AINS Chapter 9
Because insurance contracts impose an obligation of complete honesty on the parties, an insurance contract is called a Select one: A. Contract of indemnity. B. Contract of utmost good faith. C. Conditional contract. D. Contract of adhesion.
B
For a contract to be enforceable, something of value must be exchanged. The thing of value exchanged is called Select one: A. Indemnity. B. Consideration. C. Adhesion. D. Mutual assent.
B
Insurance policy limits, deductibles, and policy premium are found in which one of the following categories of insurance policy provisions? Select one: A. Insuring agreements B. Declarations C. Conditions D. Miscellaneous provisions
B
Insurers generally have the option to repair, replace, or pay the value of lost or damaged property. These options Select one: A. Comply with insurance-to-value provisions so that the insured is not penalized. B. Are settlement options. C. Increase the insurer's costs. D. Lead to a higher settlement amount for the insured.
B
Jay purchased a used car that is painted purple with orange swirls, and its bumpers are green with yellow stripes. In his application for auto insurance, he was embarrassed to disclose the true colors of his car, so he wrote that it was white. Jay was later in an accident with the car. May his insurance insurer disclaim coverage for his losses because of the deliberate falsehood on his application? Select one: A. Yes, because Jay is guilty of a misrepresentation. B. No, because the falsehood did not involve a material fact. C. Yes, because Jay is guilty of concealment. D. No, because there was no intent to deceive; Jay was just trying to avoid embarrassment.
B
Joe owns a building covered by a property insurance policy. Joe intentionally sets fire to and destroys this building. He then files a claim with his insurance company. Which one of the following statements best describes why Joe would be precluded from recovering under his policy for this loss? Select one: A. Payment of the claim would violate the principle of indemnity B. Payment of the claim would be a violation of public policy C. Joe acted irrationally D. Joe acted under emotional duress
B
Joshua is a claim representative who has been assigned an auto liability claim. To determine whether his company's Personal Auto Policy (PAP) provides coverage for the claim, Joshua should first review the policy's Select one: A. Insuring Agreement. B. Declarations. C. Exclusions. D. Conditions.
B
Rachel is an insurance broker. She has received a sales referral from another broker concerning an airport management company, Airport Ltd. The company plans to operate a large, national airport in a major city and has requested a quote for airport liability coverage. Rachel will probably recommend the use of which one of the following types of policy forms? Select one: A. Preprinted B. Manuscript C. Miscellaneous D. Self-contained
B
The declarations page of a Personal Auto Policy (PAP) Select one: A. Lists any exclusions that are attached to the policy. B. Shows the name of the insured and the insured's mailing address. C. Identifies common policy definitions. D. Indicates that the policy period starts at 12:01 PM standard time at the address of the insurer.
B
The definitions section of the policy Select one: A. Consists of dictionary meanings of words. B. Helps clarify real or perceived ambiguity. C. Describes the services provided by the insurer. D. Contains a definitive statement of coverage.
B
The homeowners policy excludes coverage for professional services, such as those provided by a physician, primarily in an attempt to Select one: A. Avoid covering uninsurable losses. B. Eliminate coverage for exposures that require special handling by the insurer. C. Eliminate duplicate coverage. D. To avoid insuring losses that could be prevented.
B
The insuring agreement of a homeowners policy specifies that Select one: A. Endorsements are available to modify the contract. B. The insurer will provide policy coverage in return for the premium and compliance with policy provisions. C. Five property coverages are provided by the policy. D. Defined words have special meanings when they are used within the policy.
B
The medical payments coverage in a homeowners policy covers certain medical expenses incurred by Select one: A. Insureds. B. Nonresidents of the insured's household. C. Resident relatives of the insured. D. Residents of the insured's household other than residence employees.
B
The policy numbers, inception, and expiration dates of all attached forms and endorsements are found in the policy Select one: A. Conditions. B. Declarations. C. Miscellaneous provisions. D. Insuring agreements.
B
The requirements of a valid offer include Select one: A. Definite terms, intent to contract, and conditions. B. Agreement, capacity to contract, consideration, and legal purpose. C. Intent to contract, communication to the other party, and acceptance. D. Definite terms, communication to the other party, and acceptance.
B
War is generally excluded from property insurance policies because Select one: A. Most families and businesses do not face a war exposure. B. War affects many people at the same time with widespread losses. C. The federal government covers war losses. D. War losses can be prevented through careful planning.
