Chapter 2: contract law
According to the code, how many separate requirements should a insurance policy have?
6
Which of the following best defines an insurance policy?
A contract between an insured and an insurer that gaurentees payment for loss caused bu a soecific event
What is a material misrepresentation?
A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company
Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe?
Adhesion
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
In insurance, an offer is usually made when
An applicant submits an application to the insurer
Which of the following would be covered by contract law
An insurer suing the insurer for failure to provide promised benefits
A life insurance application is asking if the applicant has applied for any other insurance within the past 6 months. He states that he applies for $15,000 coverage from XYZ, but fails to mention the $150,000 coverage for DEF. the applicant is guilt of
Concealment
The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary of the policy is approved. This is an example of what kind of contract?
Conditional
Representations are written or oral statements made by the applicant that are
Considered true to the best of the applicant's knowledge
An agreement that is enforceable by law is known as a
Contract
Which of the following is not a required element of an insurance contract?
Counteroffer
Which of the following best describes the aleatory nature of an insurance contract?
Exchange of unequal values
The key factor of representation that allows the injured party to rescind the contract is
If the representation is false in a material point
All of the following information must be communicated in an insurance contract except
Information the other party already knows
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
Concealment as defined by the California insurance code is
Neglect on the part of the insured to communicate all information known to be material to the insurer
What is the definition of a unilateral contract?
One-sided: only one party makes an enforceable promise
The price of insurance for each exposure unit is known as
Rate
All of the following must be specified in an insurance policy except
The financial rating of the insurer
What is the wrongful act or violation of someone's rights that leads to legal liability called?
Tort
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
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?
consideration
When may a representation be withdrawn?
only before the insurance is in effect
