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Exam 43: Insurance, Wills, and Trusts

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Question 21

Multiple Choice

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Roma obtains a fire insurance policy on her house with Safe-wise Insurance Company. This policy is an arrangement for

A) avoiding the assumption of responsibility.
B) predicting a potential loss based on unknown factors.
C) shifting the imposition of liability.
D) transferring and allocating risk.

E) B) and D)
F) A) and C)

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Question 22

Multiple Choice

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Red obtains a fire insurance policy on his vacation cabin near Smoky Mountain from Torchlight Insurance Company. The cabin is lost in a fire, but the parties dispute the amount of Torchlight's liability under an ambiguous clause in the policy. A court would most likely

A) interpret the clause against Red.
B) interpret the clause against Torchlight.
C) rewrite the clause and apply it as rewritten.
D) strike the clause from the policy.

E) A) and B)
F) B) and D)

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Question 23

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By insuring property, its owners protect themselves.

The trustee's duty of loyalty requires that he or she act in the exclusive interest of the grantor or settlor.

Insurance contracts are usually obtained through an agent, who works as an independent contractor.

An insurable interest in property need not exist when a policy insuring against its damage or loss is purchased.

If a trustee fails to comply with the terms of the trust or the governing statute, he or she is personally liable for any loss.

Clark obtains from Dependable Insurance Inc. a policy that provides if a dispute arises between the parties concerning the settlement of a claim, the dispute must be submitted to an impartial third party, not a court, for resolution. This is

On the death of the owner, property can be transferred through a will, a trust, or a state law prescribing its distribution. This indicates our laws require that, on death, title to property must be

Under intestacy laws, if Darlene has no heirs, then the property of her estate

Under intestacy laws, if no heirs exist, then the state assumes ownership of the property of an estate.

An insurance broker is most likely

With a constructive trust, a court declares a property owner to be a trustee for parties who are, in fairness, entitled to the benefits that flow from the property.

At the grantor's death, assets held in a living trust revert to the decedent's estate.

Rollo opens an account for $250,000 at Savers Bank. The account provides that the funds are held in trust for Thea, Rollo's daughter. This is

If a will does not provide how an estate will be distributed to grandchildren, under the per capita method of distribution, an heir takes the share that his or her deceased parent would have been entitled to inherit.

Insurance is an arrangement for transferring and allocating risk.

Carl dies without a will, survived by his granddaughter Dora and her brother Elton. The grandchildren are Carl's

A testator can revoke a will by having someone else tear it up in the testator's presence and at his or her direction.

Greta applies for a homeowners' policy with Home Insurance Company through Ivy, an insurance agent. As a general rule, Home is bound by