General and Commercial Insurance Examination Review

Flashcards reviewing Ontario insurance concepts, regulations, O.A.P. 1 rules, CGL coverage, and property/habitational forms.

Which class of insurance is designed to indemnify a business for loss of income resulting from fire damage to a building, stock, and equipment?

Business Interruption insurance covers the loss of income a business suffers while operations are interrupted or shut down during property restoration after a covered loss.

What action must an insurer take if a third-party claim occurs after a Broker binds liability coverage, but before the applicant pays the premium?

The insurer must respond to the claim in accordance with the coverage bound by the Broker, because coverage is in force once bound regardless of whether the premium has been paid.

What type of policy specifically covers losses arising from data breaches, hacking, and ransomware?

Cyber insurance policy.

What should a Broker do under professional competence rules when asked to quote a complex commercial risk outside their area of expertise?

The Broker should refer the client's risk to a qualified specialist at the company while remaining involved to maintain the client relationship and gain experience.

What is the maximum outboard motor horsepower permitted for watercraft coverage under the Liability Section of a standard Homeowners policy?

Outboard motors of $25\,h.p.$ or less are covered under the standard Homeowners liability section.

According to the RIBO Code of Conduct, what must Brokers do regarding conflicts of interest?

Brokers must disclose conflicts of interest to all relevant parties.

How does a Co-insurance Clause affect the settlement of a partial property loss if the insured is underinsured?

It decreases the amount paid by the insurer because the insurer pays only a proportionate share of any partial loss.

How does PIPEDA define a 'commercial activity'?

PIPEDA defines commercial activity broadly as any particular transaction, act, or conduct, or any regular course of conduct that is of a commercial character.

Why is offering a gift card on social media for purchasing an insurance policy prohibited under RIBO regulations?

RIBO regulations prohibit offering inducements that are conditional on the purchase of an insurance policy, regardless of the dollar value.

Which specific policy or bond protects an employer against loss caused by the dishonesty of an employee?

A 3-D (Dishonesty, Disappearance, and Destruction) bond.

Under the Replacement Cost clause of a Comprehensive Condominium Unit Owners policy, what occurs if the insured chooses not to repair or replace the property?

The insurer will pay only Actual Cash Value (ACV) if the insured decides not to repair or replace the damaged property.

Does the Tenants Comprehensive policy liability section cover unintentional damage to rented principal residence premises?

Yes, liability coverage includes Legal Liability for unintentional damage caused by fire, explosion, water, and smoke to principal residence premises.

What type of liability policy covers a slip-and-fall injury sustained by a customer on a restaurant's premises?

Commercial General Liability (CGL) insurance.

What action should an unregistered mailroom clerk take if a client calls asking to confirm their automobile collision coverage?

The clerk must inform the caller that no registered Broker is currently available and arrange for a registered insurance Broker to call them back.

In a landlord-tenant relationship, who is defined as the 'lessor'?

The lessor is the property owner who rents or leases the building to a tenant.

Is earthquake damage automatically included in a standard property insurance policy?

No, earthquake damage is not automatically included, but it may be covered under a property policy by endorsement for an additional premium.

Which commercial liability policy is governed by common law and policy wording rather than mandatory Statutory Conditions under the Ontario Insurance Act?

Commercial General Liability (CGL) policies do not contain Statutory Conditions.

If a $100{,}000$ building is insured for $60{,}000$ with a $90\%$ co-insurance clause, how much will the insurer pay for a $93{,}000$ fire loss?

The insurer will pay $60{,}000$ (the full policy limit). The required insurance is $100{,}000 \times 90\% = 90{,}000$. The co-insurance calculation is $\frac{60{,}000}{90{,}000} \times 93{,}000 = 62{,}000$, which is capped at the policy limit of $60{,}000$.

When does policy cancellation take effect when an insured requests to cancel a property policy in Ontario?

Cancellation takes effect on the date the policy or Lost Policy Voucher is signed off and returned to the insurer by the insured.

What modification is required on a Homeowners Policy if the homeowners decide to rent their finished basement to a tenant?

The policy must be endorsed to declare that the dwelling is no longer a single-family, owner-occupied dwelling.

What is the key purpose of Contingency Coverage in a Condominium Unit Owners Comprehensive Policy?

It provides additional coverage for damage to the owned unit if the Condominium Corporation's insurance is inadequate or ineffective.

What automatic coverage feature does a Personal Articles Floater provide for newly acquired items?

It provides limited automatic coverage up to $30\text{ days}$ on newly acquired articles of the same type as those already scheduled.

Who is required to register as an insurance Broker with RIBO under the Registered Insurance Brokers Act?

Any person who deals directly with the public to negotiate contracts of insurance on behalf of multiple insurers.

An Ontario driver with DCPD and OPCF 44R (no Collision) is involved in an accident in Georgia with a Georgia driver who is $100\%$ at fault and carries $\$10{,}000$ Property Damage limit. How is the $20{,}000$ vehicle damage paid?

