).

✅ Correct Answer: C) the standard OAP 1 Owners policy automatically covers the situation, no change is necessary

The correct answer is:

D) It is the insurer’s right to recover a loss they have paid from the person responsible for it.

Explanation:

Subrogation is a fundamental legal principle in insurance that allows an insurer to:

1. Step into the insured’s shoes after paying a claim.

2. Pursue recovery from the at-fault third party (or their insurer) to recoup the claim amount.

Key Points:

• Purpose: Prevents the insured from being compensated twice (once by the insurer, once by the at-fault party).

• Example: If your car is hit by a negligent driver, your insurer pays you, then sues the driver (or their insurer) to recover the payout.

Why Not the Other Options?

• A) Incorrect – This describes salvage rights, not subrogation.

• B) Incorrect – This refers to loss valuation/settlement, not subrogation.

• C) Incorrect – This describes a limitation period for claims, unrelated to subrogation.

Legal Basis:

Subrogation is codified in insurance contracts and common law to ensure fair loss distribution.

Final Answer: D) – Subrogation is the insurer’s recovery right from at-fault parties.

The correct answer is:

A) It indemnifies an insured up to the limit of the insured’s policy for an amount he/she is legally entitled to recover for bodily injury or death from an inadequately insured Third Party.

Explanation:

OPCF 44R (Family Protection Coverage) is an endorsement in Ontario auto insurance policies that protects the insured and their family members if they are injured by an at-fault driver who is uninsured or underinsured.

Key Features:

1. Covers the Shortfall – If the at-fault driver’s liability limits are too low to cover the insured’s damages, OPCF 44R pays the difference up to the insured’s own policy limits.

2. Legal Entitlement Required – The insured must be legally entitled to recover damages (e.g., via a lawsuit or settlement).

3. Example: If the at-fault driver has $50,000 in liability coverage but the insured’s medical bills are $150,000, OPCF 44R covers the $100,000 gap (if the insured’s policy limit is high enough).

Why Not the Other Options?

• B) Incorrect – This describes OPCF 7 (Liability for Damage to Non-Owned Automobiles), which extends coverage for out-of-province accidents.

• C) Incorrect – This refers to passenger liability coverage, not underinsured motorist protection.

• D) Incorrect – This is too vague; OPCF 44R specifically targets underinsured/uninsured motorist scenarios.

Policyholder Benefit:

OPCF 44R ensures the insured isn’t left financially vulnerable due to another driver’s inadequate insurance.

Final Answer: A) – OPCF 44R covers the insured’s legally recoverable damages from an underinsured third party.

The correct answer is:

✅ $3,000.00

✅ Explanation:

Under a Homeowners Comprehensive Policy, the coverage for Additional Living Expenses (ALE) — also known as Coverage D – Loss of Use — will pay for the increased costs of living when the insured dwelling becomes uninhabitable due to an insured peril (like fire).

🔍 Key points:

• Your client is renting another house for $1,000/month for 3 months = $3,000
• Their mortgage payments are $900/month, but those continue regardless, and are not reimbursed
• ALE pays for the extra cost of temporarily living elsewhere, not both rent and mortgage
• So, since the rent is a new, necessary expense, the insurer pays the full $3,000

❌ Why the other options are incorrect:

• $300 → Too low, no basis
• $2,400 → Would be the amount over and above mortgage ($1,000 − $900 = $100/month × 3 = $300), but this is incorrect, because rent is covered in full
• $5,700 → Adds mortgage and rent (3 × $1,000 + 3 × $900), which is not payable — the mortgage is not an increased expense

✅ Final Answer:

$3,000.00 – representing 3 months’ rent covered under Additional Living Expense coverage.

✅ Explanation:

When calculating Actual Cash Value (ACV) of a building, insurers consider factors that affect the value and depreciation of the property, such as:

• A) Resale value of the building

• C) Normal life expectancy of the building (to estimate depreciation)

• D) Condition of the building immediately before the loss

However, ownership of the building does not affect the ACV calculation. Whether the insured owns the building or not has no bearing on how its value is determined.

Summary:

Ownership is not a factor in determining Actual Cash Value.

✅ Correct Answer: B

A “Valued” policy is designed for high-value or unique items (e.g., fine art, antiques, jewelry) where the exact replacement cost is difficult to determine after a loss.