B
Which one of the following categories of insurance policy provisions outlines what is covered and where and when coverage applies? Select one: A. Conditions B. Declarations C. Insuring agreements D. Miscellaneous provisions
B
Which one of the following is the correct term for documents that are used to modify commercial property coverage to meet the specialized needs of particular insureds? Select one: A. Optional exclusion forms B. Endorsements C. Supplemental declarations D. Commercial Property Conditions
B
A broad statement of an insurer's promises to the insured may be found in a policy's Select one: A. Conditions. B. Declarations. C. Insuring agreements. D. Endorsements.
C
A description of the property insured, a list of mortgagees, and the applicable coinsurance percentage(s) are shown on which one of the following documents? Select one: A. Causes of loss forms B. Commercial property coverage forms C. Commercial property declarations D. Commercial Property Conditions
C
All of the following are true with regard to the listing of a named insured on a property insurance policy, EXCEPT: Select one: A. The tenant of a building is usually the named insured on a policy covering the tenant's personal property in the building. B. The owner and occupier of a building is usually the named insured on a policy covering both the building and personal property in the building. C. The secured lender (mortgagee) for a building is usually the named insured on a policy covering the building. D. The owner of a building is usually the named insured on a policy covering the building.
C
All of the following information is provided on the declarations page of a Personal Auto Policy (PAP), EXCEPT: Select one: A. A description of the insured autos B. A schedule of coverages C. A schedule of policy conditions D. The name of the insurer providing the coverage
C
Almost all property insurance policies exclude coverage for losses from war and nuclear hazard because Select one: A. It is against public policy to cover losses from war and nuclear hazard. B. There might not be enough claim adjusters available in the event of a loss. C. Insurance industry funds might not be adequate to pay all losses caused by war or nuclear hazard. D. It is illegal to cover losses from war and nuclear hazard.
C
An essential element of a contract is that the parties to the contract are in agreement, which is Select one: A. The name of the insurer issuing the policy. B. A general agreement stating the insurer's duty to pay damages and defense costs subject to the terms of the policy. C. A general agreement stating that the insurer is providing the coverage subject to payment of premium and to the terms of the policy. D. The name and mailing address of the insured.
C
An excess policy that contains all the agreements between the insured and insurer and that forms a complete insurance policy is a Select one: A. Combination policy. B. Following-form policy. C. Self-contained policy. D. Drop-down policy.
C
An insurer will make a loss payment if an insured loss occurs and if the insured performs certain duties. This illustrates that an insurance policy is a Select one: A. Personal contract. B. Contract of adhesion. C. Conditional contract. D. Contract of indemnity.
C
Bea's Restaurant suffered a serious fire due to a lightning strike, and the structure had to be torn down. The damage to the building is an example of Select one: A. An indirect loss. B. A time element loss. C. A direct loss. D. A consequential loss.
C
Ching is a commercial claim representative who has been assigned a large fire loss. Ching suspects that the insured may not have been completely honest in describing the property before the policy was issued such that coverage for the claim may be denied. In which document might Ching find the representations of the insured regarding the property's description? Select one: A. Declarations B. Manuscript C. Application D. Endorsements
C
Edna, who participates in a homeowners' reciprocal exchange knows that the members of the exchange insure members' loss exposures. A policy issued by the reciprocal insurer specifies the attorney-in-fact's authority to implement its powers on behalf of Edna and the other members of the exchange. Since this information regarding the powers of the attorney-in-fact affects coverage but does not have the force of conditions, it is found under her policy's Select one: A. Conditions. B. Insuring agreement. C. Miscellaneous provisions. D. Declarations.
C
In creation of a contract of insurance, what is the consideration that is provided by the insurer? Select one: A. The insurer's delivering the insurance policy to the insured B. The prompt payment of claims C. The insurer's promise to pay claims for covered losses D. The acceptance of the application
C
Interest that may accrue on damages before a judgment has been rendered is Select one: A. Retroactive interest. B. Collateral interest. C. Prejudgment interest. D. Postjudgment interest.
C
Law Firm asked Insurance Company to provide both a commercial liability policy and a professional liability policy to meet its coverage needs. Insurance Company believes that there could be some types of losses that would be covered under both policies, a situation it wishes to avoid. What type of policy provisions could Insurance Company use to address this problem? Select one: A. Extensions B. Coverage sections C. Exclusions D. Additions
C
Property insurance coverage on dwellings and other structures covering all causes of loss not specifically excluded is known as Select one: A. Broad form coverage. B. Named perils coverage. C. Special form coverage. D. Basic form coverage.
