Question 1

A "binder" on an insurance policy is a clause added to another contract to limit the base contract.

Accepted Answer

A) True 
 B)False  False

Question 2

The danger of a loss of, or injury to, property, life, or anything else, is called a .

Accepted Answer

A) rider 
B) face 
C) peril 
D) hazard 
A) rider 
B) face 
C) peril 
D) hazard C

Question 3

The maximum amount that the insurer agrees to pay in case of a loss is known as the .

Accepted Answer

A) face 
B) insurable risk 
C) premium 
D) policy 
A) face 
B) insurable risk 
C) premium 
D) policy A

Question 4

A creditor has insurable interest in the life of the debtor beyond the extent of the debt.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following best defines concealment?

Accepted Answer

A) It is a willful failure to disclose any information pertinent to the insurance contract by the insured. 
B) It is an unintentional failure to disclose any information pertinent to the insurance contract by the insurer. 
C) It is an unintentional failure to disclose any information pertinent to the insurance contract by the underwriter. 
D) The mortgagee has an insurable interest towards half the loan amount It is a willful failure to disclose any information irrelevant to the insurance contract by the insurer. 
A) It is a willful failure to disclose any information pertinent to the insurance contract by the insured. 
B) It is an unintentional failure to disclose any information pertinent to the insurance contract by the insurer. 
C) It is an unintentional failure to disclose any information pertinent to the insurance contract by the underwriter. 
D) The mortgagee has an insurable interest towards half the loan amount It is a willful failure to disclose any information irrelevant to the insurance contract by the insurer.

Question 6

Which of the following best defines subrogation? It is the right of an insurer to assume the legal rights of the insured.

Accepted Answer

A) It is the right of an insurer to claim warranty in case of breach of contract. 
B) It is the right of an insurer to assume the legal rights of the insured. 
C) It is the right of an insured to conceal certain facts from the insurer. 
D) It is the right of an insurer to deny life insurance claims in the case of suicide. 
A) It is the right of an insurer to claim warranty in case of breach of contract. 
B) It is the right of an insurer to assume the legal rights of the insured. 
C) It is the right of an insured to conceal certain facts from the insurer. 
D) It is the right of an insurer to deny life insurance claims in the case of suicide.

Question 7

A minor may disaffirm an insurance contract, but may only be able to demand the unearned premium for the unexpired portion of the policy.

Accepted Answer

A) True 
 B)False

Question 8

Give some examples of an insurable interest and explain why they are insurable .

Accepted Answer

The insured has an insurable interest in

Question 9

Which of the following best defines insurance? ​

Accepted Answer

A) It is a contract whereby a party transfers his right to receive interest to a third-party such as an agent. 
B) It is a contract whereby a party transfers a risk of physical injury to the risk bearer for a fee. 
C) It is a contract whereby a party transfers his right to a claim for a particular fee. 
D) It is a contract whereby a party transfers a risk of financial loss to a risk bearer for a fee. 
A) It is a contract whereby a party transfers his right to receive interest to a third-party such as an agent. 
B) It is a contract whereby a party transfers a risk of physical injury to the risk bearer for a fee. 
C) It is a contract whereby a party transfers his right to a claim for a particular fee. 
D) It is a contract whereby a party transfers a risk of financial loss to a risk bearer for a fee.

Question 10

To contract for a policy of insurance, one must have a(n), or an interest in the nonoccurrence of the risk insured against.

Accepted Answer

A) policy 
B) beneficiary 
C) insurable interest 
D) rider 
A) policy 
B) beneficiary 
C) insurable interest 
D) rider

Question 11

An insurer is a party who purchases insurance to provide protection from a loss.

Accepted Answer

A) True 
 B)False

Question 12

A willful failure to disclose pertinent information by the insured is known as subrogation.

Accepted Answer

A) True 
 B)False

Question 13

Untrue statements or unfulfilled promises by the insured permit the insurer to declare the policy void.

Accepted Answer

A) True 
 B)False

Question 14

A stock insurance company is a corporation for which the original investment was made by stockholders.

Accepted Answer

A) True 
 B)False

Question 15

A tenant has an insurable interest in property to the extent of the loss that would be suffered by damage to the property.

