Deck 35: Insurance

Question 1

When a provision of an endorsement conflicts with a provision of a policy, the policy controls.

Answer 1

False

Question 2

When an insurer wrongfully breaches its duty to defend its insured, the insurer is liable for all consequential damages resulting from the breach, up to the value of the policy.

Answer 2

False

Question 3

A person must be an owner or lienholder to have an insurable interest in a property.

Answer 3

False

Question 4

An insurer may cancel any contract of insurance by the insurer's unilateral act as long as the insurer gives advance written notice.

Question 5

A contract of insurance is to be interpreted as it would be understood by a person with technical knowledge of the law or of insurance.

Question 6

The fact that a partnership is terminated after a life insurance policy is obtained by one partner on another invalidates the policy.

Question 7

An insurance broker generally is an independent contractor who is not employed by any one insurance company.

Question 8

Exceptions to coverage are generally strictly interpreted against the insurer.

Question 9

To collect on property insurance, an insurable interest in the property must exist at the time that the loss is suffered.

Question 10

Generally, the terms broker and agent are synonymous because both work directly for the insurer.

Question 11

If an insurer denies liability for a loss, the insured has the burden of proving that there was a loss that came within the coverage of the policy.

Question 12

The promisor in an insurance contract is called the underwriter.

Question 13

An ambiguity in an insurance policy is generally interpreted in favor of the insurer.

Question 14

A person who obtains life insurance generally can only name a beneficiary that has an insurable interest in the life of the insured.

Question 15

Any false statement in an application binds only the insured.

Question 16

When the insurer is subornated to the insured's claim, the insurer may enforce that claim against the third person.

Question 17

By statute, an insurance policy may be either oral or written, depending on the nature of the policy.

Question 18

The promises of the insurer are found in the insurance policy.

Question 19

A person has an insurable interest in property if destruction of that property would cause a monetary or pecuniary loss to that person.

Question 20

The insured must comply with a number of time limitations in making a claim.

Question 21

All fires that cause damage are classified as hostile fires.

Question 22

If a man names his wife as beneficiary of his life insurance and the two are thereafter divorced, the insurance policy: ______.

A)is canceled automatically.
B)is not affected.
C)is divided into two policies on the life of each for one-half the amount of the original policy.
D)becomes the property of the former wife.

Question 23

Winona was a person of average intelligence, education, and experience in business.She negotiated for the purchase of insurance and paid the premium.The policy was mailed to her, but before it arrived a loss was suffered.When the policy was read, Winona could not determine whether the loss was covered because the policy was too difficult to understand.The loss is:

A)not covered unless expressly stated to be covered.
B)covered because the insurer had an obligation to word the policy in an understandable way.
C)not covered unless stated to be so in a rider.
D)covered if included in an express exception to the policy.

Question 24

For property insurance, an insurable interest must exist: _____.

A)​at the time the policy is purchased.
B)at the time of the loss.
C)both at the time the policy is purchased and at the time the loss is sustained.
D)for at least thirty (30) days before the loss is sustained.

Question 25

Homeowner's insurance is a combination of the standard fire insurance policy and comprehensive personal liability insurance.

Question 26

If a provision in an insurance policy is ambiguous:

A)​it is interpreted in favor of the insurer because the insured could have rejected the policy.
B)it is interpreted against the insurer.
C)parol evidence is admitted to show what was intended.
D)the policy is declared void and the insurer is required to return all premiums to the insured.

Question 27

A homeowner's policy typically does not provide for losses caused by theft, unless there is a specific rider to the policy.

Question 28

An insured person is generally allowed, by policy provision or statute, a grace period of what length of time in which to make the payment of a premium due on a life insurance policy?

A)​14 to 15 days
B)30 to 31 days
C)60 to 61 days
D)90 days

Question 29

A coinsurance clause provides that after the lapse of a specified time the insurer cannot dispute the policy on the ground of misrepresentation or fraud of the insured or similar wrongful conduct.

Question 30

An incontestability clause gives insurance companies a statutory period of time to pay the claims suffered by the insured.

Question 31

A person has a(n) ______ in a particular piece of property if they would suffer a direct pecuniary loss if the property were destroyed.

A)contractual risk.
B)hazard.
C)underwriting.
D)insurable interest.

Question 32

The coverage of the personal auto policy is limited to claims arising from the "use and operation" of an automobile.

Question 33

It is common for institutions financing automobile dealers' new car inventories to purchase a(n) _______ insurance policies to insure against damage to the automobiles while in inventory.

A)​freight
B)dealer automobile
C)inland marine
D)liability

Question 34

An application for insurance: ______.

A)​may be oral.
B)generally is attached to the policy and becomes a part of the insurance contract.
C)must be prepared by an attorney.
D)has no binding effect on the applicant.

