Practice test chapter 2

what is a material misrepresentation

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

in insurance an offer is usually made when

An applicant submits an application to the insurer

the policy conditions define:

How parties to the contract must act following a loss.

the federal fair credit reporting act

Regulates consumer reports

what is NOT the consideration in a policy

The application given to a prospective insured

which clauses establishes the procedure for determining the amount of a loss when the insurer and the insured cant agree on the value of the property or amount of loss

appraisal clause

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 of the paperwork. even though the policy was not issued the applicants home is temporarily covered until then, which of the following makes that possible

binder

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

concealment

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

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

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

considered true to the best of the applicants knowledge

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 would modify the original insurance contract by either adding or removing coverage

endorsements

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

exclusions

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

first named insured

Under the professional liability loss settlement provision, what must an insurer do before offering to pay a claimant to settle a claim?

get the insured's consent

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 misrepresentation

a sworn written statement that must be furnished by the insured to the insurer before any loss under a policy can be

proof of loss

which of the following acts created a federal program that would share the risk of loss from potential terrorist attacks with the insurance industry

terrorism risk insurance act (TRIA)

which of the following would qualify as a competent party in an insurance policy?

the applicant has a prior felony conviction

in terms of parties to a contract, which of the following does not describe a competent party

the person must have at least completed secondary education