Question 1

Bemer returned from vacation only to realize his insurance payment was past due. Luckily, his insurance company had inserted a(n)  ________ clause that provided a grace period to pay the premium.

Accepted Answer

A)   antilapse
B)   grace period
C)   payment forgiveness
D)   waiver of payment
E)   compassionF) C) and D)
G) B) and D)

Question 2

In the case text, Mellin v. Northern Security Insurance Company, the Mellins filed a claim under their homeowner's insurance policy because the odor of cat urine emanated from a downstairs neighbor's condominium to an open plumbing chase servicing their kitchen. The Mellins sold their unit for a price less than that of a comparable condominium in the area, which was unaffected by the odor. The Mellins sued their insurance company because it denied the claim, stating it was not a "physical loss" and therefore, the claim was not covered under their policy. Which of the following was the result on this issue?

Accepted Answer

A)   The Mellins' claim was dismissed because an odor was not considered to be a "physical loss" as defined under the insurance policy.
B)   The Mellins' claim was dismissed because the suit should have been brought against the downstairs neighbor, not against their insurance company.
C)   The Mellins were allowed to proceed with their claim because the court held physical loss can include changes perceived by the sense of smell, even in the absence of physical damage.
D)   The Mellins' claim was dismissed because they sold the property and did not receive a proper appraisal demonstrating their damages prior to bringing the lawsuit.
E)   The Mellins' were allowed to proceed with their claim because the insurance company failed to exclude odors in its policy.F) D) and E)
G) A) and E)

Question 3

If an insurance policy is cancelled, what might the insured be entitled to?

Accepted Answer

A)   A refund of premium payments.
B)   A grace period to obtain a different insurance company.
C)   The opportunity to dispute the cancellation.
D)   An injunction against the insurance company.
E)   An opportunity to appeal to an insurance board.F) B) and C)
G) C) and D)

Question 4

What type of insurance policy covers an individual's life or health insurance?

Accepted Answer

A)   Personal
B)   Proprietary
C)   Individual
D)   Private
E)   ParticularF) A) and C)
G) C) and E)

Question 5

Which of the following types of insurance protects the producer or manufacturer of a good from loss incurred by people who are injured using the good?

Accepted Answer

A)   Contractors' liability
B)   Strict liability
C)   Product liability
D)   Business operations
E)   Consumer protectionF) A) and E)
G) B) and C)

Question 6

Micha and Genenive just bought a new house after their recent wedding. What type of insurance will help protect their home from loss or damage?

Accepted Answer

A)   Property insurance
B)   Home insurance
C)   Loss of property insurance
D)   Marital insurance
E)   Golden parachute insuranceF) D) and E)
G) A) and E)

Question 7

The insured and insurer both have obligations under an insurance contract, if either fails to meet their obligation, the other can usually sue for breach of contract.

Accepted Answer

A) True 
 B)False

Question 8

Describe the effect of an appraisal clause in a policy of insurance, and explain how these usually work.

Accepted Answer

If the insured and the insurance company...

Question 9

________ is a term referencing the concept that a sufficient interest must exist on the part of an insured in order to take out a policy of insurance.

Accepted Answer

A)   Insurable interest
B)   Pecuniary interest
C)   Financial concern
D)   Financial effect
E)   Profit impactF) C) and D)
G) B) and D)

Question 10

What is the name of the document that embodies the insured and insurers agreement?

Accepted Answer

A)   Policy
B)   Application
C)   Draft
D)   Check
E)   PaperworkF) All of the above
G) A) and B)

Question 11

A[n] ________ clause is part of an insurance contract that calls for a dispute to be settled by a neutral third party.

Accepted Answer

A)   Mediation
B)   Litigation
C)   Dispute
D)   Settlement
E)   ArbitrationF) A) and C)
G) A) and B)

Question 12

The most important element of the insurance agreement is ________, the potential for loss.

Accepted Answer

A)   risk
B)   the parties
C)   the premium
D)   harm
E)   considerationF) C) and D)
G) A) and B)

