Question 1

Clark obtains from Delta Insurance,Inc.,a policy that pro?vides if a dis?pute arises between the parties concerning the settle?ment 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 described is an arbitration clause, which requires a third party to resolve any disputes that arise between the insured and the insurer, rather than going to court.

Question 2

Burt obtains from Capital 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 de?manded.This is

Accepted Answer

The clause described is known as an appraisal clause, which allows for an impartial third party to estimate the value of a loss if the parties cannot agree. An antilapse clause pertains to a life insurance policy and ensures that the coverage remains in force even if premiums are not paid on time. An arbitration clause requires any disputes to be resolved through arbitration rather than litigation. An incontestability clause limits the time frame in which an insurer can contest or void a policy due to misrepresentations or omissions made by the insured during the application process.

Question 3

Edy obtains a homeowners' insurance policy with First Source Insurance Company.First Source can cancel the policy

Accepted Answer

First Source can cancel the policy if Edy fails to pay the premiums. This is a standard provision in most insurance policies. The other options listed are not valid reasons for policy cancellation.

Question 4

Speedy Shipping Corporation applies to TransInsurance Company for a fire insurance pol?icy 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 ware?house,TransInsurance can

Accepted Answer

TransInsurance can deny payment because Speedy committed fraud by misrepresenting the age of the property, which affects the premium paid. Misrepresentation on the application is a valid reason for an insurer to deny payment.

Question 5

Kelsy,a minority business owner,obtains a business liability insurance policy from Luminous Insurance Company for Kelsy's Framing & Art Supplies store.Luminous can cancel the policy

Accepted Answer

Luminous can cancel the policy if Kelsy increases the hazard covered by the insurance. This means that if Kelsy takes actions or makes changes to her business that increase risk or liability, Luminous can cancel the policy.

Question 6

Trustworthy Insurance,Inc.,has a valid reason to cancel a policy issued to USA Sales Company.In most states,Trustworthy could cancel the policy with

Accepted Answer

In most states, the cancellation of an insurance policy requires written notice. Therefore, the best choice is D, written notice.

Question 7

Rob applies to Standard Insurance Company for a life insurance policy.On the ap?pli?cation,Rob understates his age.Rob obtains the policy,but for a lower pre?mium than he would have had to pay had he disclosed his ac?tual 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 8

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 9

Kerin obtains a property insurance policy for her art collection from Lawton Insurance Company.Kerin can cancel the policy

Accepted Answer

The answer of Kerin obtains a property insurance policy for...

Question 10

Patty,who is divorced,owns a house.She has no reasonable expectation of benefit from the life of Quinn,her ex-spouse,but she applies for insur?ance on his life anyway.She also obtains a fire insurance policy on the house,which she later sells.Five years later,Quinn dies and the house is destroyed in a fire.Can Patty obtain payment on either the death of Quinn or the loss of the house? Explain.

Accepted Answer

The answer of Patty,who is divorced,owns a house.She has no...

Question 11

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

An antilapse clause is a provision in life insurance policies that prevents the policy from lapsing or terminating if the policyholder misses a premium payment. The clause typically allows for a grace period of 30 days, during which time the policyholder can make up the missed payment without penalty. Therefore, in this scenario, Greg's policy has an antilapse clause.

Question 12

Homestead Insurance Company tells its customer Teresa that she need not respond to questions about her national origin or race on her insur?ance application. Teresa provides the information anyway. Homestead

Accepted Answer

Homestead Insurance Company cannot use the information provided by Teresa about her national origin or race to avoid its obligations under its policy with her. Homestead informed Teresa that she need not respond to those questions, and therefore, Teresa's response should not be used against her.

Quiz 35: Insurance