Key Features of a Valued Policy:

1. Pre-Agreed Payout – The insurer and insured agree upfront on the property’s value (e.g., a painting insured for $100,000). If the item is totally destroyed, the insurer pays the full agreed amount without depreciation or market-value disputes.

2. Avoids Post-Loss Negotiations – Unlike standard policies (which pay “actual cash value” or “replacement cost”), a valued policy eliminates uncertainty by fixing the payout at policy inception.

3. Common for Unique/High-Value Items – Used for art, collectibles, rare items where market fluctuations or replacement challenges exist.

Why Not the Other Options?

• B) Incorrect – Valued policies do not guarantee replacement cost; they pay the pre-agreed value, even if replacement costs differ.

• C) Incorrect – While valued policies are specialized, their rarity doesn’t make them “highly valued”—the term refers to the pre-set payout structure.

• D) Incorrect – Valued policies only pay the pre-agreed amount for total loss, not “full value however caused” (partial losses may be settled differently).

When to Recommend a Valued Policy:

• For irreplaceable items (e.g., heirlooms, custom jewelry).

• When the insured wants certainty in payout (no post-loss valuation disputes).

The correct answer is:

B) for their full actual cash value if factory installed

Explanation:

Under the OAP 1 – Ontario Automobile Policy, coverage for electrical accessories or equipment depends on how and when they were installed:

• Factory-installed equipment is considered part of the original vehicle and is covered for its actual cash value (ACV) under the policy.
• Non-factory (aftermarket) accessories or equipment are not automatically covered, or may be subject to limited coverage, unless specifically declared and additional premium is paid.

Definitions:

• Actual Cash Value (ACV) = replacement cost minus depreciation.
• Replacement Cost is not standard under OAP 1.

Why the other options are incorrect:

• A) Incorrect: Only factory-installed equipment is covered at ACV by default — not all electric accessories.
• C) Incorrect: Replacement cost is not offered under standard OAP 1.
• D) Incorrect: There is no automatic $5,000 limit unless it’s for specific optional coverage or endorsements (e.g., for aftermarket equipment).

✅ Correct Answer: B) for their full actual cash value if factory installed

The correct answer is:

C) any covered assessment made by the condominium corporation up to $10,000 or the limit specified in the unit owner’s policy declarations.

Explanation:

Coverage A2 – Loss Assessment in a Condominium Comprehensive policy typically covers a unit owner for their share of a special assessment levied by the condominium corporation due to a covered loss (e.g., damage from a peril like fire or windstorm).

Key points:

• The coverage is usually subject to a limit, often $10,000 by default, but this can vary based on the policy’s declarations.

• It applies to assessments resulting from covered perils under the condominium corporation’s master policy.

• It does not cover assessments for routine maintenance, improvements, or the condo corporation’s deductible (unless specifically endorsed).

Why not the other options?

• A) Incorrect – Coverage A2 is not limited to assessments related to unit improvements and betterments.

• B) Incorrect – Assessments to cover the condo corporation’s deductible are generally excluded unless an endorsement is added.

• D) Incorrect – While some policies may allow higher limits, the standard is typically $10,000, not $25,000, unless specified in the policy.

Thus, C is the most accurate answer. Always check the specific policy wording for exact terms.

To determine the correct answer, we need to calculate the rental income loss under the Rental Value section of a Secondary Residence Fire and Extended Coverage policy.

Given:

• Monthly rental income: $1,750
• Duration of loss (rebuild time): 4 months
• Rental Value coverage pays for loss of rental income during the period of restoration, if the damage was caused by an insured peril (in this case, windstorm).

Calculation:

$1,750/month × 4 months = $7,000

Deductible does not apply to Rental Value coverage – it only applies to property (building) loss.

✅ Correct Answer:

B) $7,000.00

The correct answer is:

B) travel health plan restrictions for sporting injury vary from insurer to insurer

Explanation:

Travel health insurance policies often contain exclusions or limitations related to high-risk or extreme sports, including scuba diving, especially if done beyond recreational depths or without proper certification.

Additionally, some policies may have restrictions for professional athletes, but the primary factor here is the activity(scuba diving) rather than his professional status in football.

Since each insurer sets its own guidelines and exclusions regarding:

• Professional sports involvement,
• High-risk or adventure activities (like scuba diving, skiing, skydiving, etc.),
• Recreational vs. technical diving,

…it’s important to review the specific policy terms or consult the underwriter.

