RIBO Insurance Course Practice Questions
Week 3 With Correct Answers.
What is a main benefit of having an insurance application completed in writing and signed by the
applicant?
Select one:
a. Provides accurate documentation of the coverage requested and confirms the accuracy of the
information.
b. Is less costly for the insurer to underwrite written applications than oral applications
c. Allows the insured to get a premium discount of fifteen percent
d. Allows the insured to choose which questions to answer and which to leave blank -
answer✔✔a. Provides accurate documentation of the coverage requested and confirms the
accuracy of the information. The benefit of a written application is that it provides accurate
documentation of what was requested, and indicates the intentions of the parties at the time the
application was made—particularly if the client signs it, as the signature attests to the accuracy
of the information.
What other types of supplemental applications might an intermediary add to a standard
application?
Select one:
a. Home business and oil tank
b. Overland water and criminal history
c. Rental supplements and pre-existing damage
d. Wood heat and sewer back up - answer✔✔a. Home business and oil tank. In addition to the
introductory client profiles form, the intermediary may use other specific application forms for
wood heat, rental supplements, oil tanks, overland water, or business in the home.
Select one:
a. The agent/broker will have their license suspended.
b. The agent/broker may be found liable for losses that may occur.
c. The agent/broker will be required to return any commission earned from the sale.
d. The agent/broker may have to pay a fine to the insurer. - answer✔✔b. The agent/broker may
be found liable for losses that may occur. Agents/brokers acting on behalf of insurance
companies and their clients have a duty to advise insurers of all the information material to the
risk.
Which national association is a main resource for and has a key initiative to create industry-
standard application forms?
Select one:
a. Financial Services Regulatory Association (FSRA)
b. Insurance Bureau of Canada (IBC)
c. Financial Services Regulatory Authority (FSRA)
d. Centre for Study of Insurance Operations/Centre D'Étude de la Pratique D'Assurance
(CSIO/CEPA) - answer✔✔d. Centre for Study of Insurance Operations/Centre D'Étude de la
Pratique D'Assurance (CSIO/CEPA). A number of different application forms are in use. The
CSIO is a national association of property and casualty insurers and independent insurance
brokers working together to achieve electronic business solutions for the insurance industry. One
of its projects is the creation of industry-standard application forms.
Who is the person or firm that requests insurance?
Select one:
a. The insurer
b. The applicant
c. The underwriter
Select one:
a. Financial hardship, poor property maintenance, and temptation for fraud
b. Increased severity of loss, slow service, and a temptation for fraud
c. Financial success, slow service, and a temptation for fraud
d. Increased frequency of loss, poor property maintenance, and slow service - answer✔✔a.
Financial hardship, poor property maintenance, and temptation for fraud. Most insurers have
criteria that indicate an underwriter must investigate an application with multiple loss payees, as
it could mean financial challenges, improper property maintenance, and a temptation to stage a
loss.
Why do insurers ask for prior insurance on an application?
Select one:
a. Confirm claim history and check for any lienholders
b. Confirm loss history and identify the loss payees
c. Identify previous declinations or cancellations and the amount of coverage
d. Confirm loss history and identify any gaps in coverage - answer✔✔d. Confirm loss history
and identify any gaps in coverage. Applicants are asked for prior insurers names, policy numbers
and policy expiry dates; and this information is used to check loss history, identify any gaps, and
potential moral hazard.
In ratemaking, what does the validity of statistics on past losses depend on?
Select one:
a. A larger sample group and longer time observed
b. A smaller sample group and shorter time observed
c. A larger sample group and shorter time observed
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