Question 1

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 policy provision described is an appraisal clause, which allows for an impartial third party to determine the value of a loss if the parties cannot agree. An antilapse clause prevents the policy from lapsing due to non-payment of premiums. An arbitration clause provides for a third party to hear and decide a dispute between parties. An incontestability clause limits the time period during which an insurer can contest the validity of a policy based on misrepresentations made by the insured.

Question 2

Estelle owns and operates a commercial dairy farm with her son Gabe. Estelle applies to obtain an insurance policy from Farm & Ranch Insurance Company to pay $1 million to Gabe on Estelle's death. This is

Accepted Answer

This is a clear case of life insurance as Estelle is applying for an insurance policy that will pay out $1 million to Gabe on her death.

Question 3

In his will, Terrence leaves $10,000 to each of his three children. However, after Terrence dies and all his debts are paid, there is only $9,000 left in his estate. Each child will receive​

Accepted Answer

Since there is only $9,000 left in Terrence's estate after his debts are paid, each child cannot receive the full amount of $10,000. Instead, the remaining $9,000 will be divided equally among the three children, resulting in each child receiving $3,000.

Question 4

Alain and Bette are partners who own and operate Cakes n' Pies, a chain of dessert restaurants. Their partnership obtains insurance on Alain and Bette's lives. This is

Accepted Answer

Key-person insurance is a type of life insurance that a business purchases on the life of an important employee or partner. In this case, Alain and Bette are important partners in the business, and their lives are insured in case they pass away unexpectedly. Disability insurance is designed to provide income replacement in the event of a disability, major medical insurance covers medical expenses, and liability insurance covers legal expenses in case of a lawsuit.

Question 5

Frank applies to Guard Dog Insurance Company for homeowners' insurance. The company issues a policy, but later discovers that Frank's application includes several misstatements. Most likely, these misstatements can

Accepted Answer

The misstatements in Frank's application could result in the policy being voided. Insurance companies rely heavily on the accuracy of the information provided in the application process, and misrepresentations or omissions can be grounds for cancellation of the policy.

Question 6

Adrian applies for, and obtains, casualty insurance coverage from Business Insurance Company for his business, Country Club, Inc. The effective date of the policy is the date​

Accepted Answer

The answer of Adrian applies for, and obtains, casualty insurance...

Question 7

Trial Lawyers, P.A., obtains an insurance policy that protects its members against negligence claims by their clients. This is​

Accepted Answer

Malpractice insurance is a type of liability insurance that protects professionals, such as lawyers, against claims of negligence or malpractice by their clients. This type of insurance is specifically tailored for professions that require a high degree of skill, where a mistake or error could result in significant financial loss for the client.

Question 8

Paxton makes a gift of real estate in his will to Orinda. This gift is​

Accepted Answer

A gift of real estate in a will is called a devise. A bequest refers specifically to a gift of personal property. A legacy refers to a gift of money or personal property, and a residuary refers to the remainder of an estate after all other gifts have been distributed.

Question 9

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. could cancel the policy issued to DIY Auto & Truck Parts Company on advance written notice but not oral notice. It is important to have written documentation of the cancellation for legal and record-keeping purposes.

Question 10

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 11

Shea makes a will. As a person who makes a will, Shea is

Accepted Answer

Shea is the person who makes the will, so she is the testator. The administrator and executor are responsible for carrying out the instructions in the will, and the beneficiary is the person who receives property or assets from the will.

Question 12

Jackie's will states, "I leave my red Corvette to Angela." This is​

Accepted Answer

The answer of Jackie's will states, "I leave my red...

Question 13

The assets in Doug's estate, including the value of his home on Elm Street and its contents, are insufficient to pay in full all of the gifts provided for in his will. His heirs will receive​

Accepted Answer

When there are insufficient assets in an estate to pay in full all of the gifts provided for in the will, the beneficiaries will receive reduced benefits. The exact percentage of reduction will depend on the laws of the state where the estate is being administered and the specific provisions of the will. The reduction will be made proportionally across all beneficiaries and gifts in the will.

Question 14

In his will, Bryson makes a gift of $12,000 to Curtis. This is​

Accepted Answer

The answer of In his will, Bryson makes a gift...

Question 15

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, the insurance company has a duty to​

Accepted Answer

When an event occurs that gives rise to a claim, the insurance company has a duty to investigate to determine the facts. This is necessary to determine whether the claim is covered under the policy and to assess the extent of liability. The insurer will then make a decision to accept or deny the claim based on the results of the investigation.

