Registered Insurance Brokers of Ontario (RIBO) Practice Exam

What does the standard automobile policy generally require for insurance under OAP 1 Owner's Form regarding loss or damage coverages?

1. It is subject to a deductible

2. It includes full coverage for all damages

3. It has no deductible amount

4. It excludes certain types of damages

The correct answer is: It is subject to a deductible

The correct response emphasizes that the standard automobile policy, specifically under the OAP 1 Owner's Form, typically requires a deductible to be applied to loss or damage coverages. This means that in the event of a claim for loss or damage, the insured party will be responsible for paying a specified amount out of pocket before the insurance company covers any remaining costs. This deductible structure is a common feature in many insurance policies, as it helps to mitigate the frequency of small claims and encourages policyholders to take care when handling their vehicles. The other options do not accurately reflect the standard requirements outlined in the policy. For instance, stating that it includes full coverage for all damages misrepresents the nature of the policy, as there are usually limits and exclusions. Similarly, claiming that it has no deductible amount or that it excludes certain types of damages does not align with the general structure and requirements established in standard automobile policies under this form. Therefore, recognizing the need for a deductible is key to understanding how loss or damage is addressed in automobile insurance policies.