Accepted Answer

A) True 
 B)False

Question 16

Either party to an insurance contract may claim the benefit of a violation of the contract by the other party.

Accepted Answer

A) True 
 B)False

Question 17

Insurance contracts must specify the particular risks being transferred from one party to another. ​

Accepted Answer

A) True 
 B)False

Question 18

James mortgaged his house and received a certain amount of money in return as a loan. However, he repaid half the loan in six months. Which of the following is likely to be true in this scenario, at the present moment?

Accepted Answer

A) The mortgagee has an insurable interest towards 25 percent of the loan amount. 
B) The mortgagee does not have an insurable interest in the loan amount. 
C) The mortgagee has an insurable interest towards the entire loan amount. 
D) The mortgagee has an insurable interest towards half the loan amount. 
A) The mortgagee has an insurable interest towards 25 percent of the loan amount. 
B) The mortgagee does not have an insurable interest in the loan amount. 
C) The mortgagee has an insurable interest towards the entire loan amount. 
D) The mortgagee has an insurable interest towards half the loan amount.

Question 19

A statement of the insured that relates to the risk is called a .

Accepted Answer

A) false representation 
B) warranty 
C) subrogation 
D) estoppel 
A) false representation 
B) warranty 
C) subrogation 
D) estoppel

Question 20

A bailee has an insurable interest in the property bailed to the extent of possible loss.

Accepted Answer

A) True 
 B)False

Exam 35: Principles of Insurance

A "binder" on an insurance policy is a clause added to another contract to limit the base contract.

The danger of a loss of, or injury to, property, life, or anything else, is called a .

The maximum amount that the insurer agrees to pay in case of a loss is known as the .

A creditor has insurable interest in the life of the debtor beyond the extent of the debt.

Which of the following best defines concealment?

Which of the following best defines subrogation? It is the right of an insurer to assume the legal rights of the insured.

A minor may disaffirm an insurance contract, but may only be able to demand the unearned premium for the unexpired portion of the policy.

Give some examples of an insurable interest and explain why they are insurable .

Which of the following best defines insurance? ​

To contract for a policy of insurance, one must have a(n), or an interest in the nonoccurrence of the risk insured against.

An insurer is a party who purchases insurance to provide protection from a loss.

A willful failure to disclose pertinent information by the insured is known as subrogation.

Untrue statements or unfulfilled promises by the insured permit the insurer to declare the policy void.

A stock insurance company is a corporation for which the original investment was made by stockholders.

A tenant has an insurable interest in property to the extent of the loss that would be suffered by damage to the property.

Either party to an insurance contract may claim the benefit of a violation of the contract by the other party.

Insurance contracts must specify the particular risks being transferred from one party to another. ​

James mortgaged his house and received a certain amount of money in return as a loan. However, he repaid half the loan in six months. Which of the following is likely to be true in this scenario, at the present moment?

A statement of the insured that relates to the risk is called a .

A bailee has an insurable interest in the property bailed to the extent of possible loss.

Introduction to Law

Courts and Court Procedures

Business Torts and Crimes

Government Regulation of Business

Nature and Classes of Contracts

Offer and Acceptance

Capacity to Contract

Consideration

Defective Agreements

Illegal Agreements

Written Contracts

Third Parties and Contracts

Termination of Contracts

Nature of Personal Property

Special Bailments

Sales of Personal Property

Formalities of a Sale

Transfer of Title and Risk in Sales Contracts

Warranties Product Liability and Consumer Protection

Nature of Negotiable Instruments

Essentials of Negotiability

Promissory Notes and Drafts

Negotiation and Discharge

Liabilities of Parties, Holders in Due Course and Defenses

Nature and Creation of an Agency

Operation and Termination of an Agency

Employer and Employee Relations

Employees Rights

Introduction to Business Organizations

Creation and Operation of a Partnership

Dissolution of a Partnership

Nature of a Corporation

Ownership of a Corporation

Management and Dissolution of a Corporation

Types of Insurance

Security Devices

Bankruptcy

Nature of Real Property

Transfer of Real Property

Real Estate Mortgages

Landlord and Tenant

Wills Inheritances and Trust

Filters

Which of the following best defines insurance?

Insurance contracts must specify the particular risks being transferred from one party to another.