Question 1

An insurance application is part of the insurance contract.

Accepted Answer

A) True 
 B)False  True

Question 2

Because insurance law follows contract law,bad faith tort actions against insurers are not allowed.

Accepted Answer

A) True 
 B)False  False

Question 3

Brassy obtains an insurance policy for her electric guitar collection from Crest Insurance Company.Brassy 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 Brassy no longer has an insurable interest in the collection. 
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 Brassy no longer has an insurable interest in the collection. 
D) only on advance written notice. A

Question 4

Bret obtains a fire insurance policy on his rental house with Continental Insurance Company.Like all insurance,this policy is an arrangement for

Accepted Answer

A) avoiding the assumption of responsibility. 
B) predicting a potential loss based on unknown factors. 
C) shifting the imposition of liability. 
D) transferring and allocating risk. 
A) avoiding the assumption of responsibility. 
B) predicting a potential loss based on unknown factors. 
C) shifting the imposition of liability. 
D) transferring and allocating risk.

Question 5

Under an antilapse clause,an insurance policy will lapse only if no pre?mium is paid on the date due.

Accepted Answer

A) True 
 B)False

Question 6

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 7

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 8

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

Accepted Answer

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

Question 9

Automobile liability insurance covers liability for bodily injury and property damage.

Accepted Answer

A) True 
 B)False

Question 10

The consideration paid to an insurer to obtain an insurance policy is the premium.

Accepted Answer

A) True 
 B)False

Question 11

Ace Investments,Inc. ,is the mortgagee for a warehouse owned by Best Storage,Inc.Ace obtains an insurance policy from Complete Insurance Corporation (CIC)to cover the warehouse.Best also obtains a policy from CIC to cover the warehouse.Later,Best sells the warehouse to Delta Company but keeps the policy.Delta also obtains a pol?icy from CIC to cover the warehouse.Ace agrees to act as Delta's mortga?gee.A fire to?tally destroys the warehouse.Who can recover for the loss?

Accepted Answer

Ace has an insurable interest in the war

Question 12

Rolling Transport & Storage Corporation wants to insure its warehouse to obtain the maximum possible recovery for the lowest possible pre?mium.To obtain the maximum recovery under a coinsurance clause,the percentage of the value of the property that should be insured is

Accepted Answer

A) 80 percent. 
B) 90 percent. 
C) 100 percent. 
D) 120 percent. 
A) 80 percent. 
B) 90 percent. 
C) 100 percent. 
D) 120 percent.

Question 13

A fire insurance policy covers losses to the insured as a re?sult of fire and lightning,but not damage from smoke and water.

Accepted Answer

A) True 
 B)False

Question 14

Edy obtains a homeowners' insurance policy with First Source Insurance Company.First Source 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.

Question 15

Lila obtains a life insurance policy with no cash surrender value and names her son Maurice as the beneficiary.This is

Accepted Answer

A) casualty insurance. 
B) decreasing-term life insurance. 
C) health insurance. 
D) term life insurance. 
A) casualty insurance. 
B) decreasing-term life insurance. 
C) health insurance. 
D) term life insurance.

Question 16

Tira obtains two fire insurance policies on her house.Each is an open policy with a pro rata clause.Tira's policy with Unity Insurance Company is for a maximum amount of $100,000.Her policy with Verity Insurance Company is for a maximum amount of $50,000.Each policy includes a pro rata clause.Due to defective electrical wiring,Tira's house catches fire and burns completely.The value the house at the time of the loss is $120,000.Tira files a proof of loss with each insurer.What is an open policy? What is a pro rata clause? What is the liability of Unity and Verity for this event?

Accepted Answer

Under an open policy,an insurer's liabil

Question 17

Cash surrender value is the amount an insured must pay to cancel a policy.

Accepted Answer

A) True 
 B)False

Question 18

Dag obtains from Expedient Insurance Company a policy that provides 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 19

Bob applies to City Insurance Company for homeowners' insurance.City issues a pol?icy,but later discovers that Bob's application includes several misstate?ments.Most likely,these misstatements can

Accepted Answer

A) affect the coverage under the policy but cannot void the policy. 
B) bind Bob but cannot affect the coverage. 
C) not bind Bob or affect the policy. 
D) void the policy. 
A) affect the coverage under the policy but cannot void the policy. 
B) bind Bob but cannot affect the coverage. 
C) not bind Bob or affect the policy. 
D) void the policy.

