Question 1

An application for insurance:

Accepted Answer

An application for insurance is typically attached to the policy and becomes part of the insurance contract, so B is the best answer. An application can be oral, but it is not the typical method. An attorney does not need to prepare the application, and it does have a binding effect on the applicant.

Question 2

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:

Accepted Answer

The insurer has an obligation to word the policy in an understandable way, and if the policy was too difficult for Winona to understand, she may not have been fully aware of what was covered. Therefore, the loss should be covered.

Question 3

For property insurance,an insurable interest must exist:

Accepted Answer

The answer of For property insurance,an insurable interest must exist:
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Question 4

A person who would suffer a direct pecuniary loss if a particular piece of property were destroyed has a(n):

Accepted Answer

Insurable interest refers to the financial stake or interest that a person has in a particular property or event, such as a potential loss. In this case, the person who would suffer a direct pecuniary loss if the property were destroyed has an insurable interest in that property.

Question 5

After the expiration of the incontestability period of a life insurance policy,the insurer must pay the face amount of the policy when the insured dies and cannot claim that in obtaining the policy,the insured had been guilty of misrepresentation,fraud,or any other conduct that would entitle it to avoid the contract of insurance.

Accepted Answer

This is the definition of the incontestability clause in a life insurance policy. After the incontestability period (usually 2 years), the insurer cannot challenge the validity of the policy due to misrepresentation or fraud by the insured.

Question 6

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

Accepted Answer

The term "insured" refers to the person who is promised insurance coverage by an insurer. The term "policyholder" refers to the person who owns the insurance policy and typically pays the premiums. Therefore, both options a. (insured) and c. (policyholder) correctly describe the person to whom an insurance promise is made.

Question 7

The effectiveness of an exception to coverage is limited by:

Accepted Answer

The effectiveness of an exception to coverage is limited by both strictly interpreting the exception against the insurer and placing the burden of proving that the exception applies on the insurer. This means that the insurer must provide clear and convincing evidence that the exception applies, which can make it difficult for them to deny coverage based on exceptions.

Question 8

Commercial General Liability (CGL)policies apply to product liability cases,actions for wrongful termination of employees,sexual harassment cases,damages caused by business advertising or employee dishonesty,and trademark infringement suits.

Accepted Answer

Commercial General Liability (CGL) policies generally cover a wide range of claims, including those related to product liability, employment practices, advertising injury, employee dishonesty, and intellectual property infringement.

Question 9

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

Accepted Answer

Homeowner's insurance provides coverage for both property damage caused by fire and personal liability in case someone is injured on the property.

Question 10

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

Accepted Answer

The designation of beneficiary on a life insurance policy is a contract that is separate from the divorce proceedings. As long as the policy is still in force at the time of the insured's death, the named beneficiary will receive the death benefit, regardless of any subsequent divorce.

Question 11

A coinsurance clause requires the insured to maintain insurance on the covered property up to a certain amount or a certain percent of the value,generally 80 percent.

Accepted Answer

This statement is true. A coinsurance clause typically requires the insured to maintain insurance coverage on the property up to a certain percentage of its value, often 80 percent. Failure to maintain this coverage may result in a penalty or reduction in the amount of any claim payment.

Question 12

For the purposes of Personal Auto Policy (PAP)coverage,an insured person "uses" an automobile by unloading groceries from the car while it is parked in the garage.

Accepted Answer

Under a Personal Auto Policy, "use" of an automobile includes activities related to the vehicle, such as loading and unloading, even if the vehicle is stationary.

Question 13

The coverage of the Personal Auto Policy (PAP)is limited to claims arising from the "use and operation" of an automobile.

Accepted Answer

The PAP only covers claims that arise from the use and operation of a vehicle. It does not provide coverage for other types of claims, such as those related to a person's residence or business.

Question 14

For the purposes of fire insurance,all fires that cause damage are considered hostile fires.

Accepted Answer

The answer of For the purposes of fire insurance,all fires...

Question 15

If a provision in an insurance policy is ambiguous:

Accepted Answer

When a provision in an insurance policy is ambiguous, it is usually interpreted against the insurer. This is because the insurer has more control over the wording of the policy and is presumed to have more expertise in the field. Therefore, any uncertainty in the language is considered to be the responsibility of the insurer.

Question 16

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.

Accepted Answer

Fire insurance is a personal contract and cannot be assigned without the consent of the insurer, unless there is statutory or contractual authorization.

Question 17

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

Accepted Answer

Armenia has the freedom to name any individual or entity as her beneficiary without any requirement for the beneficiary to have a pecuniary interest, be a close relative, or a business associate. Life insurance policies allow the policyholder to choose beneficiaries at their discretion.

Question 18

Under no-fault insurance,an insurer is obligated to pay an injured person without regard to whose fault caused the harm.

Accepted Answer

Under no-fault insurance, the insurer is indeed obligated to pay for injuries sustained by an insured person, regardless of who caused the harm.

Question 19

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?

Accepted Answer

A grace period of 30 to 31 days is generally allowed for an insured person to make the payment of a premium due on a life insurance policy. This is a standard provision in most policies and is also mandated by some state insurance laws. During the grace period, the policy remains in force and coverage will continue, but if the premium is not paid by the end of the grace period, the policy may lapse or be terminated.

Question 20

A homeowner's policy commonly provides protection from losses caused by theft.

Accepted Answer

Homeowner's policies typically include coverage for theft and burglary.

Quiz 36: Insurance