Question 1

Because insurance law follows contract law,bad faith tort actions against insurers are not allowed.

Accepted Answer

A) True 
 B)False  False

Question 2

Myles obtains a business liability insurance policy from Nova Insurance Company for Myles's Hydraulics & Transmission Repair shop.Nova can cancel the policy

Accepted Answer

A) if Myles increases the risk assumed by the Nova. 
B) if Myles files a claim under the policy. 
C) if Myles appears as a witness in a case brought against Nova. 
D) under no circumstances. 
A) if Myles increases the risk assumed by the Nova. 
B) if Myles files a claim under the policy. 
C) if Myles appears as a witness in a case brought against Nova. 
D) under no circumstances. A

Question 3

The consideration paid to an insurer to obtain an insurance policy is the premium.

Accepted Answer

A) True 
 B)False  True

Question 4

A loss sustained between the time of application and the delivery of an insurance policy may not be covered

Accepted Answer

A) True 
 B)False

Question 5

Grover is an executive accountant with the firm of Hall & Associates,which ob?tains insurance from Interstate Insurance,Inc,on Grover's life.Grover dies.The proceeds of the policy belong to

Accepted Answer

A) Grover's heirs. 
B) Hall & Associates. 
C) Interstate Insurance. 
D) the state. 
A) Grover's heirs. 
B) Hall & Associates. 
C) Interstate Insurance. 
D) the state.

Question 6

Bret obtains a fire insurance policy on his rental house with Continental Insurance Company.Like all insurance,this policy is an arrangement for

Accepted Answer

A) avoiding the assumption of responsibility. 
B) predicting a potential loss based on unknown factors. 
C) shifting the imposition of liability. 
D) transferring and allocating risk. 
A) avoiding the assumption of responsibility. 
B) predicting a potential loss based on unknown factors. 
C) shifting the imposition of liability. 
D) transferring and allocating risk.

Question 7

EZ Rentals Company wants to insure the equipment that it rents to the public.To obtain insurance,EZ must have an insurable inter?est in the equipment

Accepted Answer

A) at any time. 
B) at the time a loss occurs. 
C) at the time a policy is obtained. 
D) continuously from the time a policy is obtained to the time a loss occurs. 
A) at any time. 
B) at the time a loss occurs. 
C) at the time a policy is obtained. 
D) continuously from the time a policy is obtained to the time a loss occurs.

Question 8

Edy obtains a homeowners' insurance policy with First Source Insurance Company.First Source can cancel the policy

Accepted Answer

A) if Edy appears as a witness in a case against First Source. 
B) if Edy fails to pay the premiums. 
C) if Edy makes changes that add to the home's value. 
D) under no circumstances. 
A) if Edy appears as a witness in a case against First Source. 
B) if Edy fails to pay the premiums. 
C) if Edy makes changes that add to the home's value. 
D) under no circumstances.

Question 9

Insurance companies are prohibited from prac?ticing risk management.

Accepted Answer

A) True 
 B)False

Question 10

Ace Investments,Inc.,is the mortgagee for a warehouse owned by Best Storage,Inc.Ace obtains an insurance policy from Complete Insurance Corporation (CIC)to cover the warehouse.Best also obtains a policy from CIC to cover the warehouse.Later,Best sells the warehouse to Delta Company but keeps the policy.Delta also obtains a pol?icy from CIC to cover the warehouse.Ace agrees to act as Delta's mortga?gee.A fire to?tally destroys the warehouse.Who can recover for the loss?

Accepted Answer

Ace has an insurable interest in the war

Question 11

Investors Commercial Property Corporation obtains an insur?ance policy that protects against any losses incurred as a result of existing claims against or liens on certain property at the time of its purchase.This is

Accepted Answer

A) casualty insurance. 
B) fire insurance. 
C) life insurance. 
D) title insurance. 
A) casualty insurance. 
B) fire insurance. 
C) life insurance. 
D) title insurance.

Question 12

Bob applies to City Insurance Company for homeowners' insurance.City issues a pol?icy,but later discovers that Bob's application includes several misstate?ments.Most likely,these misstatements can

Accepted Answer

A) affect the coverage under the policy but cannot void the policy. 
B) bind Bob but cannot affect the coverage. 
C) not bind Bob or affect the policy. 
D) void the policy. 
A) affect the coverage under the policy but cannot void the policy. 
B) bind Bob but cannot affect the coverage. 
C) not bind Bob or affect the policy. 
D) void the policy.

Question 13

A fire insurance policy covers losses to the insured as a re?sult of fire and lightning,but not damage from smoke and water.

Accepted Answer

A) True 
 B)False

Question 14

Automobile liability insurance covers liability for bodily injury and property damage.

Accepted Answer

A) True 
 B)False

Question 15

An insured's lack of an insurable interest is an absolute defense against payment.

Accepted Answer

A) True 
 B)False

Question 16

State law may mandate that an incontestability clause be included in an insur?ance policy.

Accepted Answer

A) True 
 B)False

Question 17

Chocolate Gourmet Company obtains an insurance policy to pro?tect against losses incurred by the firm as a result of being held liable for per?sonal injuries or property damage sustained by others.This is

Accepted Answer

A) casualty insurance. 
B) fire insurance. 
C) life insurance. 
D) title insurance. 
A) casualty insurance. 
B) fire insurance. 
C) life insurance. 
D) title insurance.

