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Exam 35: Insurance

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Question 21

True/False

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

A) True
B) False

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Question 22

Multiple Choice

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Commerce Insurance, Inc., has a valid reason to cancel a policy issued to DIY Auto Parts Company. In most states, Commerce could cancel the policy on

A) advance oral or written notice.
B) oral or written notice but only after arbitration.
C) no notice.
D) advance written-not oral-notice.

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

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Question 23

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A person must have an insurable interest in something in order to insure it.

If a person hires a broker to obtain insurance, and the broker fails to secure a policy, the applicant is normally insured by a binder.

Rita is the chief executive officer for Sales Inc., a successful market research firm. The company obtains insurance on Rita's life from Tempo Insurance Company. This policy is

State statutes commonly require that life and health insurance policies do not include incontestability clauses.

Rafe 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

Darlene owns and operates an organic farm with her son Evan. Darlene obtains an insurance policy from Farm Insurance Company to pay $1 million to Evan on Darlene's death. This is

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

Dominion Insurance Company tells its customer Elise that she need not respond to questions about her national origin or race on her application. Elise provides the information anyway. The insurer can

Donald applies for a life insurance policy with Equity Insurance Company through Fletch, an agent who works for Equity. Donald pays the initial premium. Fletch writes a binder , which

A loss sustained before the effective date of an insurance contract will still be covered by the policy.

Insurance policies are governed by the general principles of contract law.

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?

Customarily, a party offers to purchase insurance by submitting an application to an insurance company.

Donovan obtains from Equity Insurance Company a policy that provides that if the parties cannot agree on the amount of a loss covered by the policy, an estimate of the value by an impartial third party can be demanded. This is

If the parties to an insurance contract agree that a policy will be issued and delivered at a later time, the contract is not effective until the policy is issued and delivered.

Adrian applies for, and obtains, casualty insurance coverage from Business Insurance Company for his business, Class Courses LLC. The effective date of the policy is the date

Liability insurance protects a business in the event of the death disability of a key employee.

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