Chapter 2 QUIZ

Tort

A wrongful act or the violation of someones rights that leads to legal liability

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 an aleatory contract, unequal amounts are exchanged between payments and benefits.

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

Both the insurer and the insured to rescind

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

Rate

The price of insurance for each exposure unit is called rate.

According to the code, how many separate requirements should an insurance policy have?

6 (The following must be identified: the parties to the contract; the property or persons being insured; a statement of the insurable interest that exists if the insured is not the owner; the risk(s) being covered; the time period during which the policy will be on force to continue; the stated premium or manner to calculate premium.)

Express warranty

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

Consideration

The binding force in any contract. Consideration is something of value that each party gives each other. The consideration on the part of the insured is the payment of the premium and the representations made in the application. The consideration on the part of the insurer is the promise to pay in the event of loss

In addition to penalties, fines , and possible imprisonment for violating the provision relating to the misrepresentation, the commissioner may suspend the license of such person for a period up to

3 years

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

In Insurance, an offer is usually made when

The completed application is submitted.

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

The Application given to a prospective insured. ( Consideration is something of value that is transferred between the two parties to form a legal contract)

Aleatory

A contract in which participating parties exchange unequal amounts. Insurance contracts are aleatory in that the amount the insured will pay in premiums is unequal to the amount the insurer will pay in the event of a loss.