Registered Insurance Brokers of Ontario (RIBO) Practice Exam

Which of the following is not included as a subject of statutory conditions in a property policy?

1. Fire hazards

2. Co-insurance penalties

3. Deductibles

4. Coverage limits

The correct answer is: Co-insurance penalties

In the context of property insurance policies, statutory conditions are specific provisions mandated by law that detail the obligations of both the insured and the insurer. Among these, certain conditions are explicitly defined as necessary parts of the policy, while others may be included in the policy but not as statutory conditions. In this case, co-insurance penalties are typically not classified as statutory conditions within most property policy frameworks. Instead, co-insurance is a policy requirement generally outlined in the policy terms, where the insured is penalized for underinsuring the property. The conditions surrounding co-insurance can affect the claim payment but are not dictated by statutory law. On the other hand, fire hazards, deductibles, and coverage limits are often included as statutory conditions. Fire hazards refer to safety and risk management requirements related to protecting property from fire loss. Deductibles establish the amount that the insured must pay out-of-pocket before the insurer covers a claim, while coverage limits dictate the maximum amount an insurer will pay for a loss. These conditions are directly tied to statutory requirements, ensuring both parties understand their risks and obligations as outlined by law. Thus, co-insurance penalties stand out as not being a statutory condition, focusing on the insured's responsibility regarding the amount of coverage they should