Question 1

Businesses typically protect their financial interests by obtaining insurance.

Accepted Answer

A) True 
 B)False

Question 2

Ethel obtains a life insurance policy from Fidelity Insurance Company, naming her spouse Grover as the beneficiary. Ethel and Grover are di?vorced. There is no provision in the policy about divorce. On Ethel's death, Fidelity must pay

Accepted Answer

A)  no one because Ethel and Grover are divorced. 
B)  Ethel's estate and Grover jointly. 
C)  Grover. 
D)  Ethel's estate. 
A)  no one because Ethel and Grover are divorced. 
B)  Ethel's estate and Grover jointly. 
C)  Grover. 
D)  Ethel's estate.

Question 3

Bev is an employee of the accounting firm Catz & Douglas, which ob?tains key-person life in?surance on Bev in the amount of $1 million from Equity Insurance Company. Bev quits Catz & Douglas to join Financial Analysis, LLC. Bev dies. Under the principle of insurable interest, Equity Insurance must pay the $1 million to

Accepted Answer

A)  Bev's spouse Grant. 
B)  Catz & Douglas. 
C)  Financial Analysis. 
D)  no one. 
A)  Bev's spouse Grant. 
B)  Catz & Douglas. 
C)  Financial Analysis. 
D)  no one.

Question 4

Rafe 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

Accepted Answer

A)  interpret the clause against Rafe. 
B)  interpret the clause against Torchlight. 
C)  rewrite the clause and apply it as rewritten. 
D)  strike the clause from the policy. 
A)  interpret the clause against Rafe. 
B)  interpret the clause against Torchlight. 
C)  rewrite the clause and apply it as rewritten. 
D)  strike the clause from the policy.

Question 5

Anna obtains a business liability insurance policy for her Brew & Bagels Coffee Shop from ChoiceFirst Insurance Company. When an event occurs that gives rise to a claim, each party has a duty to

Accepted Answer

A)  cooperate in an investigation to determine the facts. 
B)  file a suit against the other so that a court can settle the claim. 
C)  find a third party on whom to impose liability. 
D)  pay any outstanding premium or refund any unearned amount. 
A)  cooperate in an investigation to determine the facts. 
B)  file a suit against the other so that a court can settle the claim. 
C)  find a third party on whom to impose liability. 
D)  pay any outstanding premium or refund any unearned amount.

Question 6

Commerce & Business Insurance, Inc., has a valid reason to cancel a policy issued to DIY Auto & Truck Parts Company. In most states, Commerce & Business could cancel the policy

Accepted Answer

A)  on advance oral or written notice. 
B)  on oral or written notice but only after arbitration. 
C)  without notice. 
D)  on advance written-not oral-notice. 
A)  on advance oral or written notice. 
B)  on oral or written notice but only after arbitration. 
C)  without notice. 
D)  on advance written-not oral-notice.

Question 7

EquipLease Company pays a premium to Federated Insurance Inc. for fire insurance against the loss of EquipLease's offices, warehouse, and storage center. After EquipLease sells the facilities to Great State Trucking, Inc., the warehouse is lost in a fire. Under the policy, Federated must pay

Accepted Answer

A)  neither EquipLease nor Great State. 
B)  EquipLease and Great State proportionately. 
C)  EquipLease only. 
D)  Great State only. 
A)  neither EquipLease nor Great State. 
B)  EquipLease and Great State proportionately. 
C)  EquipLease only. 
D)  Great State only.

Question 8

Under a life insurance policy, in the absence of contractual exclusion, any cause of death is one of the insurer's risks.

Accepted Answer

A) True 
 B)False

Question 9

The Fish House, a seafood restaurant, obtains from Guaranty Insurance Company a policy that pro?vides if a dispute arises between the parties concerning the settle?ment of a claim, the dispute must be submitted to an impartial third party, not a court, for resolution. This is

Accepted Answer

A)  an antilapse clause. 
B)  an arbitration clause. 
C)  an appraisal clause. 
D)  an incontestability clause. 
A)  an antilapse clause. 
B)  an arbitration clause. 
C)  an appraisal clause. 
D)  an incontestability clause.

