Module B Quiz 2

The conditions section of an insurance policy sets forth the: -Limits of liability under the policy -Coverages provided by the policy -Exclusions of coverage under the policy -Duties fo the insured and the insurance company.

-Duties fo the insured and the insurance company.

Vanessa states on an application for personal automobile insurance, that she has had no car accidents within the past three years. She later remembers an accident and corrects this statement to include an accident that occurred two years ago. Vanessa's original statement can be described as: -A warranty -Misrepresentation -A representation -Concealment

A representation

A warranty in insurance best described as which of the following? -A statement made that represents the honest recollections of the applicant. -A material misrepresentation which is an untrue statement. -A statement that does not involve concealment nor misrepresentation. -A guarantee that the statements made by the applicant are completely true and untrue statements can void the coverage.

-A guarantee that the statements made by the applicant are completely true and untrue statements can void the coverage.

Which of the following would not have the capacity to enter into an insurance contract? -A person who is under the influence of drugs at the time of the agreement was made. -A person who has previously submitted a claim under an insurance company. A person who has just turned 18 but has not yet graduated from high school. -A person who can purchases a sports car without carefully thinking about the costs involved.

-A person who is under the influence of drugs at the time of the agreement was made.

The law recognizes two types of waivers. They are: -Express/Implied -Specific/Contractual -Estoppel/Indemnity -Apparent/Implied

-Express/Implied

An applicant fails to disclose known facts when completing an application for insurance. This act is known as: -Misrepresentation -Sliding -Hard fraud -Concealment

Concealment

If an insurance company covered an excluded claim it may have to continue paying other such claims because of: -Policy language -Indemnity rule -Comparative payment -Estoppel

Estoppel

In which part of an insurance contract would you expect to find a description of the duties and obligations of the insured? -The insuring agreement(s) -The exclusions -The declarations page -The conditions

The conditions

Any intentional misinformation provided by an applicant for an insurance policy that would have kept the insurance company from issuing the policy had that information been known is: -A material misrepresentation -Concealment -Fraud -Malfeasance

A material misrepresentation

Milton agrees to seal and wreak Alberts car for $4,000, so that Albert can collect $8,000 under his auto insurance policy. Which of the elements of a valid contract are missing in this agreement? -A valuable consideration -An offer and an acceptance -Competent parties -Legal purpose

Legal purpose

In order for a contract to be binding in a court of law, it must be designed for: -Legal purposes -Easy interpretation -Two parties -Res ipsa loquitor

Legal purposes

An element of a valid contract must involve an offer and acceptance. Sebastian completes an application for auto insurance and submits it to Indemnify Insurance Company. Who made the offer? -Sebastian's agent with the Indemnify Insurance Company -Indemnify Insurance Company -Both Sebastians and Indemnify Insurance Company -Sebastian

Sebastian

Which of the following parts of the insurance contract contains the "contractual agreement" between the insurance company and the insured? -The declarations page -The exclusions The insuring agreement The conditions section

The insuring agreement

Which of the following terms is used to describe a contract where the insurance company is the only party that is legally bound to perform its part of the agreement? -Absolute -Conditional -Aleatory -Unilateral

Unilateral

The giving up of a known right is called: -Waiver -Rebating -Estoppel -Violation of policy conditions

Waiver

Which of the following statements best describes a "representation" made in an insurance application? -A representation is a promise by the applicant that certain conditions will continue to exist throughout the policy term. -Another name for a representation is a warranty. -A representation explains the premise made by the insurance company. -A representation is a statement made by the applicant that he believes to be true when made, but which might prove to be false.

-A representation is a statement made by the applicant that he believes to be true when made, but which might prove to be false.

Which of the following people is committing "hard fraud"? -After a wind storm rips a few shingles off his roof, Stan climbs up and rips off several more before filing a claim. -After her purse is stolen, Paiges files a claim and states that her $1,000 watch was in her purse when it was stolen, even though it really wasn't. -Ally wants her insurer to buy her a new truck, so she pushes her current truck off a cliff and files an auto accident claim. -Dan's doctor keeps him in the hospital for an extra day in order to charge Dan's insurer a little more.

-Ally wants her insurer to buy her a new truck, so she pushes her current truck off a cliff and files an auto accident claim.

Estoppel is best exemplified by which of the following? -An insurer is prohibited from appointing persons without a valid producer's license. -An insurance producer is prohibited from selling insurance with unauthorized insurers. -An insured is prohibited from suing its insurer if the policy was cancelled for non-payment of premium. -An insurer is prohibited from denying a claim because its appointed producer advised the insured the claim covered.

-An insurer is prohibited from denying a claim because its appointed producer advised the insured the claim covered.

An agent, insured, or claimant has intentionally deceived an insurer for financial gain. Such an act is known as: -Twisting -Fraud -Concealment -Misrepresentation

-Fraud

An intentional act designed to deceive and induce another party to part with something of value is known as: -Subrogation -Hazard -Fraud Risk

-Fraud

Which of the following best demonstrates the meaning of "contract of adhesion" -The insured's premium payment is exchanged for the insurers promises to pay in the event of a covered loss -Once the insurer has accepted the application they must issue the policy as applied for based on the rule of warranty -The insurer should be able to rely on the insured's representations about the risk and exposures -Since the insurance company formulates the policy language, the courts usually will resolve any ambiguities in the insured's favor.

-Since the insurance company formulates the policy language, the courts usually will resolve any ambiguities in the insured's favor.

The doctrine that states an insured's policy should provide the coverage that an average prudent person would expect is: -The "Applied Principles'" doctrine. -The "Limited Liability" doctrine. -The "Ambiguous Language" doctrine -The "Reasonable Expectations" doctrine.

-The "Reasonable Expectations" doctrine.

An insurance contract is considered to be an aleatory contract. All of the following are characteristics of an aleatory contract, Except: -The contract is contingent upon uncertain events. -The contract allows the insured to receive a return in claims payments that is nearly equal to the amount paid in premium. -The contract allows an individual insured to receive much more in claims that paid in premium. -The contract allows the insurer to receive from an individual insured, much more money in premiums than is paid out in claims.

-The contract allows the insured to receive a return in claims payments that is nearly equal to the amount paid in premium.

Which of the following best describes the purpose of the "insuring agreement" contained in an insurance policy? -To identify the named insured who is bound by the contract -To set forth the conditions and exclusions -To explain the duties of the named insured in case of a loss. -To the insurer's promise to pay in case of a loss.

-To the insurer's promise to pay in case of a loss.