Question 1

Cash surrender value is the amount an insured must pay to cancel a policy.

Accepted Answer

A) True 
 B)False  False

Question 2

A coinsurance clause provides that two or more people will receive payment on a claim under the same insurance policy.

Accepted Answer

A) True 
 B)False  False

Question 3

Ginny obtains a health insurance policy for her family from Hope Insurance Company. The policy includes an incontestability clause. Under such a clause, after a policy has been in force for two or three years

Accepted Answer

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

Question 4

Grover is an executive accountant with the firm of Hall & Associates, which obtains 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 5

An insured who has policies with several companies covering the same insurable interest has multiple insurance coverage.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

The insured can cancel a policy at any time.

Accepted Answer

A) True 
 B)False

Question 8

Speedy Shipping Corporation applies to TransInsurance Company for a fire insurance policy on Speedy's warehouse. On the application, Speedy misrepresents the age of the property to obtain a lower premium. When a fire soon destroys the warehouse, TransInsurance can

Accepted Answer

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

Question 9

Rolling Transport & Storage Corporation wants to insure its warehouse to obtain the maximum possible recovery for the lowest possible premium. To obtain the maximum recovery under a coinsurance clause, the percentage of the value of the property that should be insured is

Accepted Answer

A)  80 percent. 
B)  90 percent. 
C)  100 percent. 
D)  120 percent. 
A)  80 percent. 
B)  90 percent. 
C)  100 percent. 
D)  120 percent.

Question 10

EZ Rentals Company wants to insure the equipment that it rents to the public. To obtain insurance, EZ must have an insurable interest 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 11

A business may procure coverage for product liability under a comprehensive general liability policy.

Accepted Answer

A) True 
 B)False

Question 12

General Allied Company obtains insurance policies with Hy-Rate Insurance, Inc., and Ideal InsurCo against the risk of loss of General's office 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 13

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

Accepted Answer

A) True 
 B)False

Question 14

Dag obtains from Expedient Insurance Company a policy that provides Dag has thirty days after a premium's due date to pay it before the policy will be canceled. 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 15

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

Question 16

Insurance companies are prohibited from practicing risk management.

Accepted Answer

A) True 
 B)False

Question 17

International Foods Corporation insures its real and personal property, as well as the lives of its key employees, to protect its financial interest should some event undermine its security. This is

Accepted Answer

A)  risk management. 
B)  risk pooling. 
C)  risky. 
D)  risqué. 
A)  risk management. 
B)  risk pooling. 
C)  risky. 
D)  risqué.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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 20

Chocolate Gourmet Company obtains an insurance policy to protect against losses incurred by the firm as a result of being held liable for personal 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.

Exam 51: Insurance

Cash surrender value is the amount an insured must pay to cancel a policy.

A coinsurance clause provides that two or more people will receive payment on a claim under the same insurance policy.

Ginny obtains a health insurance policy for her family from Hope Insurance Company. The policy includes an incontestability clause. Under such a clause, after a policy has been in force for two or three years

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

An insured who has policies with several companies covering the same insurable interest has multiple insurance coverage.

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

The insured can cancel a policy at any time.

Speedy Shipping Corporation applies to TransInsurance Company for a fire insurance policy on Speedy's warehouse. On the application, Speedy misrepresents the age of the property to obtain a lower premium. When a fire soon destroys the warehouse, TransInsurance can

Rolling Transport & Storage Corporation wants to insure its warehouse to obtain the maximum possible recovery for the lowest possible premium. To obtain the maximum recovery under a coinsurance clause, the percentage of the value of the property that should be insured is

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

A business may procure coverage for product liability under a comprehensive general liability policy.

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

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

Dag obtains from Expedient Insurance Company a policy that provides Dag has thirty days after a premium's due date to pay it before the policy will be canceled. This is

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

Insurance companies are prohibited from practicing risk management.

International Foods Corporation insures its real and personal property, as well as the lives of its key employees, to protect its financial interest should some event undermine its security. This is

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

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

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

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

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