Why the other options are incorrect:

• A) is incorrect — being a professional football player doesn’t automatically exclude him from coverage for scuba diving injuries.
• C) is incorrect — not all travel health policies cover scuba diving; many specifically exclude it or require add-ons.
• D) is too vague and misleading — insurers look at the activity and policy wording, not just how the injury occurred.

Let me know if you’d like sample exclusions from real travel health policies.

The correct answer is:

B) to formalize in writing the authority of the broker and the responsibilities of each party

Explanation:

A Company/Broker Agreement (or Agency Agreement) is a formal contract between an insurer and an insurance broker. Its primary purpose is to:

• Clearly define the broker’s authority (e.g., binding coverage, collecting premiums)
• Outline the responsibilities of each party, including duties, commissions, handling of claims, compliance, and termination procedures
• Establish the legal relationship between the broker (agent) and the insurer (principal)

Why the other options are incorrect:

• A) ❌ While regulators may expect clarity in broker-insurer relationships, the contract is not specifically for satisfying a department of insurance.
• C) ❌ Trust accounts are a requirement under RIBO regulations, not established by the company/broker agreement.
• D) ❌ The agreement supports regulatory compliance, but its purpose is not to meet RIBO requirements directly — RIBO governs the broker’s licensing and conduct, not the insurer’s contractual relationship.

✅ Correct Answer: B) to formalize in writing the authority of the broker and the responsibilities of each party

The correct answer is:

B) The insured was paid the amount of the loss.

Explanation:

Indemnification in insurance means the insurer compensates the insured for a covered loss, restoring them (financially) to the same position they were in before the loss occurred.

Key Points:

1. Payment of Loss – The insurer pays the insured up to the policy limits (minus any deductible).

2. No Requirement for Coinsurance or Subrogation – Indemnification happens regardless of whether coinsurance conditions are met (Option A) or if the insurer later recovers costs via subrogation (Option C).

3. Subrogation Rights Unaffected – The insurer retains the right to pursue third parties afterindemnifying the insured (Option D is false).

Why Not the Other Options?

• A) Incorrect – Coinsurance affects how much is paid, not whether indemnification occurs.

• C) Incorrect – Subrogation is a separate process that may follow indemnification.

• D) Incorrect – Indemnification does not waive subrogation rights.

Legal Principle:

Indemnification fulfills the insurer’s primary obligation to the insured under the policy.

Final Answer: B) – The insured receives payment for the loss.

The correct answer is:

B) liability coverage

Explanation:

Under a Homeowners Comprehensive policy with Inflation Protection, the following coverages are automatically increased on the policy anniversary to keep up with inflation:

• A) Dwelling building coverage (to reflect increased rebuilding costs)
• C) Personal property coverage (contents inside the home)
• D) Additional living expense coverage (costs of temporary living arrangements)

However, liability coverage limits:

• Are fixed amounts and do not automatically increase with inflation.
• If increased liability limits are desired, they must be manually requested or endorsed.

✅ Correct Answer: B) liability coverage

The correct answer is:

B) O.A.P. 1 Owner’s Policy, suitably endorsed.

✅ Explanation:

When a client leases a vehicle, they are not the legal owner, but they are considered the registered lessee and primary operator. In Ontario, the proper insurance policy for a leased vehicle is the:

Ontario Automobile Policy (O.A.P. 1) – Owner’s Policy

• It provides mandatory automobile insurance (liability, accident benefits, DCPD, etc.)

• It can be suitably endorsed to reflect the leasing arrangement (e.g., adding the leasing company as lessor on the policy using an endorsement like OPCF 5 – Permission to Rent or Lease).

❌ Why the other options are incorrect:

• A) O.A.P. 4 Garage Policy – For automobile businesses (dealers, repair shops), not lessees.

• C) O.A.F. 2 Driver’s Form – For drivers who don’t own or lease a vehicle regularly; not applicable for leased vehicles.

• D) O.A.F. 6 Non-Owned Automobile Form – Used for businesses that have employees using personal vehicles — not for personal leased vehicles.

✅ Summary:

A person leasing a car requires an O.A.P. 1 Owner’s Policy, even though they don’t legally own the car.

Correct Answer: B

The correct answer is:

✅ Those coverages which applied to the vehicle replaced, or to all of the insured’s vehicles if it is an additional automobile.

