Question 1

Kerin obtains a property insurance policy for her art collection from Lawton Insurance Company. Lawton can cancel the policy

Accepted Answer

A)  at any time. 
B)  only at the end of a period for which a premium has been paid. 
C)  only if Lawton no longer has an insurable interest in the property. 
D)  only on advance written notice. 
A)  at any time. 
B)  only at the end of a period for which a premium has been paid. 
C)  only if Lawton no longer has an insurable interest in the property. 
D)  only on advance written notice. A

Question 2

EZ Rentals Company wants to insure the equipment that it rents to the public. To obtain insurance, EZ must have an insurable inter?est in the property

Accepted Answer

A)  at any time. 
B)  at the time a loss occurs. 
C)  at the time a policy is obtained. 
D)  continuously from the time a policy is obtained to the time a loss occurs. 
A)  at any time. 
B)  at the time a loss occurs. 
C)  at the time a policy is obtained. 
D)  continuously from the time a policy is obtained to the time a loss occurs. B

Question 3

Edy obtains a homeowners' insurance policy with First Source Insurance Company. First State can cancel the policy

Accepted Answer

A)  if Edy appears as a witness in a case against First Source. 
B)  if Edy fails to pay the premiums. 
C)  if Edy makes changes that add to the home's value. 
D)  under no circumstances. 
A)  if Edy appears as a witness in a case against First Source. 
B)  if Edy fails to pay the premiums. 
C)  if Edy makes changes that add to the home's value. 
D)  under no circumstances. B

Question 4

Misrepresentation on an insurance application is a ground for canceling the policy.

Accepted Answer

A) True 
 B)False

Question 5

Investors Commercial Property Corporation obtains an insur?ance policy that protects against any losses incurred as a result of existing claims against or liens on certain property at the time of its purchase. This is

Accepted Answer

A)  casualty insurance. 
B)  fire insurance. 
C)  life insurance. 
D)  title insurance. 
A)  casualty insurance. 
B)  fire insurance. 
C)  life insurance. 
D)  title insurance.

Question 6

Dhani is the beneficiary of a life insurance policy on Elmo's life obtained from Famed Insurance Company. The insured under this policy is

Accepted Answer

A)  Dhani. 
B)  Elmo. 
C)  Famed. 
D)  the agent or broker through whom the policy was obtained. 
A)  Dhani. 
B)  Elmo. 
C)  Famed. 
D)  the agent or broker through whom the policy was obtained.

Question 7

Holly obtains an insurance policy from Inviolable Insurance Corporation (IIC). IIC may cancel, or refuse to renew, the policy because of

Accepted Answer

A)  Holly's appearance as a witness against IIC. 
B)  Holly's national origin. 
C)  Holly's race. 
D)  none of the choices. 
A)  Holly's appearance as a witness against IIC. 
B)  Holly's national origin. 
C)  Holly's race. 
D)  none of the choices.

Question 8

Normally, a fire insurance policy provides for an appraisal if the parties do not agree on the amount of a covered loss.

Accepted Answer

A) True 
 B)False

Question 9

An insured's lack of an insurable interest is an absolute defense against payment.

Accepted Answer

A) True 
 B)False

Question 10

Dag obtains from Excel Insurance Company a policy that provides that Dag has thirty days after a premium's due date to pay it before the policy will be canceled. This is

Accepted Answer

A)  an antilapse clause. 
B)  an arbitration clause. 
C)  an appraisal clause. 
D)  an incontestability clause. 
A)  an antilapse clause. 
B)  an arbitration clause. 
C)  an appraisal clause. 
D)  an incontestability clause.

Question 11

Ginny obtains a health insurance policy for her family from Hope Insurance Company. The policy includes an incontestability clause. Under such a clause, after a policy has been in force for two or three years

Accepted Answer

A)  Ginny cannot contest Hope's insurable interest. 
B)  Ginny cannot contest Hope's refusal to pay a claim under the policy. 
C)  Hope cannot contest Ginny's eligibility for continued coverage. 
D)  Hope cannot contest Ginny's statements in the application. 
A)  Ginny cannot contest Hope's insurable interest. 
B)  Ginny cannot contest Hope's refusal to pay a claim under the policy. 
C)  Hope cannot contest Ginny's eligibility for continued coverage. 
D)  Hope cannot contest Ginny's statements in the application.

Question 12

An insurance policy cannot be canceled only for nonpayment of a premium.

Accepted Answer

A) True 
 B)False

Question 13

Insurance coverage is never effective until a formal written policy is issued.

Accepted Answer

A) True 
 B)False

Question 14

Insurance companies are prohibited from prac?ticing risk management.

Accepted Answer

A) True 
 B)False

Question 15

Chocolate Gourmet Company obtains an insurance policy to pro?tect against losses incurred by the firm as a result of being held liable for per?sonal injuries or property damage sustained by others. This is

Accepted Answer

A)  casualty insurance. 
B)  fire insurance. 
C)  life insurance. 
D)  title insurance. 
A)  casualty insurance. 
B)  fire insurance. 
C)  life insurance. 
D)  title insurance.

Question 16

An applicant for insurance has a duty to disclose only what the insurer asks for.

