Question 1

Maggie purchased a life insurance policy.She was concerned that if she became disabled,she would no longer be able to pay the premiums.Her agent added an amendment of the policy stating that if she became disabled,future premium payments would be waived.Such an amendment to a life insurance policy is called a(n)

Accepted Answer

A rider is an amendment to an insurance policy, in this case adding the waiver of premium benefit in case of disability. Binders are temporary agreements that provide immediate coverage until the policy is issued. Warranties are guarantees or promises made by the insured, and schedules are lists of items or values covered under the policy.

Question 2

An elimination (waiting)period is an example of a(n)

Accepted Answer

An elimination period is a waiting period before insurance benefits begin. It is similar to a deductible, in that it is an amount of time or money that the insured must pay out-of-pocket before receiving insurance benefits. It is not an exclusion, as it does not exclude coverage for a particular condition or circumstance. It is not an other-insurance provision or coinsurance provision, as it does not relate to coordination of benefits or sharing of costs between multiple insurance policies.

Question 3

Roger owns some farmland that he rents to a tenant.The tenant lives in an old farmhouse on the property and raises crops on the land.Roger is concerned about legal liability if the tenant injures someone.Roger requires the tenant to have liability insurance and to add himself to the liability coverage through an endorsement.Under the tenant's liability insurance,Roger is a(n)

Accepted Answer

Roger is added to the tenant's liability coverage through an endorsement, making him an additional insured. This means that if someone is injured due to the tenant's actions, both the tenant and Roger can be held liable and both would be covered under the tenant's liability insurance policy.

Question 4

In determining insurance limits and deductibles,an important concept is that insurance should be used to pay big losses rather than small losses.The objective is to insure big losses that could cause financial ruin and to exclude small losses that can be budgeted out of current income.This concept is called the

Accepted Answer

The concept described is the large-loss principle, which advocates for insuring against big losses that could have catastrophic financial consequences while excluding smaller losses that can be absorbed by current income. This principle helps insurers to balance their financial exposure with the cost of insurance premiums for customers.

Question 5

Jill's property insurance policy requires her to promptly notify the insurer if a loss occurs and to cooperate with the insurer in settling the claim.If Jill does not provide prompt notification or cooperate with the insurer settling the claim,the insurer can deny payment.These qualifications on the insurer's promise to perform are called

Accepted Answer

The qualifications on the insurer's promise to perform are called conditions. In this case, the policy conditions require Jill to promptly notify the insurer of a loss and to cooperate with the insurer in settling the claim. Failure to meet these conditions could result in the insurer denying payment. Endorsements are amendments to the policy, binders are temporary contracts of insurance, and exclusions are specific risks that are not covered by the policy.

Question 6

Homeowners insurance policies usually cover resident relatives of the named insured who are under age 24 and who are full-time students away from home.Under the homeowners policy,these full-time students are considered

Accepted Answer

Full-time students who are resident relatives of the named insured and under age 24 are considered "other insureds" under the homeowners policy. This means they have coverage under the policy, but they are not named insureds or additional insureds.

Question 7

An insurance policy provision that specifies how a property loss will be settled if more than one property insurance policy covers the loss is the

Accepted Answer

The "other insurance provision" specifies how a property loss will be settled if more than one property insurance policy covers the loss. This provision is used to determine which policy will be the primary insurer and which will be the secondary insurer. It can also specify the order in which the policies will be used to cover the loss.

Question 8

Ann Parks and Robert Evans jointly own a grocery store.Ann and Robert are both named insureds on the property insurance covering the store,but Ann is the first named insured.Which of the following statements is true with regard to Ann's status as the first named insured?

Accepted Answer

As the first named insured, Ann is primarily responsible for ensuring that the premium is paid. However, it does not necessarily mean that any loss settlement is paid to her only, that she can assign the policy without the insurer's consent, or that she can waive policy conditions. Those are not necessarily implications of being the first named insured.

Question 9

Maria's home was damaged by an earthquake.As Maria has open-perils coverage on her home,she was surprised to learn that her loss was not covered.Which section of a property insurance policy specifies which perils,property,and types of losses are not covered?

Accepted Answer

The exclusions section of a property insurance policy specifies which perils, property, and types of losses are not covered. This section usually includes specific exclusions for earthquakes, floods, and other natural disasters, as well as exclusions for wear and tear, intentional damage, and other types of losses.

Quiz 10: Analysis of Insurance Contracts

An elimination (waiting) period is an example of a(n)

Homeowners insurance policies usually cover resident relatives of the named insured who are under age 24 and who are full-time students away from home.Under the homeowners policy,these full-time students are considered

An insurance policy provision that specifies how a property loss will be settled if more than one property insurance policy covers the loss is the

Ann Parks and Robert Evans jointly own a grocery store.Ann and Robert are both named insureds on the property insurance covering the store,but Ann is the first named insured.Which of the following statements is true with regard to Ann's status as the first named insured?

Maria's home was damaged by an earthquake.As Maria has open-perils coverage on her home,she was surprised to learn that her loss was not covered.Which section of a property insurance policy specifies which perils,property,and types of losses are not covered?