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 do not require substantiation

The nature of special damages in insurance primarily involves compensation for specific, quantifiable losses that stem from an injury or incident. These damages require substantiation, meaning they must be supported by evidence like receipts, invoices, or medical bills to validate the claim. Special damages specifically cover losses such as medical expenses, repair costs, and lost earnings that can be calculated accurately and backed up by documentation. Therefore, they cannot be classified as not requiring substantiation. Focusing on the function of special damages, they are aimed at making the injured party whole by covering financial losses incurred as a direct result of the incident. This characteristic distinguishes them from other types of damages, such as general damages, which address non-economic losses like pain and suffering and do not require the same level of detail for substantiation.