Chapter 2

Adhesion

An insurance contract feature that permits all ambiguous areas to be construed in favor of the insured is

Loss settlement is reduced by 15%

Under a Business owners Policy, if the insured property is vacant beyond 60 Days

To provide excess Insurance

All of the following are Characteristics of Reporting Forms, EXCEPT:

Bilateral Contract

All of the following are characteristics of insurance contracts EXCEPT

Loss of rental income to the apartment

All of the following are direct losses EXCEPT

Incompetent parties

All of the following are essential elements of a contract EXCEPT:

Reporting requirements may be waived by the insured.

All of the following are true of timely reporting requirements of reporting forms EXCEPT

Paint and related solvents stored in original containers

All of the following would be considered a hazard EXCEPT

Find in favor of the insured since the policy is a contract of adhesion

How will court of law interpret an Insurance contract that contains policy language that is ambiguous?

Coverage will apply

If a property is determined to be unoccupied at the time of loss

Moral Hazard

Illegal gambling or the illegal use of narcotics would be an example of a

Subrogation

The legal right of an insurance company to seek reimbursement from a negligent third party is

The cause of loss

The perils covered in a policy may be described as

Promote proper values and proper coverage amounts.

The primary purpose of the full reporting or honesty clause is to

Indemnification

The principle of insurance that restores one to approximately the same condition that they enjoyed prior to their loss is

Coverage may be verbally bound with no premium by an appointed insurance agent

To place insurance coverage into effect

Consideration

Under an insurance contract, both the insured and insurer give up something of value which is:

Concealment

What term describes the failure to disclose a fact to the application for insurance

Representations

What term describes the statements made by an individual at application

Actual physical damage to an insured risk

Which of the following definitions best describe a direct loss?

Provides coverage for direct loss unless specifically excluded

Which of the following definitions best describes Special (Open Peril) coverage

Only perils listed in the policy are covered

Which of the following definitions best describes Specific (Named Peril) Coverage

The results or consequences of a direct loss

Which of the following definitions best describes an indirect or consequential loss

Ethical Hazard

Which of the following is NOT a common type of hazard

Guaranteed Warranty

Which of the following is NOT a type of warranty

Fire to a house

Which of the following would be an example of a direct loss?

Manuscript Coverage

Which one of the following is NOT a common means of writing property insurance