Registered Insurance Brokers of Ontario (RIBO) Practice Exam

What is a subscription policy typically used to insure?

1. Small personal items

2. Large risks

3. Everyday consumer goods

4. Consumer electronics

The correct answer is: Large risks

A subscription policy is typically utilized to insure large risks. This approach allows multiple insurers to share the risk associated with significant or complex insurance needs, such as large commercial properties, major construction projects, or large corporate liability exposures. By distributing the risk among several insurers, each company can limit its exposure while still participating in the premium income associated with the policy. This is particularly relevant for large risks, where one insurer might not be willing or able to cover the entire amount due to potential exposure. In such cases, a subscription policy offers a collaborative solution in which different insurers can combine their resources and expertise to adequately cover the risk. In contrast, small personal items, everyday consumer goods, and consumer electronics typically do not require this type of coverage due to their lower individual value and the ability of standard insurance products to handle these risks effectively without the need for sharing among multiple insurers.