✅ Explanation:

Under the Ontario Automobile Policy (O.A.P. 1), the “What Automobiles Are Covered” section provides automatic 14-day coverage for a newly acquired automobile if:

• It replaces a vehicle already described on the policy
  → It receives the same coverages as the one it replaces.
• It is an additional vehicle (not a replacement), and the insured has all owned vehicles insured with the same company
  → The new vehicle gets the broadest coverage of any vehicle already insured on the policy.

This automatic coverage does not apply if:

• The vehicle is not a private passenger vehicle
• The insurer doesn’t already insure all the insured’s other vehicles

❌ Why the other options are incorrect:

• “A vehicle which replaces one already insured under the policy and not to additional automobiles.”
  → Incorrect. Coverage can apply to additional automobiles, under certain conditions.
• “Private passenger vehicles and no other types of automobile.”
  → Incorrect. Although most commonly applicable to private passenger vehicles, the policy wording isn’t limited only to them. It depends more on how the insurer insures the fleet.
• “Private passenger vehicles which are mainly used for pleasure purposes.”
  → Incorrect. Use (pleasure vs business) is not the restriction for automatic coverage.

📝 Final Note:

So, for 14 days after acquiring a new automobile, the insured is automatically covered with:

“Those coverages which applied to the vehicle replaced, or to all of the insured’s vehicles if it is an additional automobile.”

The correct answer is:

✅ Property of others destroyed intentionally by the insured’s 10-year-old son

✅ Explanation:

Section II – Liability Coverage of the Homeowners Comprehensive Policy includes a subsection called “Voluntary Payment for Damage to Property”. This covers unintentional damage to property of others, even if legal liability is not established. However, this section can also apply in certain intentional cases if caused by a child under the age of 12.

🔍 Why the correct answer is valid:

• Damage caused intentionally by a 10-year-old
  → Covered, because the policy generally provides coverage for intentional acts by children under 12, recognizing their lack of full legal responsibility.

❌ Why the other options are not covered:

• Theft of a shotgun on loan from a sporting goods store
  → ❌ Theft is not covered under Voluntary Property Damage. Also, theft is not unintentional damage.
• Automobile backed into borrowed barbecue
  → ❌ Not covered. Damage arising from use of a motor vehicle is excluded under Homeowners Liability, even if the vehicle is operated by a guest.
• Damage to a rented ride-on lawn mower
  → ❌ Property rented to an insured is excluded under the voluntary property damage section. Damage to rented or leased items is not covered.

📝 Summary:

The Homeowners Comprehensive Policy provides Voluntary Payment for Damage to Property coverage for damage caused by an insured’s 10-year-old son, even if intentional.

Thus, the correct answer is:

✅ Property of others destroyed intentionally by the insured’s 10-year-old son

Explanation:

When a driver is covered under Workers’ Compensation and is injured in a work-related automobile accident, the following principles apply:

1. Workers’ Compensation as Primary Coverage – Workers’ Compensation benefits are the exclusive remedy for workplace injuries, meaning the driver cannot simultaneously claim under their auto insurance (OAP 1) for the same injury.

2. No Double Recovery – Since Workers’ Compensation provides medical and wage-loss benefits, the driver is barred from pursuing Accident Benefits under their auto policy (Section 4 of OAP 1).

3. No Right to Sue – Workers’ Compensation laws generally prohibit lawsuits against employers or at-fault parties for workplace injuries (eliminating Option B).

Why Not the Other Options?

• A) Incorrect – Accident Benefits (OAP 1) are not payable if Workers’ Compensation covers the injury.

• B) Incorrect – Workers’ Compensation blocks lawsuits for workplace injuries in exchange for no-fault benefits.

• C) Incorrect – OAP 1 doesn’t act as “secondary”; it’s inapplicable if Workers’ Compensation applies.

Legal Basis:

Workers’ Compensation operates on a “historic compromise” where employees give up the right to sue in exchange for guaranteed benefits, making other insurance claims inadmissible for the same injury.

Final Answer: D) – The driver cannot claim under OAP 1 if Workers’ Compensation covers the injury.

The correct answer is: D) All perils rider

Explanation:

Let’s break down what each clause or feature does:

A) Co-insurance clause:
This does affect the settlement amount. If the insured has not purchased enough insurance (usually less than 80% of the property’s value), the insurer may reduce the claim payout proportionally.

B) Deductible clause:
This also affects the settlement. The insured must pay the deductible amount out of pocket, and the insurer pays the remainder of the claim.

