Registered Insurance Brokers Of Ontario (RIBO) Practice Exam

What is the insurable value of contents if they are insured for $45,000 but valued at $100,000?

$45,000 $100,000 $2,500 $8,000

Correct Answer:

$45,000

Explanation:

The insurable value of contents is determined by the amount for which they are insured, rather than their market value or replacement cost. In this case, the contents are insured for $45,000, which represents the maximum amount that the insurer would pay in the event of a loss. Even though the contents have a higher value of $100,000, insurance policies typically limit the payout to the insured amount. This means that if a claim was made, the policy would only cover up to $45,000, regardless of the actual value of the contents. Therefore, the correct determination of the insurable value is based on the coverage amount specified by the insured in the policy.

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