Exam 9: Fundamental Legal Principles

Which of the following is a fundamental purpose of the principle of indemnity?

Robin plans to open a bar in a high-crime area.She had difficulty obtaining insurance for the business.She found an insurer willing to write the coverage,but only if Robin agreed to have a security alarm system in operation at all times when the business is closed.Robin's promise to have a security alarm system operational as a condition of having the insurance coverage in force is a

Ted's insurance claim was denied by XYZ Insurance Company.When Ted inquired why the claim was denied,he was told to,"Read the exclusion on page 5 of the policy." Ted read the exclusion.In his opinion,the exclusion was poorly worded and vague.If a court of law agrees with Ted's assessment of the exclusion,Ted may still be able to have his claim paid by the insurer because insurance contracts are

Sue's office building was damaged by a fire caused by a careless tenant.After paying Sue for the loss,the insurance company sued the tenant to recover its loss.This suit is based on the principle of

What is the practical effect of an insurance contract being a contract of adhesion?

Dave and Meagan Philips borrowed $150,000 from Fifth National Bank to help fund the purchase of a new home.The home serves as collateral for the loan.Fifth National has an insurable interest in the home based on

Frank asked his company's employee benefits director if his group health coverage could be converted to individual coverage.The benefits director said,"Yes,you can convert to an individual policy,and the coverage is identical to your group coverage." Frank quit his job and converted to an individual policy.Six months later he filed a claim.He was dismayed to learn the conversion policy was limited compared to the group coverage,and his claim was denied.What legal doctrine will allow Frank to bring a successful legal action against his former employer because he was financially harmed due to his reasonable reliance upon a representation of fact?

Which distinct legal characteristic of insurance contracts states that only the insurer's promise to perform is legally enforceable?

Fundamental purposes of the principle of indemnity include which of the following? I.To reduce physical hazards II.To prevent the insured from profiting from insurance

Which of the following statements about offer and acceptance for insurance contracts is true?

Powers specifically conferred on an agent to act on behalf of a principal are

A total loss under a valued policy is settled on the basis of the

Hank bought a farm.There was an old barn on the land.One day Hank decided to take a look at the barn.It was windy,and Hank could see the roof swaying in the wind.Hank ran out of the barn fearing the roof might collapse.While driving home,Hank stopped to see his insurance agent.He insured the barn for $20,000.The agent didn't ask if the roof might collapse,and Hank didn't say anything about it.One week later there was a strong wind and the roof collapsed.Assuming the insurer can prove it,under what legal grounds could the insurer deny payment of the claim?

A contract in which the values exchanged are not equal because chance is involved is called a(n)

David owns a liquor store in a high-crime area.In order to obtain a reduced insurance premium,David promised to have a burglar alarm operating at the store when the store was closed.This agreement,which was incorporated into the insurance contract,is an example of a

Which of the following statements describes how losses will be settled if a property insurance policy is written on a replacement cost basis?

Why can an insurer refuse to pay a claim if an insured fails to abide by the policy provisions?

Sam's furniture was destroyed by a fire.The furniture cost $1200 when it was purchased,but similar new furniture now costs $1800.Assuming the furniture was 50 percent depreciated,what is the actual cash value of Sam's loss?

What is the legal significance of a material misrepresentation in an insurance application?

Melody's car was damaged when another driver ran a stop sign and hit her car.Melody decided to collect from her own insurer and to let her insurer recoup the loss payment from the negligent driver who hit her.What fundamental legal principle is illustrated in this scenario?