C) Pro-rata distribution clause:
This clause affects the amount paid by each insurer when multiple policies are in force. It ensures the loss is shared proportionally among insurers based on their share of the total coverage.

D) All perils rider:
This is an extension of coverage — it expands what losses are covered but does not directly affect the amount of the settlement once a loss is covered.

✅ Correct Answer: D) All perils rider

Because it affects what is covered, not how much is paid once coverage applies.

The correct answer is:

B) Advise the insurer of the change of use

Explanation:

1. Material Change in Risk:

   • The student’s shift from occasional personal use to commercial delivery (pizza delivery) is a material change in the vehicle’s use.

   • Commercial use (especially delivery) introduces higher risk (e.g., frequent stops, late-night driving, increased mileage).

2. Policy Implications:

   • Personal auto policies (OAP 1) typically exclude commercial delivery unless endorsed.

   • Failing to disclose this change could void coverage for claims arising during delivery.

3. Broker’s Duty:

   • You must notify the insurer to adjust coverage (e.g., add a business use endorsement or switch to a commercial policy).

Why the Other Options Are Incorrect:

• A) Incorrect: Ignoring the change risks claim denial (non-disclosure).

• C) Incorrect: You cannot unilaterally lapse the policy; the insurer must assess the risk.

• D) Incorrect: Being listed as a driver doesn’t cover commercial use.

Action Required:

✅ Notify the insurer immediately to avoid coverage gaps.

Answer: B is correct.

The correct answer is:

a) The Comprehensive coverage would pay

Explanation:

Under the OAP 1 – Ontario Automobile Policy, Comprehensive Coverage includes protection against loss or damage caused by perils other than collision, such as fire, theft, vandalism, falling objects, and natural disasters, including sinking or stranding of a transport vessel.

• The key point here is that Comprehensive coverage includes losses from perils like “the sinking of a conveyance in which the automobile is being transported”.
• This applies regardless of whether the ferry is traveling between Canadian ports or internationally, as long as the vehicle is being lawfully transported and is not being driven.

Why the other options are incorrect:

• b) is incorrect: Coverage does not depend on whether the ferry operates solely between Canadian ports.
• c) is incorrect: Stranding or sinking is indeed covered under Comprehensive, not just Specific Perils.
• d) is incorrect: A special ferry rider is not required under Comprehensive coverage for this type of peril.

✅ Answer: a) The Comprehensive coverage would pay.

The correct answer is:

C) quoting an insurance premium to a policy holder that is less than a competitor’s quotation with the intention of influencing the placing of an insurance policy or renewal

Explanation:

C) is not considered misconduct — offering a competitive quote is a standard and acceptable practice in the insurance industry, as long as the quote is honest, accurate, and based on proper underwriting. Competing on price is legal and common, provided it’s done ethically.

Why the other options are considered misconduct:

• A) Providing incomplete or misleading illustrations/memos violates fair presentation standards and can mislead clients — this is misconduct.
• B) Making incomplete or unfair comparisons of policies to persuade a client to lapse, forfeit, or surrender an existing policy is considered “twisting”, which is a prohibited practice and definitely misconduct.
• D) Advertising or doing business under a name other than the registered one is a breach of regulatory requirements and is also misconduct.

Let me know if you’d like the exact references from the RIBO Code of Conduct or applicable regulations.

The correct answer is:

C) Co-insurance Clause.

Explanation:

A coinsurance clause directly impacts the settlement amount of an insured loss by requiring the policyholder to carry insurance equal to a specified percentage (e.g., 80% or 90%) of the property’s value. If the insured fails to meet this requirement, the insurer reduces the payout proportionally.

How It Works:

1. Example: A building worth $500,000 has a 90% coinsurance clause, meaning the insured must carry at least $450,000 in coverage.

2. If Underinsured: If the insured only carries $300,000, a $200,000 loss is paid as:

   Payout=($300,000$450,000)×$200,000=$133,333.33Payout=($450,000$300,000​)×$200,000=$133,333.33

   (Instead of the full $200,000).

Why Not the Other Options?

• A) Subrogation Clause – Allows the insurer to recover costs from at-fault parties but does not reduce the insured’s settlement.

• B) Named Perils Rider – Defines what perils are covered but does not adjust payout amounts.

• D) Subscription Policy – Involves multiple insurers sharing risk but does not inherently limit the settlement.

