Exam 11: Insurance Contracts

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?

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

Dane Cook has a $50,000 property loss. His insurance policy's coverage limit is $35,000, and has a $500 deductible applied to the loss. How much will Dane collect?

Exclusions are contained in insurance policies for all the following reasons except:

Deductibles serve three major purposes, and two of those are:

An affirmative warranty states that:

Which of the following is not likely to be found on a declarations page?

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

The principle of indemnity says that the insured should profit from insurance.

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.

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

Explain the purpose of the declaration page found in insurance contracts.

Which one of the following is true concerning consideration in property insurance?

To determine if a loss is covered by a property insurance contract, you should look at all of the following except:

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

What are some of the reasons exclusions are found in insurance contracts?

The fact that insured have reasonable expectations has typically resulted in:

In property insurance, to collect for a loss, insurable interest must exist:

Which of the following items is not a benefit of standard insurance policies?

What is the doctrine of utmost good faith? What situations arise out of its application? Explain.