Question 35

Commercial General Liability (CGL) policies apply to trademark infringement suits.

Question 36

Fire insurance is a personal contract, and in the absence of statutory or contractual authorization, it can be assigned without the consent of the insurer.

Question 37

Armenia purchased life insurance on her life.Regarding the beneficiary: _______.

A)Armenia must name a person with a pecuniary interest in her life.
B)Armenia must name a close relative.
C)Armenia must name a close relative or business associate.
D)Armenia may name whomever she wishes.

Question 38

If an automobile collision results in a permanent serious disfigurement or death, a lawsuit may be brought against the party who was at fault.

Question 39

The person to whom an insurance promise is made is called: ______.

A)​the insured.
B)the insurer.
C)the broker.
D)the agent.

Question 40

No-fault automobile liability insurance bars injured parties from suing the party at fault for ordinary claims.

Question 41

Paul purchased a house and also purchased fire insurance coverage on the house.The policy contained an 80 percent coinsurance clause.Paul maintained coverage in the amount of $150,000 and the value of the house was $250,000.A fire caused a loss of $100,000.Paul will collect:

A)the full $100,000, because he had coverage for $150,000.
B)only part of the $100,000 loss, because he failed to maintain coverage at 80 percent of the value of the house.
C)nothing, because he failed to maintain coverage at 80 percent of the value of the house.
D)80 percent of $250,000, or $200,000.

Question 42

Sylvia Jurgen operates a florist shop.During a particularly busy day, she allowed one of her employees, Terry Lioni, to use her (Jurgen's) personal car to assist with deliveries.Lioni had just obtained his driver's license.Lioni was involved in an accident that was his fault.Would Jurgen's liability insurance pay in this situation?

Question 43

If the insured lives to the end of the policy period of an endowment insurance policy, the policy pays:

A)​nothing.
B)one-half of the face amount of the policy.
C)the face amount of the policy.
D)double the face amount of the policy.

Question 44

What is a correct statement concerning burden of proof?

A)​The insured has the burden of proving that the loss was a covered loss.
B)The insurer has the burden of proving that the loss was not covered.
C)Exceptions to coverage are liberally interpreted in favor of the insurer.
D)Exceptions to coverage are disregarded in life insurance matters.

Question 45

If an insured person tells her current husband that she is going to name him as beneficiary of her life insurance in place of her former husband and dies a year later without having taken any further steps with respect to the change of the policy beneficiary, the insurance company must pay the proceeds of the policy to:

A)​the former husband.
B)the current husband.
C)the children by the first marriage.
D)the children by the second marriage.

Question 46

What type of insurance is written for a specified number of years and terminates at the end of that period?

A)​term insurance
B)whole life insurance
C)endowment insurance
D)universal insurance

Question 47

An incontestability clause ordinarily bars contest of the validity of a life insurance policy by the insurer after the lapse of:

A)​sixty (60) days.
B)one (1) year.
C)two (2) years.
D)ninety (90) days.

Question 48

Insurance designed to protect an insured driver or owner from the claims of others is called:

A)​collision insurance.
B)financial responsibility insurance.
C)liability insurance.
D)comprehensive insurance.

Question 49

Part of every whole life insurance premium covers the cost of insurance.The remainder of the premium is devoted to the investment component of the policy, which builds up over time to its:

A)​reimbursement point.
B)cash surrender value.
C)culmination value.
D)return point.

Question 50

Mike Reilly suffered the loss of his home as a result of a chimney fire that was caused by the ignition of soot in the chimney.This fire would be described as: ______.

A)​a friendly fire.
B)arson by negligence.
C)a strict liability fire.
D)a hostile fire.

Question 51

A professor knew a colleague who was quite ill.The professor applied for life insurance on the colleague's life and named himself as beneficiary.Because of a similarity in the names of the professor and the colleague, an error was made and the policy was issued.?The professor also sold his car to a student.When the student drove away, it was clear that the student was an extremely reckless driver.The professor decided not to cancel his property insurance policy that he had maintained on the vehicle that he sold to the student.Shortly thereafter, the colleague died and the student demolished the car.The professor applied for insurance benefits under both policies and each of the insurers resisted payment.Decide both cases.

Question 52

Janice Beadles owns a large cargo vessel that is used primarily for international trade transactions.Janice is quite concerned about her possible liability and financial losses, as she has become aware of more and more collisions between ships at sea.What can you tell her about the different types of insurance that she could obtain that could assist her in the event of an accident?

Question 53

An insurer who wrongfully refuses to defend the insured is liable for: ______.

A)​breach of contract.
B)insurance fraud.
C)the tort of wrongful interference with contractual relations.
D)the tort of malicious prosecution.