Question 1

Insurance aims to protect parties by spreading risk.

Accepted Answer

A) True 
 B)False  True

Question 2

In a contract of insurance,the offer is accepted when:

Accepted Answer

A) the insurer sends the insured a proposal form (acceptance)following the insured's request (offer). 
B) the insured completes and submits (acceptance)the proposal form sent out by the insurer (offer). 
C) the insurer issues a cover note (acceptance)following the insured's request (offer). 
D) the insurer accepts the proposal (acceptance)submitted by the insured (offer). 
A) the insurer sends the insured a proposal form (acceptance)following the insured's request (offer). 
B) the insured completes and submits (acceptance)the proposal form sent out by the insurer (offer). 
C) the insurer issues a cover note (acceptance)following the insured's request (offer). 
D) the insurer accepts the proposal (acceptance)submitted by the insured (offer). D

Question 3

Explain the purpose of a cover note.

Accepted Answer

The purpose of a cover note is to provide temporary cover for the proponent while the insurance company considers the proposal and decides whether to accept or reject it.It is a contract in its own right and it usually incorporates the conditions of the company's policy.Most are of one month's duration.They are not issued for contracts of life insurance.

Question 4

Fraud on the part of one co-insured will always prevent the other from recovering under an insurance policy.

Accepted Answer

A) True 
 B)False

Question 5

With respect to indemnity,the value of the insured property is taken after the date of loss when determining how much the insured can recover.

Accepted Answer

A) True 
 B)False

Question 6

The consideration in a contract of insurance is called the premium.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements about fire insurance is correct?

Accepted Answer

A) A fire policy is a contract of assurance. 
B) A fire policy is a contract of contingency. 
C) A fire policy is a contract of indemnity. 
D) A fire policy is a contract of property insurance. 
A) A fire policy is a contract of assurance. 
B) A fire policy is a contract of contingency. 
C) A fire policy is a contract of indemnity. 
D) A fire policy is a contract of property insurance.

Question 8

Sophie over-insures her car,worth $10,000,for $12,000.If the car is written off,how much would she receive under an indemnity policy?

Accepted Answer

A) $10,000. 
B) $12,000. 
C) $2,000. 
D) $0. 
A) $10,000. 
B) $12,000. 
C) $2,000. 
D) $0.

Question 9

The doctrine of subrogation:

Accepted Answer

A) is limited in its application by the Insurance Contracts Act 1984 (Cth). 
B) continues without restriction. 
C) was abolished by the Insurance Contracts Act 1984 (Cth). 
D) was overruled by the High Court. 
A) is limited in its application by the Insurance Contracts Act 1984 (Cth). 
B) continues without restriction. 
C) was abolished by the Insurance Contracts Act 1984 (Cth). 
D) was overruled by the High Court.

Question 10

Explain the dynamics that exist between insurance and tort law.

Accepted Answer

Operating a business inherently involves

Question 11

Contracts of insurance are contracts of utmost good faith.

Accepted Answer

A) True 
 B)False

Question 12

At common law,the insured in every contract of general insurance had to have something called:

Accepted Answer

A) Pecuniary Interest. 
B) Equitable Interest. 
C) Valuable Interest. 
D) Insurable interest. 
A) Pecuniary Interest. 
B) Equitable Interest. 
C) Valuable Interest. 
D) Insurable interest.

Question 13

Claudia insures the contents of her house for $200,000 when they are in fact worth $300,000.If the contract contains a 'subject to average' clause and goods worth $60,000 are stolen,how much is the insurer obliged to pay?

Accepted Answer

A) $40,000. 
B) $200,000. 
C) $60,000. 
D) $20,000. 
A) $40,000. 
B) $200,000. 
C) $60,000. 
D) $20,000.

Question 14

Which of the following statements about subrogation is NOT correct?

Accepted Answer

A) Subrogation only applies to contracts of indemnity. 
B) For subrogation to apply it must be agreed to by the parties as a term of the contract. 
C) Subrogation gives the insurer all the rights of the insured against a third party who caused the loss. 
D) Subrogation applies only after the insurer has paid the insured for their loss. 
A) Subrogation only applies to contracts of indemnity. 
B) For subrogation to apply it must be agreed to by the parties as a term of the contract. 
C) Subrogation gives the insurer all the rights of the insured against a third party who caused the loss. 
D) Subrogation applies only after the insurer has paid the insured for their loss.

Question 15

What governmental organisation regulates insurance companies' business practices?

