Question 1

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

Accepted Answer

When a provision of an endorsement conflicts with a provision of a policy, the endorsement controls because it is a later addition or amendment to the policy, specifically designed to alter or add to the terms of the original policy.

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.

Accepted Answer

False

Question 3

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

Accepted Answer

An insurable interest in a property does not strictly require ownership or being a lienholder; it simply requires that the person would suffer a financial loss if the property were damaged or destroyed. This can include tenants, trustees, or others who have a legitimate financial interest in the property's safety and condition.

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.

Accepted Answer

The answer of An insurer may cancel any contract of...

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.

Accepted Answer

A contract of insurance is to be interpreted according to the reasonable expectations of the ordinary policyholder, therefore it is not necessary to have 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.

Accepted Answer

The fact that a partnership is terminated after a life insurance policy is obtained by one partner on another does not necessarily invalidate the policy. However, certain circumstances such as fraud or misrepresentation at the time of obtaining the policy may result in invalidation.

Question 7

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

Accepted Answer

An insurance broker works independently and is not tied to any particular insurance company. They provide clients with insurance policies from multiple companies and help them choose the best option.

Question 8

Exceptions to coverage are generally strictly interpreted against the insurer.

Accepted Answer

This means that if there is any ambiguity in the policy language, it will be resolved in favor of the insured.

Question 9

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

Accepted Answer

To collect on property insurance, the policyholder must have an insurable interest in the property at the time of the loss. This means that they must have a financial or legal stake in the property and stand to suffer a financial loss if the property is damaged or destroyed.

Question 10

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

Accepted Answer

While both a broker and an agent work with insurers to sell insurance products, there is an important difference. A broker works independently and represents multiple insurers, while an agent works exclusively for one 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.

Accepted Answer

This statement is correct. When an insurer denies liability for a loss, the burden of proof shifts to the insured to provide evidence and show that the loss was covered by the policy.

Question 12

The promisor in an insurance contract is called the underwriter.

Accepted Answer

The promisor in an insurance contract is the underwriter, who assumes the risk and agrees to pay out claims in the event of a covered loss or event.

Question 13

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

Accepted Answer

An ambiguity in an insurance policy is generally interpreted in favor of the insured, as the policy is typically drafted by the insurer and any ambiguity should be resolved against the party responsible for the ambiguity.

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.

Accepted Answer

While it's common to name beneficiaries who have an insurable interest, it's not a legal requirement for life insurance policies. Policyholders can name anyone as a beneficiary.

Question 15

Any false statement in an application binds only the insured.

Accepted Answer

This is a principle of insurance known as the "utmost good faith" principle. It means that the insured is responsible for ensuring that all the information they provide on an application is truthful and accurate. If the insured makes a false statement and it is discovered, the insurer may be within their rights to deny coverage or even cancel the policy.

Question 16

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

Accepted Answer

The correct term is "subrogated," not "subornated." When the insurer is subrogated to the insured's claim, the insurer may enforce that claim against the third party responsible for the loss.

Question 17

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

Accepted Answer

Insurance policies are typically required to be in writing to ensure all terms, conditions, and agreements are clearly documented and enforceable. Oral agreements are generally not considered legally binding in the context of insurance.

Question 18

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

Accepted Answer

The insurance policy outlines the terms and conditions of the insurance contract, including the promises made by the insurer to the policyholder.

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.

Accepted Answer

This is the definition of insurable interest. It is necessary to have an insurable interest in order to purchase an insurance policy on a piece of property.

Question 20

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

Accepted Answer

The insured is typically required to report and file a claim within a certain amount of time after the incident occurs. Failure to comply with these time limitations may result in the denial of the claim.

Quiz 35: Insurance