QUESTIONS - Property and Casualty Policy provisions and Contract Law

What is a material misrepresentation?

A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company

The declarations page of the homeowners policy provides all of the following information EXCEPT

A statement that earthquake damage is not covered

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

Additional insured

In insurance, an offer is usually made when

An applicant submits an application to the insurer

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

Assignment

In return for premium, an insurance company must

Be fair in underwriting and pay covered losses.

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

Beneficiary's consent

An applicant is purchasing a homeowners policy. A producer comes to her home, fills out the paperwork, and tells the applicant that her home will be covered as soon as she signs all the paperwork, and that she will receive a new policy in the mail in 5 business days. Even though the policy is not issued, the applicant's home is temporarily covered until then. Which of the following makes that possible?

Binder

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

Cancellation

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

Concealment

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT

Conditions

The part of the policy that sets forth the rules of conduct, duties, and obligations of the parties is called the

Conditions

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

Representations are written or oral statements made by the applicant that are

Considered true to the best of the applicant's knowledge

Which of the following is NOT an essential element of an insurance contract?

Counteroffer

The part of a property policy that shows the amount of insurance, premium, and policy term is the

Declarations

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

Declarations

The part of a policy that clarifies terms in the policy is the

Definitions

Which of the following provisions requires that the insured protects the damaged property from further damage, cooperates with the insurer in settling the loss, and submits to the insurer signed proof of loss within a specified period of time?

Duties after loss

An insured has four separate but identical policies written by different insurers to cover her $100,000 building. Each policy is written for $100,000, and each has the pro rata liability other insurance clause. In the event of a total loss to the building, what would each insurer pay?

Each policy will pay $25,000 of the loss

The section of an insurance policy that details what perils are not insured against and what persons are not insured is known as the

Exclusions

Which of the following would be named on the declarations page of a property or liability policy?

First named insured

The policy conditions define

How parties to the contract must act following a loss.

The proof of loss statement must be

In writing

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

Indemnity

Who is responsible for filling out a notice of claim form?

Insured

Persons covered under an insurance policy, whether named or not, are known as the

Insureds

All of the following are conditions commonly found in the insurance policy EXCEPT

Insuring agreement

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 enforceable by law, the purpose of the contract must be

Legal and not against public policy

Untrue statements on the application unintentionally made by insureds that, if discovered, would alter the underwriting decision of the insurance company, are called

Material misrepresentations

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

Notify the insured in the event of financial difficulty

The other insurance provision that limits the liability of the insurer to a portion of the loss no greater than the amount the insurer bears to all the insurance covering the property is called

Pro rata liability

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 any loss under a policy, what is usually required from the insured?

Proof of loss

The Gramm-Leach-Bliley Act was passed to

Protect private customer information filed with a financial institution.

All of the following are considered parts of the policy structure EXCEPT

Provisions

The Federal Fair Credit Reporting Act

Regulates consumer reports

What type of information would be found in a policy's insuring agreement?

Renewal dates

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

The applicant's marital status

Which of the following is NOT the consideration in a policy?

The application given to a prospective insured

When a mortgagee is named in a mortgagee clause attached to a fire or other direct damage policy,

The loss reimbursement is paid to the mortgagee

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?

Warranty

In forming an insurance contract, when does acceptance usually occur?

When an insurer's underwriter approves coverage