RIBO Level 1 key terms

A legal duty on both applicant and insurer to deal honestly and disclose material facts, so neither side gains from information the other does not have.

Any information that would influence a reasonable insurer's decision to accept a risk, set a premium, or attach conditions. Examples include prior claims, fire hazards, and refused coverage.

The principle that a property or liability claim payment restores the insured to roughly the financial position held before the loss, without creating profit from the loss.

A financial stake in the person or property insured such that a loss would cause genuine economic harm. It must exist when the contract starts and, for property, at the time of loss.

The insurer's right, after paying a claim, to pursue the party who caused the loss and recover what it paid, using the insured's legal position against that party.

A settlement basis equal to replacement cost minus depreciation, reflecting what the damaged item was worth just before the loss. Policies may define it differently, so wording controls.

A settlement basis that pays what it costs to repair or rebuild with new materials of like kind and quality, usually without deducting depreciation, subject to policy limits and conditions.

A property policy condition requiring the insured to carry coverage at least equal to a stated percentage of the property's value, or claim payments are reduced proportionally.

The portion of each covered loss the insured absorbs before the insurer pays. Choosing a higher deductible usually lowers premium but increases the insured's out-of-pocket exposure.

The amount the insured pays the insurer for coverage over a policy term. It reflects the risk, limits, deductibles, and the insurer's expense and profit needs.

A policy provision that removes specified perils, property, persons, or circumstances from coverage. Exclusions narrow the broad insuring agreement and must be read with the coverage grant.

The core policy clause that states what the insurer promises to cover and the broad circumstances triggering that promise, before conditions and exclusions are applied.

Policy terms that set out the obligations of insured and insurer, such as reporting claims promptly, protecting property after loss, and cooperating in the investigation.

A written amendment added to a policy that changes, adds, or removes coverage. It forms part of the contract and prevails over conflicting original wording.

An attachment to a policy that adds or varies benefits, often used in life and health contracts. In property and auto practice the equivalent term is usually endorsement.

A formal sworn statement from the insured detailing the amount claimed, the circumstances of the loss, and supporting information the insurer requires to evaluate the claim.

A person who investigates a claim, assesses coverage and damages, and negotiates settlement on behalf of the insurer or, in some cases, the insured.

The chance of loss, and also the person or property exposed to that chance. Insurers assess, select, and price risk, and may reduce it through conditions and deductibles.

The actual cause of a loss, such as fire, windstorm, theft, or collision. Named-peril policies list covered perils; all-risks wording covers everything not excluded.

A condition that increases the chance or severity of a loss, such as oily rags in a workshop or an unrepaired roof. Hazards are distinct from the peril that causes damage.

Insurance bought by an insurer to transfer part of its risk to another insurer, protecting its capital and enabling it to write larger or more concentrated exposures.

The Financial Services Regulatory Authority of Ontario, the regulator that licenses insurance agents and brokers, supervises market conduct, and administers Ontario insurance legislation.

The Registered Insurance Brokers of Ontario, the self-regulatory body that licenses and disciplines insurance brokers in Ontario and administers entry, continuing education, and conduct standards.

The authorization granted to an individual or firm to act as an insurance agent or broker in Ontario. It is subject to renewal, conditions, and continuing education requirements.

Professional liability coverage protecting a broker or firm against claims that a negligent act, error, or omission in providing insurance services caused a client financial loss.

A legal obligation to act in the client's best interest, placing the client's interests ahead of the broker's own, and to handle client money and information with care.

The broker's obligation to give clients enough clear information about coverage, limits, exclusions, and costs for them to make informed decisions, and to reveal relevant conflicts.

Situations where a broker's personal, financial, or other interest could improperly influence advice or placement. They must be avoided, or disclosed and managed openly.

The broker formally designated by a client to act on its behalf with insurers. Insurers generally act on instructions only from the named broker of record.

The standard auto insurance contract prescribed for Ontario, containing mandatory third-party liability, accident benefits, uninsured automobile, and direct compensation for property damage coverages.

Auto coverage that pays amounts the insured becomes legally liable to pay others for bodily injury or property damage caused by the insured vehicle, up to the policy limit.

No-fault auto benefits that pay medical, rehabilitation, attendant care, and income replacement costs for insured persons injured in a collision, regardless of fault.

The Statutory Accident Benefits Schedule, the regulation setting out Ontario's accident benefit entitlements, definitions of impairment, limits, and dispute procedures.

Direct Compensation for Property Damage, an Ontario auto coverage under which the insured's own insurer pays for damage to the insured vehicle caused by another identified driver, without fault disputes.

Mandatory Ontario auto coverage responding when the insured is injured or their vehicle damaged by an identified at-fault driver who has no insurance or cannot be located.

A residual market pool that provides auto insurance to Ontario drivers who cannot obtain coverage in the voluntary market, funded by member insurers.

Property wording that covers direct physical loss or damage from any cause unless specifically excluded, shifting the burden of identifying an exclusion to the insurer.

Property wording that covers only the perils listed in the policy, such as fire, lightning, and windstorm. The insured must show the loss resulted from a listed peril.

Failure to exercise the care a reasonable person would in similar circumstances, usually established by showing a duty of care, a breach, causation, and resulting damage.

The maximum amount an insurer will pay for covered liability claims during a policy period, often expressed per occurrence and sometimes with an aggregate cap.

A liability policy providing limits above underlying auto, home, or commercial policies, and sometimes filling gaps in coverage those policies leave.