Exam 9: Fundamental Legal Principles

Why does the insured get the benefit of the doubt if an insurance policy contains any ambiguities or uncertainties?

The voluntary relinquishment of a legal right is called

Which of the following statements about an insurable interest in life insurance is (are)true? I.It is required of any person named as beneficiary. II.It may result from a pecuniary (financial)interest.

Dave is an agent for Easy Pay Insurance.Easy Pay insures only the highest-quality applicants.Dave wanted to earn more commissions,so he sold some policies to applicants he knew were below-average risks.When these policyowners started filing claims,Easy Pay tried to deny the claims stating that Dave had not acted appropriately.Which general rule of agency makes Easy Pay responsible for the claims of the higher-than-average risk policyowners?

Which of the following statements about subrogation is true?

Janice purchased a living room set for $1,000 and insured this furniture on an actual cash value basis.Two years later the living room set was destroyed by a covered peril.At the time of loss,the property had depreciated in value by 25 percent.The replacement cost of the furniture at the time of loss was $1,200.Assuming no deductible,how much will Janice receive from her insurer?

Some courts have ruled that an alternative to "replacement cost less depreciation" should be used to determine the actual cash value of a property loss.Under this alternative,the value of property lost is determined by the price a willing buyer would pay a willing seller for the property in a free market.This method of determining actual cash value is called the

Bob purchased insurance on his home with an insurer that was not licensed to do business in the state.In this case,which requirement to form a binding insurance contract is lacking?

All of the following statements about subrogation are true EXCEPT

Jacob sold his house to Shelia for $140,000 in cash.Jacob "threw in" insurance on the house as part of the deal and did not bother telling the insurer that there was a new owner.Four months after Shelia purchased the home,a windstorm damaged the roof.Which of the following legal characteristics of insurance contracts could the insurer use to legally deny payment for the damage to the roof?

Under which of the following rules is actual cash value determined by taking into consideration all relevant factors an expert would use to determine the value of the property?

Why are insurance contracts said to be contracts of adhesion?

Some states have a law that requires payment of the face amount of insurance to the insured if a total loss to real property occurs from a peril specified in the law.These laws are called

Which of the following types of insurance policies can usually be assigned without the insurer's consent? I.Life insurance II.Property insurance

Which of the following statements about consideration in an insurance contract is (are)true? I.The insured's total consideration is submission of a completed application. II.The insurer's consideration is the promise to do those things specified in the policy.