Question 18

General Allied Company obtains insurance policies with Hy-Rate Insurance,Inc.,and Ideal InsurCo against the risk of loss of General's of?fice building in a fire.Each policy includes a multiple insurance clause.A fire partially destroys the building.General can collect from Hy-Rate

Accepted Answer

A) all of the loss. 
B) half of the loss. 
C) its proportionate share of the loss to the total amount of insurance. 
D) none of the loss. 
A) all of the loss. 
B) half of the loss. 
C) its proportionate share of the loss to the total amount of insurance. 
D) none of the loss.

Question 19

Under an antilapse clause,an insurance policy will lapse only if no pre?mium is paid on the date due.

Accepted Answer

A) True 
 B)False

Question 20

A party who would sustain a financial loss from the destruction of property has an insurable interest in it.

Accepted Answer

A) True 
 B)False

Exam 51: Insurance

Because insurance law follows contract law,bad faith tort actions against insurers are not allowed.

Myles obtains a business liability insurance policy from Nova Insurance Company for Myles's Hydraulics & Transmission Repair shop.Nova can cancel the policy

The consideration paid to an insurer to obtain an insurance policy is the premium.

A loss sustained between the time of application and the delivery of an insurance policy may not be covered

Grover is an executive accountant with the firm of Hall & Associates,which ob?tains insurance from Interstate Insurance,Inc,on Grover's life.Grover dies.The proceeds of the policy belong to

Bret obtains a fire insurance policy on his rental house with Continental Insurance Company.Like all insurance,this policy is an arrangement for

EZ Rentals Company wants to insure the equipment that it rents to the public.To obtain insurance,EZ must have an insurable inter?est in the equipment

Edy obtains a homeowners' insurance policy with First Source Insurance Company.First Source can cancel the policy

Insurance companies are prohibited from prac?ticing risk management.

Investors Commercial Property Corporation obtains an insur?ance policy that protects against any losses incurred as a result of existing claims against or liens on certain property at the time of its purchase.This is

Bob applies to City Insurance Company for homeowners' insurance.City issues a pol?icy,but later discovers that Bob's application includes several misstate?ments.Most likely,these misstatements can

A fire insurance policy covers losses to the insured as a re?sult of fire and lightning,but not damage from smoke and water.

Automobile liability insurance covers liability for bodily injury and property damage.

An insured's lack of an insurable interest is an absolute defense against payment.

State law may mandate that an incontestability clause be included in an insur?ance policy.

Chocolate Gourmet Company obtains an insurance policy to pro?tect against losses incurred by the firm as a result of being held liable for per?sonal injuries or property damage sustained by others.This is

General Allied Company obtains insurance policies with Hy-Rate Insurance,Inc.,and Ideal InsurCo against the risk of loss of General's of?fice building in a fire.Each policy includes a multiple insurance clause.A fire partially destroys the building.General can collect from Hy-Rate

Under an antilapse clause,an insurance policy will lapse only if no pre?mium is paid on the date due.

A party who would sustain a financial loss from the destruction of property has an insurable interest in it.

Introduction to Law and Legal Reasoning

Courts and Alternative Dispute Resolution

Court Procedures

Constitutional Authority to Regulate Business

Ethics and Business Decision Making

Intentional Torts and Privacy

Negligence and Strict Liability

Intellectual Property and Internet Law

Criminal Law and Cyber Crime

Nature and Terminology

Agreement in Traditional and E-Contracts

Consideration

Capacity and Legality

Mistakes, fraud, and Voluntary Consent

The Statute of Frauds

Third Party Rights

Performance and Discharge

Breach of Contract and Remedies

The Formation of Sales and Lease Contracts

Title, risk, and Insurable Interest

Performance Breach of Sales Lease Contracts

Warranties and Product Liability

International Law in a Global Economy

The Function Creation of Negotiable Instruments

Transferability and Holder in Due Course

Liability,defenses,and Discharge

Checks and Banking in the Digital Age

Creditors Rights and Remedies

Secured Transactions

Bankruptcy Law

Mortgages Foreclosures After the Recession

Agency Formation and Duties

Agency Liability and Termination

Employment,immigration,and Labor Law

Employment Discrimination

Sole Proprietorships and Franchises

Partnerships and Limited Liability Partnerships

Limited Liability Companies Special Business Forms

Corporate Formation and Financing

Corporate Directors,officers, Shareholders

Corporate Merger, consolidation, Termination

Securities Law Corporate Governance

Law for Small Business

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

Professional Liaility and Accountability

Personal Property and Bailments

Real Property Landlord-Tenant Relationships

Wills and Trusts

Legal and Ethical Considerations in Sustainability, Discovery, and Corporate Behavior

Legal and Ethical Issues in Contemporary Society

Contracts and Agreements

Legal Issues in Iowa's Video Game Labeling Statute, National Export Initiative, and Contract Law

Banking and Loan Liability

Bankruptcy and Agricultural Credit: Debts, Reporting, and Risk

Legal and Ethical Issues in Employment and Agency Relationships

Legal Issues in Business Franchising, LLC Management, Tax Collection, Director Liability, and Securities Regulations

Compliance and Ethics Issues in Business Operations