Policy Provision and contract law - Ch. 2 Quiz

What may the insurer use as a source of insurability information?

-Interviews with the applicant' s neighbors and friends -Motor vehicle records -Insurance history

When a mortgage is named in a mortgage clause attached to a. Fire or other direct damage policy

1.) The loss reimbursement will be paid to the mortgage as their interest may appear. 2.) The mortagee's rights of recovery will not be defeated by any act or neglect of the insured. 3.) Th mortgagee may bring a suit in their own name to recover damages to covered property.

Which term best describes the act of withholding material information that would be crucial to an underwriting decision?

Concealment

What is a material misrepresentation?

A statement by the applicant that, upon discover, 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 the earthquake damage is not covered

Which part of the insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged p[property from further loss, or defense expenses?

Additional coverage

In insurance, an offer is usually made when

An applicant submits an application to the insurer

Bob insists that the insurer owes him $10,000, while his insurer asserts that they owe him no more than $7,000. Which of the following would most likely describe the type of claim settlement that they might pursue?

Arbitration

When a disagreement occurs as to how to settle a loss in a "Fender Bender" between two cars, what procedure is followed?

Arbitration through the court

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 of the paperwork, and that she will receive a new policy in the mail in 5 business days. Even thought the policy is not issued, the applicants home is temporarily covered until then. Which of the following lakes that possible?

Binder

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

Concealment

When applying for an individual life insurance policy, an applicant states that he went to the doctor for nausea, but fails to mention that he was also having severe chest pains. This is an example of

Concealment

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

Conditions

The part of the policy that sets for the rules of conduct, duties, and obligation fo the parities is called the

Conditions

The part of the 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 (Because The Who what where and when is different in each contract)

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

Exclusions

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

Policy conditions define

How parties to the contract must act following a loss.

The proof of loss statement must be

In writing

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 int he insurance policy EXCEPT

Insuring agreement

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

Nonrenewal

An insurance contract must contain the following to be legally binding

Offer and acceptance, consideration, competent parties, and legal purpose

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

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 rate liability

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

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-Bailey Act was passed to

Protect private customer information filed with a financial institution

All of the following are apart of the policy structure except

Provisions

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

Provisions

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

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

Warranty (Guaranteed truth) (Represenations, believed to be true)