Contract Law

An insured wants to transfer his personal insurance policy to his friend. Under what conditions would this be possible?

The insured will need a written consent of the insurer

In which of the following examples would a contract between an insurer and prospective insured be legal?

the applicant has a prior felony conviction

because an insurance policy is a contract between the insurer and the insured, it must conform to the state laws governing contracts which require all of the following elements

-legal purpose -offer and acceptance -competent parties -consideration

Which of the following best describes a misrepresentation?

A statement intended to distract, mislead, or deceive a party to a contract

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?

Consideration

Which of the following best describes the aleatory nature of an insurance contract?

Exchange of Unequal values

The violation of a material warranty or other material provision of a policy allows

both the insurer and the insured to rescind

The applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of

concealment

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is

conditional

Contracts that are prepared by one party and submitted to another party on a "take it or leave it" basis are classified as

contracts of adhesion

Factual statements about the insured or the risk in an insurance policy are considered

express warranty

The key factor of representation that allows the injured party to rescind the party is

if the representation is false in a material point

according to the California insurance code, any agent violating the regulations relating to misrepresentation will be charged with a

misdemeanor, a fine not to exceed $25,000, and or a possible 1 year imprisonment

An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe?

Aleatory

How is the premium in an insurance policy determined?

By multiplying the rate by the number of units of insurance purchased

Which of the following best describes a policy non-renewal?

Discontinuance of an insurance policy by the insured on the policy anniversary date

A contract between an insured and an insurance company which agrees to pay the insured for loss caused by specific events is

A policy

What is a wrongful act or the violation of someones rights that leads to legal liability called?

Tort

When may a representation be withdrawn?

Prior to the issuance of the policy

If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is that?

Unilateral

In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?

Unilateral