Accepted Answer

A) The Australian Insurance Commission. 
B) The Australian Securities and Investments Commission. 
C) The Australian Prudential Regulation Authority. 
D) The Australian Competition and Consumer Commission. 
A) The Australian Insurance Commission. 
B) The Australian Securities and Investments Commission. 
C) The Australian Prudential Regulation Authority. 
D) The Australian Competition and Consumer Commission.

Question 16

Carla insures her residence for $300,000 when it is in fact worth $500,000.If the contract contains a 'subject to average' clause and a fire causes $100,000 worth of damage,how much is the insurer obliged to pay?

Accepted Answer

A) $75,000. 
B) $60,000. 
C) $100,000. 
D) $80,000. 
A) $75,000. 
B) $60,000. 
C) $100,000. 
D) $80,000.

Question 17

Which of the following is NOT an example of life insurance?

Accepted Answer

A) Personal accident policies. 
B) Annuity policies. 
C) Disability insurance. 
D) Endowment policies. 
A) Personal accident policies. 
B) Annuity policies. 
C) Disability insurance. 
D) Endowment policies.

Question 18

If an exclusion clause is ambiguous,a court will not read it down to ensure it retains its commercial purpose.

Accepted Answer

A) True 
 B)False

Question 19

Alexandra insures her car,worth $10,000,for $8,000 with Company Ace and for $7,000 with Company Bee.If the car is written off and Company Ace pays her $8,000,how much is she entitled to receive from Company Bee?

Accepted Answer

A) $2,000. 
B) $0. 
C) $1,000. 
D) $7,000. 
A) $2,000. 
B) $0. 
C) $1,000. 
D) $7,000.

Question 20

Which of the following statements about insurance is NOT correct?

Accepted Answer

A) The insurance premium is calculated on the basis of the risk insured. 
B) Insurance is a means for people and businesses to protect themselves against the risk of loss. 
C) It is possible to insure against both speculative and pure loss. 
D) It is possible to insure against loss caused by natural disasters or legal action. 
A) The insurance premium is calculated on the basis of the risk insured. 
B) Insurance is a means for people and businesses to protect themselves against the risk of loss. 
C) It is possible to insure against both speculative and pure loss. 
D) It is possible to insure against loss caused by natural disasters or legal action.

Exam 23: Insurance

Insurance aims to protect parties by spreading risk.

In a contract of insurance,the offer is accepted when:

Explain the purpose of a cover note.

Fraud on the part of one co-insured will always prevent the other from recovering under an insurance policy.

With respect to indemnity,the value of the insured property is taken after the date of loss when determining how much the insured can recover.

The consideration in a contract of insurance is called the premium.

Which of the following statements about fire insurance is correct?

Sophie over-insures her car,worth $10,000,for $12,000.If the car is written off,how much would she receive under an indemnity policy?

The doctrine of subrogation:

Explain the dynamics that exist between insurance and tort law.

Contracts of insurance are contracts of utmost good faith.

At common law,the insured in every contract of general insurance had to have something called:

Claudia insures the contents of her house for $200,000 when they are in fact worth $300,000.If the contract contains a 'subject to average' clause and goods worth $60,000 are stolen,how much is the insurer obliged to pay?

Which of the following statements about subrogation is NOT correct?

What governmental organisation regulates insurance companies' business practices?

Carla insures her residence for $300,000 when it is in fact worth $500,000.If the contract contains a 'subject to average' clause and a fire causes $100,000 worth of damage,how much is the insurer obliged to pay?

Which of the following is NOT an example of life insurance?

If an exclusion clause is ambiguous,a court will not read it down to ensure it retains its commercial purpose.

Alexandra insures her car,worth $10,000,for $8,000 with Company Ace and for $7,000 with Company Bee.If the car is written off and Company Ace pays her $8,000,how much is she entitled to receive from Company Bee?

Which of the following statements about insurance is NOT correct?

Legal Foundations

Legal Systems

How Law Is Made: Precedentstatute Law

Civil Liability: the Law of Torts and Negligence

Applications of Negligence to Business

Introduction to Contracts

Agreement Between the Parties

Intention to Create Legal Relations

Consideration

Capacity of the Parties

Genuine Consent

Is the Contract Legal

Terms of the Contract

Rights and Liabilities of the Parties,discharge and Remedies

Remedies in Contract

Statutory Consumer Guarantees and the Australian Consumer Law

General and Specific Consumer Protections Under the Acl

Introduction to Companies and Incorporated Associations

Agency

Partnerships

Choosing a Business Entity

Other Business-Related Torts

Sale of Goodsbusiness to Business

Property and Mortgages

Intellectual Property

Ethics and Business Practice

Criminal Law in a Business Context

Competition Law

Insolvency and Debt Recovery

The Work Environment and the Employment Relationship

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