Chapter 3 Exam - Legal Concepts of the Insurance Contract

Only one party (the insurer) makes any kind of legally enforceable promise.

A unilateral contract is one in which:

The authority to represent the insurer.

Express power given to an agent in an agency agreement is:

Rescind the policy

If a material warrant violation on the part of the insured if found, what recourse does an insurer have?

Implied Authority

Reasonably necessary acts that an agent must perform for carrying out his/her expressly authorized duties are covered by an agents:

Indemnity

Restoring an insured to the same condition as before a loss is an example of the principle of:

Materiality of Concealment

The importance of a representation is demonstrated in what rule?

Fiduciary

When handling premiums for an insured, an agent his acting in which capacity?

Indemnity contract

Which of the following contracts is defined as "One that restored an injured part to the condition that was present before the loss"?

The insured and the insurer contribute equally to the contract.

Which of the following statements about aleatory contracts is NOT true?

Equal consideration is required between the involved parties.

Which of the following is NOT a requirement of a contract?

Probability of loss

Which of the following is NOT required in the content of a policy?

Contract may be accepted or rejected by the insured.

Which statement is CORRECT when describing a contract of adhesion?

An offer and Acceptance of the contract terms.

A contract requires:

One party is restored to the same financial position the party was in before the loss occurred.

Which of the following statements correctly describes a contract of indemnity?

Indemnity

Which principle is accurately describes with the statement "Insureds are entitled to recover an amount NOT greater than the amount of their loss"?