Insurance Testing: Ch. 3 Legal Concepts of the Insurance Contract

a contract

A written agreement that involves two or more parties and consideration is

principle of indemnity

An insured should be restored to the approximate financial condition occupied before the loss occurred. This is called the

aleatory contract

An insurer pays a large claim for medical expenses after the insured has only made one premium payment. This is an example of a(n)

representations

In regards to a life insurance policy or an annuity contract, all statements made on the application are considered to be

concealment

The withholding of facts in an insurance application is called

An airline insuring the lives of its passengers

Which of the following is NOT an example of insurable interest?

The withholding of information that should have been provided to an insurer is called concealment

Which of the following is a true statement?

A representation is valid as long as it is true

Which of these statements regarding an insurance application is true?

The insurance company

Who does the insurance agent legally represent?

One party writes the contract and the other party must accept the contract as written

Why are insurance contracts said to be contracts of adhesion?

implied authority

Pat the producer just sold an insurance policy to a client, explaining that he has authority to issue the policy. Pat was not specifically granted this power from the insurance company. Pat is exercising

doctrine of reasonable expectations

The exclusions and conditions in an insurance contract are required to be conspicuous, plain, and clearly stated. There should be no surprise when an insurance company denies a claim for a hidden clause. This is called the