2-Legal Concepts

Which situation would not require the insured's consent when a life insurance policy is issued ?

A policy is purchased by a parent for a minor child.

Reasonable Expectations

An insured is entitled to coverage under a policy that a prudent person is expected to provide. This principle is called reasonable expectations.

Use of XYZ Insurance Company brochures, business cards, and rating guides is an example of

Apparent authority.

An insurance application requires an applicant to make a full, accurate disclosure of the risk factor involved. Using the criteria, an insurance policy is considered what type of contract?

Contract of utmost good faith

XYZ Insurance Company gives direct authority to its producers to sell insurance through an agency contract, but nothing is stated regarding the collection of premiums. Which authority grants the producer the right to collect premiums?

Implied authority.

Which of the following situations would an insurance agent need to guard against liability for professional errors and omissions?

Making a recommendation to a potential insured to replace existing coverage.

Greg applies for insurance and makes false statements on the application that will influence weather or not the insurer will accept the risk. Greg's false statement is called a

Material misrepresentation.

An agent whose actions exceed the authority granted by contract is

Not backed by the insurer.

All of these statements correctly describe an aleatory contract EXCEPT

Only one party makes any kind of legally enforceable offer.

Statements made by an insured on an accident and health insurance application are considered to be

Representations.

Which of the following people would NOT have the ability to enter into a contract? Mentally ill person Minor Person under the influence of alcohol Small employer

Small employer.

An arrangement when an individual is authorized to act on behalf of another person or company is established through

The law of agency.

Giving up a known right on a voluntary basis is called a

Waiver.

A contract is considered void in all of the following situations EXCEPT

When consideration is unequal.

An insurance company can be liable for a producer's unauthorized acts

When the agency contract is unclear concerning the authority given.