Policy Provision & Contract Law

When an insurance policy does not offer a continuation or replacement at its expiration date, it is considered a

Nonrenewal

Duties of the insurer found in property policy conditions include all of the following EXCEPT

Notify the insured in the event of financial difficulty

All of the following are conditions commonly found in the insurance policy EXCEPT: A. Insuring Agreement B. Cancellation and nonrenewable C. Subrogation D. Appraisal

A. Insuring Agreement

A person who is not named as an insured on the declaration page of a policy but is protected by the policy is known as the

Additional insured

Which of the following clauses establishes the procedure for determining the amount of a loss when the insurer and the insured cannot agree on the value of property or amount of loss?

Appraisal clause

Which of the following describes the transfer of a legal right or interest in an insurance policy?

Assignment

Which of the following is NOT an essential element of an insurance contract? A. Legal purpose B. Counteroffer C. Consideration D. Agreement

B. Counteroffer

An insurance contract must contain all of the following to be considered legally binding EXCEPT

Beneficiary's consent

Termination of an in-force insurance policy prior to the expiration date shown in the policy is known as

Cancellation

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

Concealment

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principle has the insurer violated?

Consideration

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

Consideration

Which of the following would modify the original insurance contract by either adding or removing coverage?

Endorsement

All of the following are found in the declarations section of a policy EXCEPT the

Exclusion

The policy conditions define

How parties to the contract must act following a loss

The part of the insurance contract that describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured is called the

Insuring agreement

For a contract to be enforced by law, the purpose of the contract must be

Legal and not against public policy

An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied?

Material misrepresentation

A sworn written statement that must be furnished by the insured to the insurer before any loss under a policy can be paid is called

Proof of Loss

Before an insurer will pay an loss under a policy, what is usually required from the insured?

Proof of Loss

Which of the following would NOT be considered a source of insurability information by an insurer?

The applicant's marital status

A homeowners sells his house to a friend. The friend wants to keep the homeowner's current policy in effect. Under the assignment provision, which of the following is most likely?

The homeowners will need to get written consent from the insurer before the policy can be reassigned.

In terms of parties to a contract, which of the following does NOT describe a competent party?

The person must have a least completed secondary education

An agent tries to sell insurance over the phone to an applicant who appears to be confused, but is eventually able to give enough information for the application to be completed. After the policy was issued, the agent talked to the insured's family, and they explained that the insured was recovering from a surgery and might have been under the influence of medication at the time of application. Which of the following is true?

The policy may be voided if it can be proven that the applicant was not capable of making a buying decision at the time of the application.

The proof of loss statement must be

in writing

In insurance, an offer is usually made when

the completed application is submitted

What is material misrepresentation

will affect whether or not a policy is issued. if the insured had been truthful, it is very likely that the policy would not be issued.

Which of the following is a mandatory part of an insurance policy that varies with each individual policy?

Declarations

The pro rata liability clause is designed to protect the principle of

Indemnity

What insurance policy provision defines how the policy will respond if there is more than one insurance policy written on the same risk?

Other insurance