The claim pays $\$10{,}000$ under the Georgia policy and nothing under OPCF 44R or DCPD. DCPD applies only in Ontario, and OPCF 44R covers bodily injury only.

Under O.A.P. 1 Section 4, when is a laid-off worker eligible for Income Replacement Benefits?

When the laid-off worker has a written contract made before the accident to start a new job within $1\text{ year}$.

What is the definition of a 'deductible' in an insurance contract?

A specified amount to be subtracted from the amount of an insured loss and assumed by the insured.

Are Ontario insurance Brokers permitted to pay referral fees to auto dealership salesmen?

No. Under RIBO regulations (Ontario Regulation 991, Section 15), Brokers are prohibited from paying finder's or referral fees to persons not licensed or registered as insurance intermediaries.

Under RIBO's Mandatory Disclosures Guidance (RIBO-002), what is the minimum ownership threshold for disclosing a broker's relationship with an insurer?

There is no minimum threshold; any ownership, financial, or other relationship between the broker and an insurer must be disclosed to the client regardless of size.

What notice period must an insurer give when mid-term cancelling a policy by written notice personally delivered to the insured?

The insurer can cancel in $5\text{ days}$ by written notice of termination personally delivered, with return of pro-rata unearned premium.

What activity limitations apply to an insurance Broker holding a RIBO Level 1 License?

A Level 1 Broker may engage in the sale of insurance anywhere in Ontario provided the transaction is conducted under the supervision of the Principal Broker on whose behalf they act.

Under Freezer Foods Coverage, what specific perils are covered for food spoilage?

Spoilage caused only by mechanical breakdown of the freezer unit or accidental outside power interruption.

An insured's vehicle is damaged by an uninsured car driven by their brother who lives in the household and is $100\%$ at fault for $\$1{,}000$ in damages. How much does the insured's policy pay under Uninsured Automobile coverage without Collision?

The policy pays $\$500$ due to the household exclusion rules applying a $50\%$ limit for property damage involving an uninsured vehicle owned by a household member.

What is the role of the Facility Association in Ontario automobile insurance?

It is an unincorporated association of all auto insurers in Ontario that provides coverage for high-risk drivers who cannot obtain insurance in the voluntary market.

Under Ontario Regulation 383/24 effective July 1, 2026, which Accident Benefits remain mandatory in every Ontario auto policy?

Only Medical and Rehabilitation Benefits and Attendant Care Benefits remain mandatory. Income Replacement, Death/Funeral, Caregiver, Non-Earner, Housekeeping, and Dependent Care benefits become optional.

What mechanism is established under the Ontario Insurance Act to resolve disputes between an insured and an insurer regarding vehicle loss value?

The Statutory Appraisal process under the Insurance Act.

What is the Medical and Rehabilitation Benefit limit under the O.A.P. 1 for a catastrophically injured person?

Up to $\$1{,}000{,}000$ (compared to $\$65{,}000$ for non-catastrophic injuries).

Under Ontario Direct Compensation-Property Damage (DCPD), how much of their property damage does an insured collect from their own insurer if they are $25\%$ at fault?

The insurer pays $75\%$ of the property damage, which corresponds to the percentage of fault attributed to the other driver.

Does an automobile policy pay for personal items stolen from inside a vehicle after a window is smashed?

No, personal property inside a vehicle is excluded under an automobile policy and must be claimed under a Homeowners or Tenants policy.

What is the standard coverage limit for appurtenant private structures (e.g., detached garages or sheds) under a Homeowners policy?

Typically $10\%$ of the dwelling coverage amount.

What is the standard sublimit for Money and Numismatic Property under a standard Ontario Homeowners policy?

$$\$200$$

What is the default Death Benefit payable to a surviving spouse under O.A.P. 1, and what is its status after July 1, 2026?

The standard amount is $\$25{,}000$; effective July 1, 2026 under O. Reg. 383/24, it becomes an optional benefit that policyholders must actively purchase.

Under travel health insurance, what is the effect of a medication dosage change within a policy's required stability window (e.g., 180 days)?

A medication dosage change makes the pre-existing condition unstable under the stability clause, resulting in claim denial for related medical events.

What does the Products-Completed Operations Hazard cover under a Commercial General Liability (CGL) policy?

It covers third-party bodily injury and property damage arising from the insured's products or completed work after they have left the insured's possession or premises.

What is an Owner-Controlled Insurance Program (OCIP or Wrap-Up insurance)?

A single insurance program purchased by a project owner covering the owner, general contractor, and all subcontractors on a major construction project.

A commercial property valued at $\$1{,}000{,}000$ replacement cost is insured for $\$800{,}000$ with a $90\%$ co-insurance clause. How much does the insurer pay for a $\$200{,}000$ loss?

The insurer pays $\$177{,}778$. Required coverage is $1{,}000{,}000 \times 90\% = 900{,}000$. Co-insurance calculation: $\frac{800{,}000}{900{,}000} \times 200{,}000 = 177{,}778$.