Question 10

WeatherGuard Roofing Corporation obtains an insurance policy that protects WeatherGuard against liability in the event of injuries or losses sustained by its employees during the course of their employment that are not covered under workers' compensation insurance. This is

Accepted Answer

A)  casualty insurance. 
B)  employer's liability insurance. 
C)  key-person life insurance. 
D)  term life insurance. 
A)  casualty insurance. 
B)  employer's liability insurance. 
C)  key-person life insurance. 
D)  term life insurance.

Question 11

eDigital Enterprise Corporation discovers a defect in its newly developed, recently marketed tablets. eDigital decides to recall the prod?uct and replace it with another. eDigital's in?surance policy with Finance & Business Insurance Company will cover any harm to customers that oc?curs before the tablets are returned. Is it likely that the policy will also pay for the recall and replacement? If so, what type of policy does eDigital have?

Accepted Answer

It is likely that eDigital's policy will

Question 12

Ollie obtains a health-insurance policy for his family from Protection Insurance Company. The policy includes an incontestability clause. Under such a clause, after a policy has been in force for a specified period or time, such as two or three years

Accepted Answer

A)  Ollie cannot contest Protection's insurable interest. 
B)  Ollie cannot contest Protection's refusal to pay a claim. 
C)  Protection cannot contest Ollie's eligibility for continued coverage. 
D)  Protection cannot contest Ollie's statements in the application. 
A)  Ollie cannot contest Protection's insurable interest. 
B)  Ollie cannot contest Protection's refusal to pay a claim. 
C)  Protection cannot contest Ollie's eligibility for continued coverage. 
D)  Protection cannot contest Ollie's statements in the application.

Question 13

An insurer has a duty to avoid paying a claim even if it means acting in bad faith.

Accepted Answer

A) True 
 B)False

Question 14

Dental Clinic obtains an insurance policy that protects its members against negligence claims by their pa?tients. This is

Accepted Answer

A)  casualty insurance. 
B)  employer's liability insurance. 
C)  malpractice insurance. 
D)  workers' compensation insurance. 
A)  casualty insurance. 
B)  employer's liability insurance. 
C)  malpractice insurance. 
D)  workers' compensation insurance.

Question 15

Shipping Corporation applies to TransInsurance Company for a fire insurance pol?icy on Shipping's warehouse. On the application, Shipping understates the age of the property to obtain a lower premium. When a fire destroys the ware?house, TransInsurance can

Accepted Answer

A)  deny payment, because a fire destroyed the warehouse. 
B)  deny payment, because of fraud in the application. 
C)  not deny payment, because a fire destroyed the warehouse. 
D)  not deny payment, because the application is not part of the policy. 
A)  deny payment, because a fire destroyed the warehouse. 
B)  deny payment, because of fraud in the application. 
C)  not deny payment, because a fire destroyed the warehouse. 
D)  not deny payment, because the application is not part of the policy.

Question 16

When there is an ambiguity in an insurance policy, the provision generally is interpreted against the insurance company.

Accepted Answer

A) True 
 B)False

Question 17

For an insurance contract to be binding, consideration in the form of a premium must be given.

Accepted Answer

A) True 
 B)False

Question 18

A person who is obtaining insurance from an insurance company's agent is not usually protected until a formal written policy is issued.

Accepted Answer

A) True 
 B)False

Question 19

Reno is the beneficiary of a life insurance policy on Sula's life obtained from Traditional Insurance Company. The underwriter of this policy is

Accepted Answer

A)  Reno. 
B)  Sula. 
C)  Traditional Insurance. 
D)  the agent or broker through whom the policy was obtained. 
A)  Reno. 
B)  Sula. 
C)  Traditional Insurance. 
D)  the agent or broker through whom the policy was obtained.

Question 20

Misstatements or misrepresentations in an application for insurance can affect the amount of a premium but cannot void a policy.

Accepted Answer

A) True 
 B)False

Exam 50: Insurance

Businesses typically protect their financial interests by obtaining insurance.