C
The Auto Medical Payments Coverage endorsement to the business auto policy provides coverage for Select one: A. Medical, rehabilitation, income loss, substitute services, and death benefits specified by auto no-fault laws. B. Bodily injury, including pain and suffering, suffered by the insured in a covered auto accident. C. Reasonable and necessary medical expenses incurred by a person, regardless of fault. D. Bodily injury, including pain and suffering, suffered by another person injured as a result of a covered auto accident.
C
The HO-3—Special Form (HO-3) policy, a nontransferable contract Select one: A. Is fully assignable without the insurer's consent. B. Cannot be assigned to another party. C. Is assignable only with the insurer's written consent. D. May be assigned when the insured makes a written request within 60 days of the assignment.
C
The Section II Limit of Liability provision of the HO-3—Special Form (HO-3) stipulates that the single limit of Coverage E—Personal Liability appearing on the declarations page is the total limit of coverage for Select one: A. Each person injured in a claim. B. Each insured separately. C. Any one occurrence. D. Each claim made relative to an occurrence.
C
The most common violations of the concept of utmost good faith in insurance policies involve buildup in insurance claims filed by insureds and/or Select one: A. Overindemnification. B. Exchange of unequal amounts. C. Misrepresentation of material facts. D. Adverse selection.
C
When Joshua purchased his home, he did not tell his insurer that he kept flammable chemicals in his basement for use in a hobby. Joshua is aware that storing the chemicals increases the potential for loss to his home. The fact that the insurer does not have this information is an example of which one of the following? Select one: A. An exchange of unequal amounts B. Consideration C. Concealment of material fact D. The principle of indemnity
C
Which one of the following can be covered by a floater? Select one: A. Carports B. Swimming pools C. Jewelry D. Antenna towers
C
Which one of the following is a required component of the commercial property coverage part that specifies the perils covered? Select one: A. Commercial Property Conditions B. Commercial property coverage form C. Causes of loss form D. Perils specified form
C
Which one of the following statements is correct with respect to the subrogation provision in Part One of the Workers Compensation and Employers Liability Policy? Select one: A. Dependents of a deceased employee have no right of action against the insurer. B. If the employer fails to comply with policy requirements, the insurer is not obliged to pay benefits. C. When the insurer pays benefits, any right of recovery against a third party becomes the right of the insurer. D. An employer's failure to comply with health and safety laws and regulations results in immediate suspension of coverage.
C
Which one of the following statements is true regarding the distinguishing characteristics of insurance contracts? Select one: A. Insureds are generally allowed to transfer an insurance policy to a third party without the insurer's written consent, because insurance policies are not considered to be personal contracts. B. Insurance policies are considered conditional because if the insured meets the premium payment condition, the insurer must pay the claims. C. Contracts of adhesion significantly influence the enforcement of insurance policies. D. Standard insurance policies contain no ambiguities.
C
XYZ Manufacturing (XYZ) has a Commercial General Liability (CGL) Coverage Form with a $2,000,000 each occurrence limit, a $3,000,000 general aggregate limit, and a $3,000,000 aggregate limit for products and completed operations. If XYZ has products liability losses of $1,500,000, $1,200,000, and $500,000 during the policy period, how much would the CGL policy pay for the losses? Select one: A. $1,500,000 B. $2,000,000 C. $3,000,000 D. $3,200,000
C
Alfred has an unendorsed HO-3 policy. After a severe fire loss to Alfred's house, an investigation proved that Alfred intentionally set the fire. Alfred was jailed for arson, and his property claim was denied. Which one of the following describes the rights granted by Alfred's HO-3 to the mortgagee? Select one: A. The mortgagee will collect the full amount of the claim if it joins with the insurer in prosecuting Alfred. B. The mortgagee will collect the full amount of the claim. C. The mortgagee will not collect any amount of the claim because the loss was a fraudulent act. D. The mortgagee will collect the amount of its insurable interest in the property.
D
All commercial package policies begin with two components, namely, common policy conditions and common Select one: A. Modules. B. Manuscripts. C. Coverages. D. Declarations.
