Exam 8: Insurance Contracts

Actual cash value is defined as:

If a property insurance agent goes to Maria's door,convinces her to apply for insurance and write a check for the policy premium,which of the following has occurred?

A binder must meet all the requirements of a valid contract.

The functional replacement provision in some property insurance policies is used when:

The principle of indemnity

Christopher purchases an insurance contract with the following warranty attached: "the burglar alarm system will be in good working order." What type of warranty is this?

A waiver is:

Which of the following does not support the principal of indemnity?

Sarah has a house valued at $200,000 and insured for $180,000. It is totally destroyed by fire,due to the negligence of Courtney. Sarah recovers $180,000 from her insurer,which then subrogates against Courtney. Suppose the courts decide that Courtney must pay $100,000 in damages,because that's all the money she has. How much of this $100,000 can the insurer keep,assuming that the policy has no special provision regarding the distribution of subrogation amounts?

The personal feature of property insurance contracts means that:

Dana loans her brother,Marcus,$500,000 with which to start a movie production company. The business assets are shown in the loan agreement as collateral for the loan. Dana can insure Marcus' life because:

Explain the principle of subrogation. Provide a mathematical example of its use.

Conditional receipts are associated with life insurance rather than non-life insurance.

The principle of insurable interest is important because it:

Jasmine phones her agent to obtain auto insurance. The agent binds coverage over the phone,and tells her she will have a $250 collision deductible. When the insurer issues the policy,the underwriter imposes a $1,000 deductible because of Jasmine's poor driving record,then mails her the policy. She does not read it or notice this change until she has an accident six months later. She then demands that the insurer only require a $250 deductible rather than a $1,000 deductible,since she did not approve this change.Which legal principle of insurance contracts would be the insurers most convincing reason for refusing to honor the $250 deductible?

Which term below describes a contract in which there is an unequal dollar consideration?

The parol evidence rule says:

Since the automobile insurance policy is written by the insurer,ambiguities are interpreted in favor of the insurer.

When entering into a legally enforceable insurance contract consideration must exist. Explain what consideration is and the form it takes in insurance contracts.

In property insurance the insured must have an insurable interest when the loss occurs and need not have it when the policy is taken out in order to collect.