Exam 18: Insurance and Guarantee

Kathleen, feeling quite depressed, decides that a few rounds of Russian Roulette would cheer her up. Unfortunately she loses. Two years earlier, a life insurance policy was issued to her mother, Joan. Will the insurance company pay Joan under this policy? Discuss the legal basis for the insurance company's argument that they are not liable.

Julie entered an art gallery with a book- bag over her shoulder. She was asked by a security guard to leave the book- bag at the front desk but she refused to do so. As she looked at a display of pottery, she carelessly swung the book- bag around and knocked over a pottery display case destroying its contents valued at $4,000. Julie then asked the security guard if the gallery had insurance on the pottery and she was told that it did. Will Julie need to pay the damages?

James was the guarantor for a loan Edward had at the bank. Edward had also pledged a coin collection as security for the loan. The loan came in default, so James made the remaining payments. Who gets the coin collection?

Which of the following is NOT a defence available to a guarantor when an action is brought by the creditor to have the guarantor held liable for the debt of the principal debtor?

A tenant carelessly drops a candle, and the resulting fire destroys the landlord's premises. The landlord's loss is fully covered under the landlord's fire insurance policy, and the insurance company compensates the landlord for the loss. In these circumstances:

How do the functions of an insurance agent and an insurance broker differ?

A building owned by X Company is insured for $100,000 but the insurance contract contains an 80% co- insurance clause. The building is damaged by fire to the amount of $20,000. The depreciated replacement value of the insured property is $250,000. The insurance company will then pay

Contracts of insurance contain statutory terms which require, for example, that the insured give prompt notice to the insurer of any loss suffered by the insured. If the insured fails to meet such terms, what effect does it have on the contract of insurance?

LawnTrim Inc. is in need of working capital. It sold at a discount its account receivables to a factor -without recourse. LawnTrim is using a form of

Term insurance is insurance that covers a person for the term of his or her life.

Rather than purchasing separate policies, the modern tendency is to issue comprehensive insurance.

Leah, while driving her vehicle on a narrow road in the mountains, came to a bridge which did not appear very stable. After considering her alternatives for a moment she decides to drive over the bridge. The bridge collapsed and her vehicle was totally destroyed. Is the insurance company liable on her auto insurance policy? What legal arguments could they raise if they wish to deny coverage?

In June, Ken developed glaucoma, a condition of the eyes where if untreated, results in blindness. By August, Ken was legally blind yet he continued to drive. He neither informed the Dept. of Motor Vehicles nor his insurance company of the changed condition of his eyes. On September 12th he got into a serious automobile accident where he was driving and was at fault. Will the insurance company need to pay this claim?

Simon purchased for cash a used boat and trailer from Haggard Maritime Inc. at 4:56 PM. He phoned his insurance agent and asked if he could get insurance immediately so he could bring the boat and trailer home. The agent said, "You are covered as of 12:01 noon today." Simon got into a traffic accident at 6:32 PM the same day, where the boat and trailer were severely damaged. Will the insurance company pay this claim?

In a guarantee, the guarantor is primarily liable for the debt owed by the debtor. In an indemnity, the guarantor is secondarily liable for the debt owed by the debtor.

A contract of insurance is a method of purchasing protection against a possible loss. The insurance company will and the risk of loss.

A guarantee is

Subrogation in insurance law is the

Which of the following is TRUE regarding the significance of a guarantee?

The right of subrogation does not apply in all cases, but it is presumed to apply if it is not expressly excluded.