Contract law
Contract of indemnity (indemnify)
Financially "whole"; not allowing gain; avoid overpayment reimbursed
Concealment
Intentional failure to disclose
Fraud
Knowing misrepresentation or concealment
Misrepresentations
Lie
Representations
Material facts; insurer's
Legal purpose
Not against the public (meth lab)
Unilateral contract
One party; duty to perform; enforceable by the insured
Contract of utmost good faith
Rely upon the representations of the other; trust each other
Consideration (value of trade)
Something of value
Warranties
Written statements; insured guarantees
All of the following are requirements of a legally binding contract, except: a. an exchange of equal consideration b. an offer and acceptance c. competent parties d. legal purpose
a. an exchange of equal consideration
When one party constructs the contract and the other party has no input, it is known as: a. contract of adhesion b. aleatory contract c. unilateral contract d. conditional contract
a. contract of adhesion
an insurance contract is a legally binding contract. which of the following best describes the insured must accept or reject all of the policy provisions? a. contract of adhesion b. unilateral contract c. contract of indemnity d. conditional contract
a. contract of adhesion
a banana peel on the floor of a grocery store on which a person could slip and fall is a: a. hazard b. peril c. cause of loss d. pure risk
a. hazard
which of the following would be a moral hazard? a. wet pavement on the highway b. arson c. leaving building unlocked d. a banana peel on the floor
b. arson
all of the following are requirements for a contract to be legally binding, except? a. both parties must give something of value b. both parties must sign the contract c. both parties must, at the time of the contract, be considered legally competent d. both parties must come to an agreement which requires both an offer and acceptance
b. both parties must sign a contract
statements made by the applicant on an insurance application are considered: a. warranties b. representations c. guarantees d. misrepresentations
b. representations
which statement made by the insured automatically voids the insurance coverage if not true? a. fraud b. warranty c. representation d. misrepresentation
b. warranty
An insurance contract is all of the following, except? a. contract of utmost good faith b. aleatory contract c. bilateral contract d. contract of adhesion
c. bilateral contract
an insurance contract is a legally binding contract. which of the following best describes a policy concept which allows the insured to be reimbursed without making a gain? a. conditional contract b. unilateral contract c. conditional contract d. contract of indemnity
d. contract of indemnity
all of the following statements are true regarding an insurance contract, except? a. consideration is something of value which is required of both parties b. the insured must adhere to the terms of the contract without negotiation c. insurance contracts are enforceable by the insured d. insurance contracts are bilateral contracts
d. insurance contracts are bilateral contracts
Which of the following would be considered competent to enter a contract? a. retired person committed to a mental hospital b. a girl scout, age 12, selling girl scout cookies c. individual having a difficult time walking after leaving a tavern d. person confined to hospital due to a heart attack
d. person confined to hospital due to a heart attack
all of the following are characteristics of an insurance contract, except? a. the insured must give consideration b. the insurer must give consideration c. the contract is enforceable by the insured d. the contract is enforceable by the insurer
d. the contract is enforceable by the insurer
Penalties of fraud (felony) *Court of law
1. Civil penalty of up to $10,000 2. Imprisonment for up to ten years 3. Combination of both
Contract of adhesion
Ambiguity (unclear); in favor of the insured; take it or leave it
Competent parties
At the time of agreement
Agreement
Both an offer and an acceptance
An insurer must rely on the truthfulness and integrity of the applicant. This is called: a. Conditional contract b. bilateral contract c. bilateral of utmost good faith d. unilateral contract
C. contract of utmost good faith
Conditional contract
Certain conditions (rules) are required of both parties