Chapter Quiz - Policy Provisions & Contract Law

In insurance, an offer is usually made when

An applicant submits an application to the insurer.

Which of the following would modify the original insurance contract by either adding or removing coverage? Additional Coverage Form Conditions Flexible Policy Endorsements

Endorsements

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

All of the following are conditions commonly found in the insurance policy except: Subrogation Appraisal Insuring Agreement Cancellation and Nonrenewal

Insuring Agreement - Provides information on the policy's coverages.

For a contract to be enforceable 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 denies?

Material Misrepresentation

The Gramm-Leach-Bliley Act was passed to:

Protect private customer information filed with a financial intitution.

Which of the following would qualify as a competent party in an insurance contract? The applicant is under the influence of a mind impairing medication. The applicant has a prior felony conviction. The applicant is intoxicated at the time of application. The applicant is a 12 year old student.

The applicant has a prior felony conviction.

Which of the following is not an essential element of an insurance contract? Legal Purpose Counteroffer Consideration Agreement

Counteroffer

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

Indemnity

A policy condition that stipulates how the amount of damaged or lost property will be determined if the insured and the principal do not agree on the value of a property loss is known as:

Appraisal

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? Valuation Clause Loss Settlement Clause Appraisal Clause Loss Payment Clause

Appraisal Clause - can be done by either the insured or the insurer.

What type of information would be found in a policy's insuring agreement? Location of premises Policy Limits Insurer's Address Renewal Dates

Renewal Dates

Which of the following is a method of claim settlement used in casualty insurance when the insured and insurer cannot agree on how to settle a claim? Proof of Loss Restoration Appraisal Arbitration

Arbitration

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: Legal Purpose Offer and Acceptance Conditions Consideration

Conditions - Part of Policy Structure.