Key Takeaway:

The coinsurance clause penalizes underinsurance by reducing payouts, making it the only condition listed that directly affects settlement amounts.

Final Answer: C) – The coinsurance clause adjusts payouts based on the insured’s compliance with coverage requirements.

Explanation:

For an insurer to legally void a policy due to misrepresentation, the following must be proven:

1. Materiality – The misrepresented fact must be material to the risk, meaning it would have influenced the insurer’s decision to accept the risk or set the premium.

2. Reliance – The insurer must show they relied on the misrepresentation when underwriting the policy.

3. No requirement for intent – The misrepresentation does not need to be malicious, careless, or collusive (Options A, C, D). Even an innocent misstatement can void the policy if it is material.

Why Not the Other Options?

• A) Incorrect – Malice (intent to deceive) is not required; materiality alone suffices.

• C) Incorrect – The broker’s carelessness is irrelevant unless the insurer can prove material misrepresentation by the insured.

• D) Incorrect – Collusion is not necessary; the insured’s misrepresentation (even if unilateral) can void the policy if material.

Legal Basis:

Under the Insurance Act, insurers can void a policy for material misrepresentation, regardless of whether it was fraudulent, negligent, or innocent.

Final Answer: B) – The misrepresented fact must be material to the risk.

The provision not outlined in the RIBO Code of Conduct (Ontario Regulation 991, Section 14) is:

A) to maintain a trust account for all trust Money received

✅ Why the others are included:

• B) To be both candid and honest when advising the member’s client – the Code requires honesty, integrity, and full disclosure in client dealings.
• C) Not to charge or accept any fee which is not fully disclosed prior to service being rendered – the Code mandates upfront disclosure of fees and absence of hidden charges.
• D) To be competent to perform the services which the member undertakes on the client’s behalf – members must ensure they have the necessary skills and competence to serve clients.

🛑 Why A isn’t part of the Code:

Maintaining a trust account is a regulatory/best practices requirement under trust accounting provisions—not an ethical standard in the RIBO Code of Conduct. The Code focuses on ethics, competence, transparency, and honesty—not the administration of client funds.

Answer: A)

The correct answer is: A) It is the one to whom the money is owed.

Explanation:

• Mortgagee = The lender (e.g., a bank or financial institution) who lends money to the borrower to purchase property. They have a financial interest in the property until the loan is repaid.
• Mortgagor = The borrower, or the person who owes the money.
• Mortgage broker = A third party who helps arrange the loan, not the lender or borrower.
• A mortgage document outlines the terms, but it is not the mortgagee.

✅ Correct Answer: A) It is the one to whom the money is owed.

The correct answer is:

D) basis for determining the amount of premium

Explanation:

Statutory Conditions are mandatory provisions required by law (under provincial Insurance Acts) and apply to certain classes of insurance, particularly fire insurance policies. These conditions govern the rights and responsibilities of both the insurer and the insured.

Statutory Conditions typically cover:

• A) Misrepresentation – prohibits false statements that could void the policy.
• B) Protection of the property after loss – the insured must take steps to prevent further damage after a loss.
• C) Provisions for termination of the policy – outlines how and when a policy can be cancelled by either party.

Why D is NOT included:

• The basis for determining the amount of premium is not part of the Statutory Conditions. That is a matter of underwriting and rating, and it’s typically addressed in other sections of the insurance contract, not in the Statutory Conditions.

✅ Correct Answer: D) basis for determining the amount of premium

The correct answer is:

A) Loss or damage caused by earthquake

Explanation:

In property insurance policies, certain perils are typically excluded from standard coverage but can be added for an additional premium.

• Earthquake (Option A) is a commonly excluded peril that insurers often allow to be added via an endorsement (for an extra cost).

• Other perils like war, nuclear incidents, and intentional/criminal acts (Options B, C, and D) are almost always excluded and cannot be covered, even for an additional premium, due to their catastrophic or uninsurable nature.

Why Not the Other Options?

• B) War – Insurers do not cover war risks due to their unpredictable and widespread impact.

• C) Criminal acts – Insurance never covers illegal or intentional acts by the insured.

• D) Nuclear incidents – These are excluded by law (e.g., the Nuclear Liability Act) and are uninsurable.

Final Answer:

A) is correct because earthquake coverage can often be added to a property policy with an additional premium, unlike the other excluded perils listed.