Accepted Answer

A) True 
 B)False

Question 17

An insurer has a duty to avoid the payment of claims.

Accepted Answer

A) True 
 B)False

Question 18

Computer Electronics Corporation (CEC) discovers a defect in its newly developed, recently marketed hard drives. CEC decides to recall the prod?uct and replace it with another. CEC's in?surance policy with Delta Business Insurance Company will cover any harm to customers that oc?curs before the drives are returned. Is it likely that the policy will also pay for the recall and replacement? If so, what type of policy does CEC have?

Accepted Answer

It is likely that CEC's policy will pay

Question 19

Cathy obtains from Depend Insurance Company a policy that pro?vides that if a dispute arises between the parties concerning the settle?ment of a claim, the dispute must be submitted to an impartial third party, not a court, for resolution. This is

Accepted Answer

A)  an antilapse clause. 
B)  an arbitration clause. 
C)  an appraisal clause. 
D)  an incontestability clause. 
A)  an antilapse clause. 
B)  an arbitration clause. 
C)  an appraisal clause. 
D)  an incontestability clause.

Question 20

A homeowners' policy covers an owner's home but not its contents.

Accepted Answer

A) True 
 B)False

Exam 49: Insurance

Kerin obtains a property insurance policy for her art collection from Lawton Insurance Company. Lawton can cancel the policy

EZ Rentals Company wants to insure the equipment that it rents to the public. To obtain insurance, EZ must have an insurable inter?est in the property

Edy obtains a homeowners' insurance policy with First Source Insurance Company. First State can cancel the policy

Misrepresentation on an insurance application is a ground for canceling the policy.

Investors Commercial Property Corporation obtains an insur?ance policy that protects against any losses incurred as a result of existing claims against or liens on certain property at the time of its purchase. This is

Dhani is the beneficiary of a life insurance policy on Elmo's life obtained from Famed Insurance Company. The insured under this policy is

Holly obtains an insurance policy from Inviolable Insurance Corporation (IIC). IIC may cancel, or refuse to renew, the policy because of

Normally, a fire insurance policy provides for an appraisal if the parties do not agree on the amount of a covered loss.

An insured's lack of an insurable interest is an absolute defense against payment.

Dag obtains from Excel Insurance Company a policy that provides that Dag has thirty days after a premium's due date to pay it before the policy will be canceled. This is

Ginny obtains a health insurance policy for her family from Hope Insurance Company. The policy includes an incontestability clause. Under such a clause, after a policy has been in force for two or three years

An insurance policy cannot be canceled only for nonpayment of a premium.

Insurance coverage is never effective until a formal written policy is issued.

Insurance companies are prohibited from prac?ticing risk management.

Chocolate Gourmet Company obtains an insurance policy to pro?tect against losses incurred by the firm as a result of being held liable for per?sonal injuries or property damage sustained by others. This is

An applicant for insurance has a duty to disclose only what the insurer asks for.

An insurer has a duty to avoid the payment of claims.

Cathy obtains from Depend Insurance Company a policy that pro?vides that if a dispute arises between the parties concerning the settle?ment of a claim, the dispute must be submitted to an impartial third party, not a court, for resolution. This is

A homeowners' policy covers an owner's home but not its contents.

Introduction to Law and Legal Reasoning

Courts and Alternative Dispute Resolution

Court Procedures

Constitutional Authority to Regulate Business

The Statute of Fraudswriting Requirements

Ethics and Business Decision Making

Intentional Torts

Negligence and Strict Liability

Intellectual Property and Internet Law

Criminal Law and Cyber Crimes

Nature and Terminology

Agreement

Consideration

Capacity and Legality

Mistakes, Fraud, and Voluntary Consent

Third Party Rights

Performance and Discharge

Breach of Contract and Remedies

E-Contracts and E-Signatures

The Formation of Sales and Lease Contracts

Title, Risk, and Insurable Interest

Performance Breach of Sales Lease Contracts

Warranties and Product Liability

The Function Creation of Negotiable Instruments

Transferability and Holder in Due Course

Liability, Defenses, and Discharge

Checks, the Banking System, and E-Money

Creditors Rights and Remedies

Secured Transactions

Bankruptcy Law

Agency Formation and Duties

Liability to Third Parties and Termination

Employment and Labor Law

Employment Discrimination

Sole Proprietorships and Franchises

Partnerships and Limited Liability Partnerships

Limited Liability Companies Special Business Forms

Corporationsformation and Financing

Corporationsdirectors, Officers, Shareholders

Corporationsmerger, Consolidation, Termination

Corporationssecurities Law Corporate Governance

Law for Small Businesses

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

Personal Property and Bailments

Real Property and Landlord-Tenant Relationships

Wills and Trusts

Professional Liaility and Accountability

International Law in a Global Economy

Legal and Ethical Issues in Business

Legal Issues

Contracts and Business Law

Contracts and Liability

Banking and Payment Systems

Loan Security and Repossession in Credit Transactions

Employment Law and Ethics

Legal Issues in Corporate Governance and Business Operations

Legal and Ethical Issues in Environmental Protection and Consumer Rights