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Exam 47: Insurance

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Question 31

Multiple Choice

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Burgers & Brews Inc. applies for, and obtains, casualty insurance coverage from Corporate Insurance Company. The effective date of the policy is the date

A) the application is submitted.
B) the premium is accepted.
C) the policy is issued.
D) specified in the application as the effective date.

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

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Question 32

Multiple Choice

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Miles obtains a property insurance policy from Nova Insurance Company for Miles's restored 1957 Chevy. Nova can cancel the policy if Miles

A) fails to pay the premiums.
B) files a claim under the policy.
C) appears as a witness in a case brought against Nova.
D) any of the choices.

E) B) and D)
F) None of the above

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Question 33

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In most situations, state law determines the status of all parties writing or obtaining insurance.

Because an insurance contract is governed by the principles of contract law, for the contract to be binding, consideration must be given.

Rob applies to Standard Insurance Company for a life insurance policy. On the application, Rob understates his age. Rob obtains the policy, but for a lower premium than he would have had to pay had he disclosed his actual age. The policy includes an incontestability clause. Five years later, Rob dies. Can Standard refuse payment on the policy?

When it is unclear whether an insurance contract actually exists because a written policy has not been delivered, the uncertainty is normally resolved against the insured.

Conflagration Insurance Corporation promises to compensate Dakota for property damage and personal injuries resulting from fire. This may be

Seasonal Resort Company applies for an insurance policy with Trustworthy Insurance Inc. through an agent who works for the insurer. The applicant pays the initial premium. The agent writes a binder, which

Chik is injured in an accident caused by Dylan's negligence. Chik files a claim to recover for the injury under Dylan's homeowners' policy. Liability coverage under this policy normally applies to liability that arises from

If an insurer in bad faith denies coverage for a claim, the insured may sue, but can recover no more than the policy's coverage limits.

Energy Inc. obtains insurance policies with Fidelity Insurance Company and Good Insurance Inc. against the risk of loss of Energy's property. Each policy includes a multiple insurance clause. A fire destroys one of Energy's buildings. The insured can collect from either insurer

By insuring property, its owners protect themselves.

To encourage an owner to insure his or her property for an amount as close to full value as possible, a fire insurance policy can include a coinsurance clause.

Jin, the insured under a life insurance policy, fails to pay the premium on its due date but makes the payment within the next thirty days. Ordinarily, under an antilapse clause, this policy would

For a business, comprehensive general liability insurance can protect against liability for physical injuries and for the loss of financial support suffered by a family due to the injuries.

An insurer can cancel, or refuse to renew, a policy for any reason, including a reason that would otherwise violate public policy.

With a binder, an applicant for insurance obtains temporary coverage before the insurance company accepts or rejects the application.

Signs Inc., a trade fixture installer, wishes to insure itself against injuries to employees and others on the premises during and after work hours. This business should obtain

Once an insurer has accepted a risk, and an event occurs that gives rise to a claim, the insurer has a duty to investigate to determine the facts.

Good faith requires the party who is applying for insurance to reveal everything necessary for the insurer to evaluate the risk of issuing a policy.