Question 16

Energy Industries, Inc., obtains insurance policies with Fidelity Insurance, Inc., and Good worth 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

A multiple insurance clause means that if a policyholder has more than one insurance policy covering the same property, the policies will share the risk of loss. In this case, Energy has two insurance policies, so they will share the loss. The proportionate share of the loss that each insurance policy will cover is determined by the ratio of the coverage amount of each policy to the total amount of insurance. Therefore, Energy can collect its proportionate share of the loss to the total amount of insurance, which is option C.

Question 17

U-Rents Company wants to insure the equipment that it rents to consumers. To obtain insurance, U-Rents must have an insurable interest in the property​

Accepted Answer

The answer of U-Rents Company wants to insure the equipment...

Question 18

According to the terms of Ramona's will, specific gifts are made, and taxes and other estate expenses and debts are paid. The assets of Ramona's estate that remain are​

Accepted Answer

The term used for assets of Ramona's estate that remain after specific gifts, taxes, expenses, and debts are paid is "the residuary." This term refers to the remaining portion of the estate, which is distributed to the residuary beneficiaries as specified in the will.

Question 19

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 is an antilapse clause, which provides a grace period for the insured to make a late payment before the policy is canceled. A multiple insurance clause refers to coordinating benefits with other insurance policies. An appraisal clause provides a dispute resolution process for valuation disagreements. An incontestability clause limits the insurer's ability to contest the validity of the policy after a certain period of time has passed.

Question 20

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

Accepted Answer

When an event occurs that gives rise to a claim, both the insured and the insurer have a duty to cooperate in an investigation to determine the facts. This includes providing information and documentation to support the claim. Cooperation is essential for the timely and fair resolution of the claim. The other options, such as filing a suit against each other or finding a third party to impose liability, are not typical duties of the insured or insurer in the event of a claim. Paying outstanding premiums or refunding unearned amounts may be required, but it is not directly related to the duty to cooperate in a claim investigation.

Quiz 36: Insurance, Wills, and Trusts

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​

Estelle owns and operates a commercial dairy farm with her son Gabe. Estelle applies to obtain an insurance policy from Farm & Ranch Insurance Company to pay $1 million to Gabe on Estelle's death. This is

In his will, Terrence leaves $10,000 to each of his three children. However, after Terrence dies and all his debts are paid, there is only $9,000 left in his estate. Each child will receive​

Alain and Bette are partners who own and operate Cakes n' Pies, a chain of dessert restaurants. Their partnership obtains insurance on Alain and Bette's lives. This is

Frank applies to Guard Dog Insurance Company for homeowners' insurance. The company issues a policy, but later discovers that Frank's application includes several misstatements. Most likely, these misstatements can

Adrian applies for, and obtains, casualty insurance coverage from Business Insurance Company for his business, Country Club, Inc. The effective date of the policy is the date​

Trial Lawyers, P.A., obtains an insurance policy that protects its members against negligence claims by their clients. This is​

Paxton makes a gift of real estate in his will to Orinda. This gift is​

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​

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​

Shea makes a will. As a person who makes a will, Shea is

Jackie's will states, "I leave my red Corvette to Angela." This is​

The assets in Doug's estate, including the value of his home on Elm Street and its contents, are insufficient to pay in full all of the gifts provided for in his will. His heirs will receive​

In his will, Bryson makes a gift of $12,000 to Curtis. This is​

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, the insurance company has a duty to​

U-Rents Company wants to insure the equipment that it rents to consumers. To obtain insurance, U-Rents must have an insurable interest in the property​

According to the terms of Ramona's will, specific gifts are made, and taxes and other estate expenses and debts are paid. The assets of Ramona's estate that remain are​

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​

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

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

In his will, Terrence leaves $10,000 to each of his three children. However, after Terrence dies and all his debts are paid, there is only $9,000 left in his estate. Each child will receive

Adrian applies for, and obtains, casualty insurance coverage from Business Insurance Company for his business, Country Club, Inc. The effective date of the policy is the date

Trial Lawyers, P.A., obtains an insurance policy that protects its members against negligence claims by their clients. This is

Paxton makes a gift of real estate in his will to Orinda. This gift is

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

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

Jackie's will states, "I leave my red Corvette to Angela." This is

The assets in Doug's estate, including the value of his home on Elm Street and its contents, are insufficient to pay in full all of the gifts provided for in his will. His heirs will receive

In his will, Bryson makes a gift of $12,000 to Curtis. This is

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, the insurance company has a duty to

U-Rents Company wants to insure the equipment that it rents to consumers. To obtain insurance, U-Rents must have an insurable interest in the property

According to the terms of Ramona's will, specific gifts are made, and taxes and other estate expenses and debts are paid. The assets of Ramona's estate that remain are

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