D
Basheer sold his car to Carl. For an additional sum, he also transferred his auto policy to Carl, to go with the car. Is Carl now entitled to the benefits promised by Basheer's policy? Select one: A. Yes, because the assignment was a proper transaction. B. It depends on the intent of the parties. C. It depends on whether or not Carl suffers a subsequent loss. D. No, because Basheer's policy is not transferable.
D
Depending on the policy terms and conditions, property insurance can protect other parties in addition to the named insured. Which one of the following statements best describes the coverage for property of others provided under a homeowners policy? Select one: A. The personal property of tenants of the named insured is automatically covered under a homeowners policy while in the part of the residence that the tenant usually occupies. B. A homeowners policy can provide worldwide coverage for property belonging to the named insured's guests, residence employees, and others. C. The spouse receives the same coverage as the named insured, even if the spouse is not named on the declarations and is not residing in the same household. D. Homeowners policies can cover property of others who reside in the named insured's household - relatives of any age, and other persons under the age of twenty-one.
D
Exclusions in insurance policies generally serve all of the following basic purposes, EXCEPT: Select one: A. Assist in keeping premiums reasonable B. Eliminate coverages requiring special treatment C. Assist in managing moral and morale hazards D. Outline steps the insured needs to take to enforce coverage
D
In terms of the elements of a contract, an insurance application is Select one: A. An acceptance. B. A consideration. C. An agreement. D. An offer.
D
Most property and liability insurance policies contain other insurance provision clauses in order to Select one: A. Eliminate the collateral source rule. B. Ensure losses are fortuitous. C. Encourage utmost good faith. D. Prevent over indemnification.
D
Neighbors Jack and Jerry were visiting and discussing the cost of new vehicles. Jack told Jerry he wanted to buy a $26,000 car but to do so he would have to sell his current auto for $8,000. Jerry said, "I accept your offer." The contract between Jack and Jerry is Select one: A. Valid because of Jack's intent to contract for sale of his car. B. Valid because of Jack's intent to sell and Jerry's acceptance of Jack's offer. C. Not valid because there were no definite terms established. D. Not valid because Jack did not give the offer consideration.
D
Property insurance policies usually exclude coverage for damage from water seepage, insects, or rodents because these types of damages are Select one: A. Catastrophic in that it affects many insureds. B. Covered through government insurance plans. C. Extremely costly to repair. D. Preventable through proper care and maintenance.
D
Self-contained policies Select one: A. Address unique coverage needs. B. Require more than one form to address coverage needs. C. Do not address all of an insured's coverage needs. D. Address complete coverage needs.
D
The Causes of Loss-Basic Form differs from the Causes of Loss-Broad Form in which one of the following ways? Select one: A. The broad form covers "risks of direct physical loss" subject to the form's exclusions and limitations. B. The broad form adds the water damage peril, which covers flooding, rainfall, sewer backup, and similar causes of water damage. C. The broad form specifically excludes rupture or bursting of water pipes and leakage of water or steam from any part of a system or appliance. D. The broad form provides coverage for loss caused by collapse of a building or personal property resulting from specified perils.
D
The Declarations page of an insurance policy includes all of the following, EXCEPT: Select one: A. Name and mailing address of the insured B. Policy period C. Name of the insurer issuing the policy D. Agreement and definitions
D
Which one of the following is an example of material misrepresentation by Albert, a businessman applying for property insurance on a building he owns? Select one: A. Albert does not tell the insurance agent he is about to file for bankruptcy. B. Albert does not tell the insurance agent his building has a defective heating system that could explode at any time. C. Albert tells the insurance agent he has owned the building for 17 years, but he has actually owned it for 18 years. D. Albert tells the insurance agent the building is used to store steel, but it is actually used to store steel drums containing flammable liquids.
D
Which one of the following is the correct term for documents that are used to modify commercial property coverage to meet the specialized needs of particular insureds? Select one: A. Optional exclusion forms B. Supplemental declarations C. Commercial Property Conditions D. Endorsements
D
Which one of the following statements is true regarding insurance policies? Select one: A. Because the insurer's promise to pay claims spans several years, insurance policies have a separate set of requirements than those for any other valid contract. B. Insurance policies are approved in advance and therefore are presumed to meet all of the requirements of a valid contract. C. Because of their special nature, insurance policies must meet several requirements in addition to those required for other valid contracts. D. Insurance policies must meet the same requirements as any other valid contract.
