Registered Insurance Brokers of Ontario (RIBO) Practice Exam

What is the nature of special damages in insurance?

1. They are for items that must be substantiated

2. They are for future earnings and potential claims

3. They do not require substantiation

4. They are only for property damage

The correct answer is: They are for items that must be substantiated

Special damages in insurance refer specifically to quantifiable financial losses that can be substantiated with concrete evidence, such as receipts and invoices. They are intended to compensate the insured for specific financial losses incurred due to an incident, such as medical expenses, repair costs, or lost wages. Therefore, saying that special damages do not require substantiation is misleading; in fact, they require precise documentation to verify the claimed amounts. The correct answer involves the misunderstanding about the nature of special damages. It is essential to recognize that these damages must indeed be supported by tangible evidence and documentation. The other options describe aspects of damages that generally relate to different categories, such as general damages, which cover non-monetary losses, or future earnings, which fall outside the scope of what special damages address. By understanding that special damages need substantiation through documentation, one can better grasp how they are applied within insurance claims.