Registered Insurance Brokers of Ontario (RIBO) Exam 2026 – 400 Free Practice Questions to Pass the Exam

The correct answer is that both parties must have an insurable interest. This is a fundamental principle in insurance contracts, ensuring that the parties involved have a legitimate stake in the subject matter of the insurance. Insurable interest protects against moral hazard, where individuals might be incentivized to cause loss or damage if they stand to gain from the insurance payout.

In insurance, the insured must have a genuine financial interest in the insured property or person at the time the contract is formed. For instance, when insuring a property, the owner must benefit from its preservation and thus has a vested interest in it not being harmed.

The other concepts presented are not requirements for an insurance contract. While agents play a role in facilitating the transaction, the presence of a single agent does not define the validity of the contract itself. Additionally, a broker's independence can vary based on structure and agreements in place but isn't mandated as a requirement for the existence of an insurance contract. Similarly, while the insured is often the policyholder, they do not necessarily have to be the same person; for example, one might purchase life insurance on another individual, where the policyholder and the insured are distinct. Thus, the insurable interest requirement is crucial and foundational in establishing a valid insurance