Question 20

State law may mandate that an incontestability clause be included in an insur?ance policy.

Accepted Answer

A) True 
 B)False

Exam 51: B: Insurance

An insurance application is part of the insurance contract.

Because insurance law follows contract law,bad faith tort actions against insurers are not allowed.

Brassy obtains an insurance policy for her electric guitar collection from Crest Insurance Company.Brassy can cancel the policy

Bret obtains a fire insurance policy on his rental house with Continental Insurance Company.Like all insurance,this policy is an arrangement for

Under an antilapse clause,an insurance policy will lapse only if no pre?mium is paid on the date due.

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

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 Famous Insurance Company.The insurer of this policy is

Automobile liability insurance covers liability for bodily injury and property damage.

The consideration paid to an insurer to obtain an insurance policy is the premium.

Rolling Transport & Storage Corporation wants to insure its warehouse to obtain the maximum possible recovery for the lowest possible pre?mium.To obtain the maximum recovery under a coinsurance clause,the percentage of the value of the property that should be insured is

A fire insurance policy covers losses to the insured as a re?sult of fire and lightning,but not damage from smoke and water.

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

Lila obtains a life insurance policy with no cash surrender value and names her son Maurice as the beneficiary.This is

Cash surrender value is the amount an insured must pay to cancel a policy.

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

Bob applies to City Insurance Company for homeowners' insurance.City issues a pol?icy,but later discovers that Bob's application includes several misstate?ments.Most likely,these misstatements can

State law may mandate that an incontestability clause be included in an insur?ance policy.

A: Introduction to Law and Legal Reasoning

B: Introduction to Law and Legal Reasoning

C: Introduction to Law and Legal Reasoning

D: Introduction to Law and Legal Reasoning

A: Courts and Alternative Dispute Resolution

B: Courts and Alternative Dispute Resolution

A: Court Procedures

B: Court Procedures

A: Constitutional Authority to Regulate Business

B: Constitutional Authority to Regulate Business

A: Ethics and Business Decision Making

B: Ethics and Business Decision Making

A: Intentional Torts and Privacy

B: Intentional Torts and Privacy

A: Negligence and Strict Liability

B: Negligence and Strict Liability

C: Negligence and Strict Liability

D: Negligence and Strict Liability

A: Intellectual Property and Internet Law

B: Intellectual Property and Internet Law

A: Criminal Law and Cyber Crimes

B: Criminal Law and Cyber Crime

A: Nature and Terminology

B: Nature and Terminology

C: Nature and Terminology

D: Nature and Terminology

A: Agreement in Traditional and E-Contracts

B: Agreement in Traditional and E-Contracts

A: Consideration

B: Consideration

A: Capacity and Legality

B: Capacity and Legality

A: Mistakes,fraud,and Voluntary Consent

B: Mistakes,fraud,and Voluntary Consent

A: The Statute of Frauds

B: The Statute of Frauds

A: Third Party Rights

B: Third Party Rights

A: Performance and Discharge

B: Performance and Discharge

A: Breach of Contract and Remedies

B: Breach of Contract and Remedies

A: The Formation of Sales and Lease Contracts

B: The Formation of Sales and Lease Contracts

C: The Formation of Sales and Lease Contracts

D: The Formation of Sales and Lease Contracts

A: Title,risk,and Insurable Interest

B: Title,risk,and Insurable Interest

A: Performance Breach of Sales Lease Contracts

B: Performance Breach of Sales Lease Contracts

A: Warranties and Product Liability

B: Warranties and Product Liability

A: International Law in a Global Economy

B: International Law in a Global Economy

A: The Function Creation of Negotiable Instruments

B: The Function Creation of Negotiable Instruments

C: The Function Creation of Negotiable Instruments

D: The Function Creation of Negotiable Instruments

A: Transferability and Holder in Due Course

B: Transferability and Holder in Due Course

A: Liability,defenses,and Discharge