Exam 47: Insurance

Customarily, an insurance company offers to insure individuals and businesses by advertising for applicants, who can either accept or reject the offer.

Estimable Credit Company loans funds to Farmland Granaries LLC to buy a silo. Estimable obtains an insurance policy from Grangers Insurance Inc. to cover the silo. Farmland also obtains a policy from Grangers to cover the silo. Later, Farmland sells the silo to Hi-Yield Harvest Company but keeps the policy. Hi-Yield also obtains a policy from Grangers to cover the silo. Estimable agrees to finance Hi-Yield's purchase of the property. A fire totally destroys the silo. Who can recover for the loss?

A person can insure anything, even if he or she does not have an insurable interest in it.

Insurance policies differ in relation to the interests that they protect because the types of losses that are expected vary with the nature of an activity.

Verity Insurance Inc. promises to pay, for a certain period of time, a portion of the monthly wages of the employees of Wood Products Company whose illnesses or injuries cause disability. This is

Insurance is an arrangement for transferring and allocating risk.

Because the types of losses that are expected and the types that are foreseeable or unforeseeable vary with the nature of an activity, insurance is classified according to

An insurance broker is most likely

As a condition for recovery, a fire insurance policy may require an insured to file a proof of loss, but the insurer cannot avoid liability for a failure to comply.

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

Cutting Edge Corporation makes and sells knives, scissors, garden shears, and other cutting devices. To cover injuries to consumers if the products prove defective, Cutting Edge should obtain

Bjorg applies for a life insurance policy to be issued by Credible Insurance Inc. If a dispute arises between the parties concerning the settlement of a claim, the insurer wants the dispute to be submitted to an impartial third party, not a court, for resolution. Under an arbitration clause, this would be

Courts interpret the words used in an insurance policy as if most people have the special training necessary to understand the intricate terminology.

Fresco Inc. insures the life of Giotto, a key Fresco executive. Giotto leaves the firm to work for HVAC Company. Fresco continues to pay the premiums on the policy. Giotto subsequently dies. Benefits under the policy can be collected by

Neon Signs LLC wants to insure the equipment and supplies that it uses to create its products. To obtain insurance, Neon must have an insurable interest in the property

Red 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

In the absence of exclusion in a life insurance contract, a court is most likely to construe any cause of death to be one of the insurer's risks.

Quality Insurance Company issues a business liability policy to Rapid River Tours Inc. When an event occurs that gives rise to a claim, the insurer has a duty to

A creditor generally can reach insurance proceeds payable under a life insurance policy if the payment of the premiums constituted a fraud on the creditor.

Dash Delivery wants to procure an insurance policy that protects it against liability for property damage resulting from the operation of its vehicle. This would be