Question 13

[Information Issues] Nari bought a sporty, yellow convertible. She had a teenage son at home, Joon, but she did not plan to let him drive the new car because he had driven her last car into the lake. Embarrassed, Nari decided to change insurers. She went to Big Insurance Company to apply. She got an application from Mark, an agent. Nari was a little nervous because the application asked about other drivers in the home. It also asked if there were any teenagers in the home. Nari decided to answer "no" on both counts because she had no plans to let Joon drive. Nari got full coverage on the car, and the policy was issued shortly after she completed the application. One year later, she renewed the policy without revising any of the information she provided. One month after she renewed the policy, Nari really needed some gas in the car for the next day, but she was unable to go to the gas station. Under the belief that he had sufficiently matured, Nari sent Joon to get gas. Unfortunately, a driver who had no insurance hit the car and totaled it. (Luckily, Joon was okay.)  Nari immediately called her agent, Mark. When Mark reviewed the police report, however, he told Nari that there would be no coverage on the car because Joon was driving. Nari said that was completely unfair and that she would take her case to court to be decided by a jury. Nari told Mark that Big Insurance Co. issued the policy and that she was relying on the incontestability clause. Mark told Nari that she was wrong and that based on how disputes were handled under the policy, she would not even see a jury.
-Regarding Mark's statement that Nari would never see a jury, which of the following is true?

Accepted Answer

A)   Mark is correct based on provisions in most policies denying the insured the right to contest policy provisions.
B)   Mark is incorrect, and insurers may not require as a condition of a policy that an insured give up the right to a trial by jury.
C)   Mark is correct based on provisions in most policies providing that the insurance company has the final word regarding coverage.
D)   Mark is likely referencing a provision requiring arbitration contained in some policies.
E)   Mark is likely referencing a provision requiring that any dispute be settled by the Insurance Adjustors of America contained in some policies.F) A) and B)
G) A) and C)

Question 14

A person must be subject to economic loss if there is damage or harm to the person or property in order to have a[n] ________ in property or life.

Accepted Answer

A)   Acknowledged loss
B)   Protected loss
C)   True injury
D)   Insurable interest
E)   Understandable failureF) D) and E)
G) A) and E)

Question 15

Which of the following best describes the insurer's duty to defend the insured?

Accepted Answer

A)   The insurer has a duty to defend the insured for all claims.
B)   The insurer has a duty to defend the insured for only claims for which the insured is not liable.
C)   The insurer does not have a duty to defend the insured.
D)   The insurer has a duty to defend the insured only if the incident was not the insured's fault.
E)   The insurer has a duty to defend the insured from all claims for which the insured is liable.F) B) and E)
G) C) and D)

Question 16

Which of the following types of insurance should a business manager purchase to obtain protection against a broad range of risks?

Accepted Answer

A)   A commercial general liability policy
B)   A business tort policy
C)   A litigation commercial policy
D)   An economic protection policy
E)   A business approved policyF) A) and E)
G) B) and E)

Question 17

What is the name of the payment, which is paid in exchange for a later payment in the event of damage or injury to property or person?

Accepted Answer

A)   A rider
B)   An addendum
C)   A premium
D)   A bill of lading
E)   A payment planF) B) and E)
G) A) and E)

Question 18

Which of the following was the result in Royal Capital Development LLC v. Maryland Casualty Company, the case in the text involving whether on a policy of insurance covering "direct physical loss of or damage to" a building that allows the insurer the option of paying either "the cost of repairing the building" or "the loss of value," the insurer must also compensate the insured for the diminution in value of the building if the insured elects to repair the building?

Accepted Answer

A)   That the insurer could choose between repairing the building or paying for its loss of value and that once proper repairs were made, the insurer had no obligation to cover any diminution in value.
B)   That unless the insured notified the insurer prior to the beginning of repairs that a claim for diminution in value would be made, the issue was waived because the insurer was entitled to take such a claim into consideration in making its decisions.
C)   That a claim for diminution in value could be made only if the insurer delayed in making repairs such that the insured had an equitable claim for diminution in value.
D)   That when a policy promised to pay the insured's loss, the insured has no claim for diminution in value if repairs are made.
E)   That when a policy promised to pay the insured's loss, the insured had a claim for diminution in value even if repairs were made.F) C) and D)
G) A) and B)

Question 19

Regarding the reduction of the impact of moral hazard by insurers, which of the following is true?

Accepted Answer

A)   It is not possible for insurers to reduce the risk of moral hazard, and this is seen as a risk of doing business.
B)   Insurers refuse to pay claims believed to result from the effects of moral hazard.
C)   The only avenue for insurers seeking to reduce moral hazard is through the use of deductibles.
D)   The only avenue for insurers seeking to reduce moral hazard is through refusing to insure those who have previously made multiple insurance claims.
E)   Insurance companies lessen the impact of moral hazard by requiring that individuals with insurance make co-payments or pay a deductible.F) A) and E)
G) B) and E)

Question 20

Thellan purchased an insurance policy that covered his new boat and trailer. The coverage begins on June 1, 2018. This date is known as the ________.

