Chapter 2 Test

Which of the following is considered an offer of a legal contract?

A An agent who solicits an application from a customer B An applicant who submits a completed application and initial premium to the insurer C An insurer that issues a policy to an applicant who has already paid the initial premium D An applicant who submits only a completed application to the insurer A

As listed on the Declarations page, most insurance policies will begin:

A At 12:01 p.m. on the effective date B Immediately after the insurer issues the policy C At 12:00 a.m. the day following policy issuance D At 12:00 a.m. on the effective date D

When the insurer elects to end coverage at the end of the policy period, the policy is said to be which of the following?

A Cancelled B Lapsed C Nonrenewed D Abandoned C

A sworn, formal statement made by the insured that provides the necessary details for the insurer to determine its liability under a policy is called a:

A Certificate of insurance B Proof of loss C Notice of loss D Certificate of authority B

An insurance contract is prepared by the insurer and submitted to the applicant on a take-it-or-leave-it basis, without negotiations. This describes which type of contract?

A Conditional contract B Aleatory contract C Contract of adhesion D Valued contract c

K makes a statement on the insurance application guaranteeing that they have a fire alarm system. Having the alarm system is required by the insurer in order for the policy to be issued. K's statement is considered a(n):

A Endorsement B Representation C Warranty D Provision C

When an individual faces the risk of economic loss in the event of property damage, this indicates which of the following?

A Limit of recovery B Merit rating C Insurable interest D Subrogation C

Generally, liability policies include all of the following in its coverage territory, except:

A Mexico B Canada C Puerto Rico D Guam A

The insured is not required to do which of the following in the event of a property claim?

A Notify police, whether or not a law has been broken B Cooperate with the insurance company's investigations C Protect property from further damage D Give notice of loss promptly A

An individual faces the risk of economic loss in the event of property damage because of which of the following insurance concepts?

A Principle of indemnity B Right of recovery C Legal purpose D Insurable interest D

Before closing on a mortgage, N is required by the mortgagee to have Homeowners insurance in place. After evaluating the risk, XYZ Insurer issues a Homeowners insurance binder to N. All of the following statements about the binder are correct, except:

A The binder must be written in order to be valid B The binder does not guarantee full policy issuance C The binder offers temporary coverage D Once XYZ Insurer issues the full policy, the binder will be terminated A

An insured needs to submit a claim after a property loss, and their insurer requires them to submit a notice of loss. All of the following statements about the notice of loss are true, except:

A The notice of loss must be submitted promptly B The notice of loss is a written notice that a loss occurred C The notice of loss contains details about the circumstances of the loss D The notice of loss contains an inventory of damaged property D

When writing the application for Homeowners insurance, B's agent asked if B had any theft losses in the past 3 years. B answered no, despite the fact that B was a theft victim 3 times in the past 3 years. B is guilty of which of the following?

A Waiver B Misrepresentation C Unilateral statement D Representation B

Statements that are guaranteed to be true at the time of application are known as:

A Waivers B Warranties C Statements of adhesion D Material representations B

Fraud is an intentional act of any of the following, except:

A Warranty B Misrepresentation used to induce someone to part with something of value C Deceit D Concealment A