Ethel obtains a life insurance policy from Fidelity Insurance Company, naming her spouse Grover as the beneficiary. Ethel and Grover are di?vorced. There is no provision in the policy about divorce. On Ethel's death, Fidelity must pay

Rafe 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

Anna obtains a business liability insurance policy for her Brew & Bagels Coffee Shop from ChoiceFirst Insurance Company. When an event occurs that gives rise to a claim, each party has a duty to

Commerce & Business Insurance, Inc., has a valid reason to cancel a policy issued to DIY Auto & Truck Parts Company. In most states, Commerce & Business could cancel the policy

EquipLease Company pays a premium to Federated Insurance Inc. for fire insurance against the loss of EquipLease's offices, warehouse, and storage center. After EquipLease sells the facilities to Great State Trucking, Inc., the warehouse is lost in a fire. Under the policy, Federated must pay

Under a life insurance policy, in the absence of contractual exclusion, any cause of death is one of the insurer's risks.

The Fish House, a seafood restaurant, obtains from Guaranty Insurance Company a policy that pro?vides if a dispute arises between the parties concerning the settle?ment of a claim, the dispute must be submitted to an impartial third party, not a court, for resolution. This is

WeatherGuard Roofing Corporation obtains an insurance policy that protects WeatherGuard against liability in the event of injuries or losses sustained by its employees during the course of their employment that are not covered under workers' compensation insurance. This is

Ollie obtains a health-insurance policy for his family from Protection Insurance Company. The policy includes an incontestability clause. Under such a clause, after a policy has been in force for a specified period or time, such as two or three years

An insurer has a duty to avoid paying a claim even if it means acting in bad faith.

Dental Clinic obtains an insurance policy that protects its members against negligence claims by their pa?tients. This is

Shipping Corporation applies to TransInsurance Company for a fire insurance pol?icy on Shipping's warehouse. On the application, Shipping understates the age of the property to obtain a lower premium. When a fire destroys the ware?house, TransInsurance can

When there is an ambiguity in an insurance policy, the provision generally is interpreted against the insurance company.

For an insurance contract to be binding, consideration in the form of a premium must be given.

A person who is obtaining insurance from an insurance company's agent is not usually protected until a formal written policy is issued.

Reno is the beneficiary of a life insurance policy on Sula's life obtained from Traditional Insurance Company. The underwriter of this policy is

Misstatements or misrepresentations in an application for insurance can affect the amount of a premium but cannot void a policy.

Law and Legal Reasoning

Courts and Alternative Dispute Resolution

Court Procedures

Business and the Constitution

Business Ethics

Torts

Strict Liability and Strict Liability

Intellectual Property Rights

Internet Law, Social Media, and Privacy

Criminal Law and Cyber Crime

Nature and Terminology

Agreement in Traditional and E-Contracts

Consideration

Capacity and Legality

Mistakes, Fraud, and Voluntary Consent

The Writing Requirement and Electronic Records

Third Party Rights

Performance and Discharge in Traditional E-Contracts

Breach of Contract and Remedies

Formation of Sales and Lease Contracts

Title, Risk, and Insurable Interest

Performance Breach of Sales Lease Contracts

Warranties

International Law in a Global Economy

The Function Creation of Negotiable Instruments

Transferability and Holder in Due Course

Liability, Defenses, and Discharge

Banking in the Digital Age

Creditors Rights and Remedies

Secured Transactions

Bankruptcy Law

Agency Formation and Duties

Agency Liability and Termination

Employment, Immigration, and Labor Law

Employment Discrimination and Diversity

Sole Proprietorships and Franchises

Partnerships and Limited Liability Partnerships

Other Organizational Forms for Small Businesses

Corporate Formation and Financing

Corporate Directors, Officers, Shareholders

Mergers and Takeovers

Securities Law Corporate Governance

Administrative Agencies

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Environmental Law and Sustainability

Antitrust Law

Professional Liability and Accountability

Personal Property and Bailments

Real Property Landlord-Tenant Law

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