D
Which one of the following types of insurers is the most likely to include its bylaws as part of its policies? Select one: A. Workers compensation insurers B. Auto insurers C. No-fault insurers D. Mutual insurers
D
he property casualty insurance policy provisions that indicate who or what is covered, and where and when coverage applies, are found in the Select one: A. Miscellaneous provisions. B. Definitions. C. Insuring agreements. D. Declarations.
D
A commercial package policy is an example of a Select one: A. Modular policy. B. Standard self-contained policy. C. Nonstandard self-contained policy. D. Manuscript policy.
A
A typical homeowners policy covers the "residence premises," which is defined as the location shown in the policy declarations. Usually, the policy definition of residence premises also includes which one of the following? Select one: A. Supplies located on or next to the premises used to construct, alter, or repair the premises B. Personal property owned by the insured and permanently contained within the home C. Any secondary residence owned by the insured and located within the policy's coverage territory D. The land on which the home is located
A
All of the following are typical examples of conditions in an insurance policy pertaining to the insured's obligations, EXCEPT: Select one: A. Defending itself from lawsuits B. Paying premiums C. Documenting losses D. Reporting losses in a timely manner
A
An injury arising from an intentional tort such as libel, slander, or invasion of privacy is called Select one: A. Personal injury. B. Bodily injury. C. Individual injury. D. Property damage.
A
An insurance policy is considered a contract of adhesion when it is drafted by the Select one: A. Insurer. B. Insurance commissioner. C. Third party. D. Insured.
A
Auto insured Tom was surprised when he was invited to his mutual auto insurer's election of its board of directors. The information relating to this type of election does not qualify strictly as a specific provision, therefore, it is found in Select one: A. A miscellaneous provision. B. An insuring agreement. C. A condition. D. A declaration.
A
Because the insurance company usually determines policy wording and the insured has little choice but to "take it or leave it," an insurance contract is a Select one: A. Contract of adhesion. B. Bilateral contract. C. Contract of indemnity. D. Nontransferable contract.
A
Documents that can become part of an insurance policy include all of the following, EXCEPT: Select one: A. Summary of available coverage options B. Insurer's bylaws C. Relevant statutory terms and provisions D. Completed application
A
Doug owned a restaurant in Iowa. It is illegal to conduct any type of gambling activity in Iowa. However, business was slow and Doug replaced his restaurant furniture and fixtures with slot machines and poker tables. Doug enters into several contracts. Which one of the following is an example of a contract with a legal purpose? Select one: A. A contract for life insurance on Doug's life for death by accident. B. A contract for property insurance insuring Doug's building entered into after Doug intentionally burned down the building. C. A contract for business income insurance covering any interruption in Doug's new business from a covered peril. D. A contract for property insurance insuring Doug's slot machines.
A
For contract purposes, an offer is valid if it includes the capacity to contract, an agreement, a legal purpose, and Select one: A. Consideration from both parties. B. A legally enforceable promise from the offeree to the offeror. C. An agreement between the parties. D. An acceptance from the one party.
A
If Katie purchases auto insurance from an out-of-state insurer without a license to sell insurance in Katie's state, the policy may be an invalid contract because Select one: A. The insurer was not legally competent to make the agreement. B. The contract does not have a legal purpose. C. The principle of indemnity has been violated. D. Utmost good faith was not practiced by the parties.
A
If an insurer mistakenly writes an insurance policy in a state in which it is not licensed, the insured might later successfully argue on what grounds that the contract is not valid? Select one: A. No legal capacity to contract B. No legal purpose C. The lack of consideration D. No agreement
A
If duress, coercion, fraud, or mistake is involved in the creation of a contract, then the contract is Select one: A. Unenforceable. B. Under consideration. C. Binding. D. Nontransferable.
A
If you were a property owner and wanted the broadest coverage available to protect your building, you would purchase Select one: A. Special form coverage. B. Broader form coverage. C. Basic form coverage. D. Broad form coverage.
A
In commercial insurance policies, several different individuals and businesses may be listed as named insureds. Which one of the following is the term used to refer to the party that is responsible for paying premiums and that has the right to receive any return premiums and cancel the policy? Select one: A. The first named insured B. The contact person C. The authorized agent D. The named insured
A
Ling has noticed that her neighbor has recovered money for two homeowners property claims and an auto damage claim he has filed in recent years. Ling has been paying insurance premiums for many years and has never suffered a loss or made a claim. She feels that her insurance contracts over the years have been worthless to her. What Ling does not understand is that she has been paying premiums in exchange for Select one: A. A promise of protection. B. A contract of utmost good faith. C. A nontransferable contract. D. A contract of adhesion.