Accepted Answer

A)   insured date
B)   effective date
C)   application date
D)   premium date
E)   inception dateF) None of the above
G) C) and D)

Exam 51: Insurance Law

Which of the following types of insurance should a business manager purchase to obtain protection against a broad range of risks?

Correct Answer
verified

What is the name of the document that embodies the insured and insurers agreement?

Correct Answer
verified

Describe the effect of an appraisal clause in a policy of insurance, and explain how these usually work.

Correct Answer
verified
If the insured and the insurance company...
View Answer

Which of the following best describes the insurer's duty to defend the insured?

Correct Answer
verified

The insured and insurer both have obligations under an insurance contract, if either fails to meet their obligation, the other can usually sue for breach of contract.

Correct Answer
verified

Correct Answer
verified

What type of insurance policy covers an individual's life or health insurance?

Correct Answer
verified

The most important element of the insurance agreement is ________, the potential for loss.

Correct Answer
verified

If an insurance policy is cancelled, what might the insured be entitled to?

Correct Answer
verified

Regarding the reduction of the impact of moral hazard by insurers, which of the following is true?

Correct Answer
verified

What is the name of the payment, which is paid in exchange for a later payment in the event of damage or injury to property or person?

Correct Answer
verified

A[n] ________ clause is part of an insurance contract that calls for a dispute to be settled by a neutral third party.

Correct Answer
verified

Which of the following types of insurance protects the producer or manufacturer of a good from loss incurred by people who are injured using the good?

Correct Answer
verified

Bemer returned from vacation only to realize his insurance payment was past due. Luckily, his insurance company had inserted a(n) ________ clause that provided a grace period to pay the premium.

Correct Answer
verified

Micha and Genenive just bought a new house after their recent wedding. What type of insurance will help protect their home from loss or damage?

Correct Answer
verified

Correct Answer
verified

A person must be subject to economic loss if there is damage or harm to the person or property in order to have a[n] ________ in property or life.

Correct Answer
verified

________ is a term referencing the concept that a sufficient interest must exist on the part of an insured in order to take out a policy of insurance.

Correct Answer
verified

Thellan purchased an insurance policy that covered his new boat and trailer. The coverage begins on June 1, 2018. This date is known as the ________.

Correct Answer
verified

Correct Answer
verified

Exam 51: Insurance Law

Which of the following types of insurance should a business manager purchase to obtain protection against a broad range of risks?

Correct AnswerverifiedShow Answer

What is the name of the document that embodies the insured and insurers agreement?

Correct AnswerverifiedShow Answer

Describe the effect of an appraisal clause in a policy of insurance, and explain how these usually work.

Correct AnswerverifiedIf the insured and the insurance company...View AnswerShow Answer

Which of the following best describes the insurer's duty to defend the insured?

Correct AnswerverifiedShow Answer

The insured and insurer both have obligations under an insurance contract, if either fails to meet their obligation, the other can usually sue for breach of contract.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What type of insurance policy covers an individual's life or health insurance?

Correct AnswerverifiedShow Answer

The most important element of the insurance agreement is ________, the potential for loss.

Correct AnswerverifiedShow Answer

If an insurance policy is cancelled, what might the insured be entitled to?

Correct AnswerverifiedShow Answer

Regarding the reduction of the impact of moral hazard by insurers, which of the following is true?

Correct AnswerverifiedShow Answer

What is the name of the payment, which is paid in exchange for a later payment in the event of damage or injury to property or person?

Correct AnswerverifiedShow Answer

A[n] ________ clause is part of an insurance contract that calls for a dispute to be settled by a neutral third party.

Correct AnswerverifiedShow Answer

Which of the following types of insurance protects the producer or manufacturer of a good from loss incurred by people who are injured using the good?

Correct AnswerverifiedShow Answer

Bemer returned from vacation only to realize his insurance payment was past due. Luckily, his insurance company had inserted a(n) ________ clause that provided a grace period to pay the premium.

Correct AnswerverifiedShow Answer

Micha and Genenive just bought a new house after their recent wedding. What type of insurance will help protect their home from loss or damage?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A person must be subject to economic loss if there is damage or harm to the person or property in order to have a[n] ________ in property or life.

Correct AnswerverifiedShow Answer

________ is a term referencing the concept that a sufficient interest must exist on the part of an insured in order to take out a policy of insurance.

Correct AnswerverifiedShow Answer

Thellan purchased an insurance policy that covered his new boat and trailer. The coverage begins on June 1, 2018. This date is known as the ________.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified
If the insured and the insurance company...
View Answer

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verified

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