Question 1

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

Accepted Answer

This policy provision is an antilapse clause, which allows for a grace period after the premium due date before the policy is canceled. It prevents the policy from lapsing or terminating immediately if the premium is not paid on time.

Question 2

Energy Industries,Inc.,obtains insurance policies with Fidelity Insurance,Inc.,and Goodworth Insurance Company against the risk of loss of Energy's property.Each policy includes a multiple insurance clause.A fire partially destroys one of Energy's buildings.Energy can collect from Fidelity

Accepted Answer

The multiple insurance clause provides that each insurer is liable only for its proportionate share of any loss, so Energy can collect from both Fidelity and Goodworth Insurance Company but only up to the amount of their respective policies. As both policies include multiple insurance clauses, Energy can collect its proportionate share of the loss to the total amount of insurance.

Question 3

Clark obtains from Delta Insurance,Inc.,a policy that provides if a dispute arises between the parties concerning the settlement of a claim,the dispute must be submitted to an impartial third party,not a court,for resolution.This is

Accepted Answer

The policy provision stating that any disputes must be submitted to an impartial third party for resolution is an arbitration clause. This means that the parties have agreed to resolve the dispute through an arbitration process rather than going to court.

Question 4

Anna obtains a business liability insurance policy for her Brew & Bagels Coffee Shop from ChoiceFirst Insurance Company.When an event occurs that gives rise to a claim,each party has a duty to

Accepted Answer

Both the insured (Anna) and the insurance company (ChoiceFirst) have a duty to cooperate in an investigation in order to determine the facts of the claim. This allows for a fair and accurate assessment of liability and damages.

Question 5

Commerce & Business Insurance,Inc.,has a valid reason to cancel a policy issued to DIY Auto & Truck Parts Company.In most states,Commerce & Business could cancel the policy on

Accepted Answer

In most states, Commerce & Business Insurance, Inc. can cancel a policy issued to DIY Auto & Truck Parts Company with advance written notice, but not oral notice or no notice. Therefore, the best choice is D, advance written-not oral-notice.

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 a specified period or time,such as two or three years

Accepted Answer

The answer of Ginny obtains a health-insurance policy for her...

Question 7

Donovan obtains from Equity Insurance Company a policy that provides that if the parties cannot agree on the amount of a loss covered by the policy,an estimate of the value by an impartial third party can be demanded.This is

Accepted Answer

The clause described in the scenario is an appraisal clause, as it provides for an impartial third party to estimate the value of a loss. An antilapse clause prevents a policy from lapsing due to non-payment of premiums, an arbitration clause provides for dispute resolution through arbitration, and an incontestability clause limits the period of time during which an insurer can contest a policy.

Question 8

Speedy Shipping Corporation applies to TransInsurance Company for a fire insurance policy on Speedy's warehouse.On the application,Speedy misrepresents the age of the property to obtain a lower premium.When a fire soon destroys the warehouse,TransInsurance can

Accepted Answer

TransInsurance can deny payment because of Speedy's misrepresentation of the age of the property on the insurance application, which counts as fraud. Insurance policies are based on trust and full disclosure, and any misrepresentation or fraud can void the policy.

Question 9

Estimable Credit Company loans funds to Farmland Granaries,LLC,to buy a silo.Estimable obtains an insurance policy from Grangers Insurance,Inc.,to cover the silo.Farmland also obtains a policy from Grangers to cover the silo.Later,Farmland sells the silo to Hi-Yield Harvest Company but keeps the policy.Hi-Yield also obtains a policy from Grangers to cover the silo.Estimable agrees to finance Hi-Yield's purchase of the property.A fire totally destroys the silo.Who can recover for the loss?

Accepted Answer

The answer of Estimable Credit Company loans funds to Farmland...

Question 10

Myles obtains a property insurance policy from Nova Insurance Company for Myles's restored 1957 Chevy.Nova can cancel the policy

Accepted Answer

Insurance policies can be cancelled by the insurance company if the insured party (in this case, Myles) increases the risk assumed by the insurer. This is to ensure that the insurer is not taking on additional risk that it did not anticipate or agree to in the policy.

Question 11

Rob applies to Standard Insurance Company for a life insurance policy.On the application,Rob understates his age.Rob obtains the policy,but for a lower premium than he would have had to pay had he disclosed his actual age.The policy includes an incontestability clause.Five years later,Rob dies.Can Standard refuse payment on the policy?

Accepted Answer

The answer of Rob applies to Standard Insurance Company for...

Question 12

Kelsey obtains a business liability insurance policy from Loyal Insurance Company for Kelsey's Modeling & Hobby Crafts store.When an event occurs that gives rise to a claim,Loyal has a duty to

Accepted Answer

As the insurance company, Loyal has a duty to investigate the facts surrounding the claim to determine if coverage applies under the policy. This allows for an accurate assessment of the claim and the potential for a fair settlement to be reached.

Quiz 35: Insurance