A
Many property insurance policies contain a provision that reduces the amount of recovery for loss if the property is underinsured. This provision is known as Select one: A. Coinsurance. B. The other insurance clause. C. The deductible. D. Reinsurance.
A
Someone contracting while under the influence of alcohol or drugs can avoid or ratify the contract upon becoming sober because there is no Select one: A. Capacity to contract. B. Consideration. C. Agreement. D. Legal purpose.
A
Standard forms Select one: A. May result in different insurers issuing identical policies. B. Are commonly used in professional liability insurance. C. Prevent insurers from offering significantly different coverage. D. Allow insurers to modify terms and conditions to accommodate differences in applicants' needs.
A
The policy section that usually contains the policyholder's name and mailing address, policy limits, and premium amount is the Select one: A. Declarations. B. Conditions. C. Definitions. D. Miscellaneous provisions.
A
Twelve-year-old Beth entered into a contract to purchase an expensive bracelet from Sherry. Before she paid Sherry for the bracelet, Beth accidentally dropped it into a meat grinder, ultimately crushing and destroying it. In a legal action, most courts would Select one: A. Permit Beth to reject the contract due to her capacity to contract. B. Require Beth to pay Sherry the full value of the bracelet. C. Permit Beth to pay only the actual cash value of the bracelet. D. Require Beth to replace the bracelet under the doctrine of substantial performance.
A
Which one of the following losses would be covered under a typical broad form property policy but not under a basic form policy? Select one: A. A large limb from a decaying tree falls onto a building causing damage to the building. B. Maintenance workers accidentally bang a ladder against a sprinkler head, which discharges, causing water damage to a building. C. A sinkhole collapse damages a building. D. The sudden malfunction of the oil-burning furnace discharges grimy, sooty smoke throughout a building, damaging its interior.
A
Which one of the following statements about policy sections is true? Select one: A. A condition clarifies an insurer's promise or an insured's duty. B. An insuring agreement establishes procedures for implementing the policy. C. Declarations state what an insurer will not cover. D. Exclusions define terms to clarify ambiguity.
A
Which one of the following statements is correct with respect to the condition Duties in the Event of Loss or Damage of the Building and Personal Property Coverage Form (BPP)? Select one: A. If the insured fails to perform any of them, the insurer may not have to pay for the loss. B. The insured is required to give the insurer notice of the loss, including a description of the property damaged, within 24 hours. C. The claims adjuster is required to take all reasonable steps to protect the property from further loss, prepare an inventory and set the damaged property aside. D. To prevent insurance fraud, the insurer is obliged to notify the police of all losses reported.
A
Which one of the following types of insurance policies is least likely to be considered a contract of adhesion? Select one: A. A manuscript policy B. A commercial crime policy C. A personal articles floater D. An automobile policy
A
Which one of the following types of insurers is the most likely to include its bylaws as part of its policies? Select one: A. Mutual insurers B. Workers compensation insurers C. No-fault insurers D. Auto insurers
A
While driving to work, John loses control of his automobile, which jumps a curb and strikes a tree. Which one of the following coverages must John have purchased in order for the damage to his vehicle to be covered? Select one: A. Collision B. Vehicle damage C. Specified causes of loss D. Comprehensive
A
Within the Personal Auto Policy (PAP), the name of a lender, loss payee, or lienholder is usually shown Select one: A. On the Declarations page. B. In the insuring agreement. C. On the schedule of coverages. D. In the definitions section.
A
All of the following explain the importance of a policy limit, EXCEPT: Select one: A. It helps the insurer keep track of its overall obligations in any one geographical area. B. It tells the insurer whether to value an item at replacement cost or actual cash value. C. It helps the insured determine whether the amount of insurance is adequate. D. It tells the insurer the maximum amount it may have to pay for a covered loss.
B
An insurer will make a loss payment if an insured loss occurs and if the insured performs certain duties. This illustrates that an insurance policy is a Select one: A. Contract of indemnity. B. Conditional contract. C. Personal contract. D. Contract of adhesion.
B
