Question 1

The insurable interest requirement with regard to property insurance:

Accepted Answer

A) may be waived by a writing signed by the insured and insurer. 
B) may be satisfied by a person other than the legal owner of the property. 
C) must be satisfied at the time the policy is issued. 
D) must be satisfied by the insured's legal title to the property at the time of loss.

Question 2

The term for the person who receives insurance proceeds paid to them is the beneficiary.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following characterizes a coinsurance clause with regard to property insurance?

Accepted Answer

A) It prohibits the insured from obtaining an amount of insurance which would be less than the coinsurance percentage multiplied by the fair market value of the property. 
B) It encourages the insured to be more careful in preventing losses since the insured is always at least partially at risk when a loss occurs. 
C) It permits the insured to receive an amount in excess of the policy amount when there has been a total loss and the insured carried the required coverage under the coinsurance clause. 
D) It will result in the insured sharing in partial losses when the insured has failed to carry the required coverage under the coinsurance clause.

Question 4

When the insurer asks the court to determine whether the insurer owes obligations to the insured under the policy in connection with the particular liability claim made against the insured by the injured third party,it is filing a(n):

Accepted Answer

A) equity of redemption. 
B) advance directive. 
C) reservation of rights notice. 
D) declaratory judgment.

Question 5

How is occurrence commonly defined in a property damage liability policy?

Accepted Answer

A) As a fire or flood 
B) As an accident resulting in bodily injury or property damage. 
C) As an event that triggers a subrogation clause 
D) As an injury to the property owner occurring in the home

Question 6

Most property insurance policies are open policies that allow the insured to recover the fair market value of the property,subject to the limits in the policy.

Accepted Answer

A) True 
 B)False

Question 7

When an insurer agrees to pay a sum of money to a third party in exchange for the third party giving up his or her legal right to pursue litigation against the insured,this is called a(n)________.

Accepted Answer

A) settlement 
B) reservation of rights 
C) declaratory judgment 
D) indemnification

Question 8

Professional insurance is also called malpractice insurance.

Accepted Answer

A) True 
 B)False

Question 9

Yuki invites Penny over to her home.She later gets angry with Penny and pushes her down the stairs.Penny hurts herself and sues Yuki.Is it likely that Yuki's insurance will cover Penny's losses?

Accepted Answer

A) Yes,if Yuki had a liability policy. 
B) Yes,if Yuki had homeowner's insurance. 
C) No,because you cannot insure for injuries incurred in a private home. 
D) No,because liability policies commonly exclude coverage for an insured's liability stemming from deliberate wrongful acts.

Question 10

Which of the following would normally not be covered in a professional liability policy.

Accepted Answer

A) Tortious conduct in the practice of a profession 
B) Negligent professional conduct causing harm to a third party 
C) Intentional wrongful professional conduct 
D) Bodily injury in a medical malpractice claim

Question 11

Consideration on an insurance contract is the premium paid by the individual being insured and the promise by the insurer for future coverage in the event of a peril.

Accepted Answer

A) True 
 B)False

Question 12

The damages recoverable by an insured for the insurer's breach of the insurance contract cannot exceed the dollar limits set forth in the insurance contract.

Accepted Answer

A) True 
 B)False

Question 13

When a party with the power to terminate an insurance policy exercises that power,a(n)________ has occurred.

Accepted Answer

A) lapse 
B) cancellation 
C) reformation 
D) rescission

Question 14

Under insurance policies (except life insurance),the insured and the beneficiary may be the same person.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is usually a covered peril under most property insurance policies?

Accepted Answer

A) Vandalism 
B) Earthquake damage 
C) Nuclear contamination 
D) Radiation

Question 16

Settlements in liability cases occur only when:

Accepted Answer

A) the insurer issues a declaratory judgment. 
B) the third party gives up the legal right to litigate. 
C) the third party demands prelitigation payment. 
D) the third party institutes litigation.

Question 17

Hans purchased an auto insurance policy from ABC Insurance (ABC)which had a liability provision.Hans was involved in a collision with Beth,caused by negligence of both Beth and Hans.Both were injured.Who would be entitled to collect money under the liability provision of Hans' policy?

Accepted Answer

A) Beth only 
B) Hans only 
C) Both Beth and Hans 
D) Neither Beth nor Hans

Question 18

On April 2,1987,Ritz Corp.purchased a warehouse that it insured for $500,000.The policy contained a 75% coinsurance clause.On April 25,1988,a fire caused $900,000 damage to the warehouse.The fair market value of the warehouse was $800,000 on April 2,1987,and $1 million on April 25,1988.Ritz is entitled to receive insurance proceeds of,at most,

Accepted Answer

A) $375,000 
B) $500,000 
C) $600,000 
D) $750,000

Question 19

Generally in business liability policies,if the insured is liable on respondeat superior grounds,then he will be covered by the policy.

Accepted Answer

A) True 
 B)False

Question 20

In 2001,Tom purchased a home with a fair market value of $100,000.At the same time,he also purchased a valued policy with a face amount of $100,000 to insure the house against various risks,including fire.In 2002,the house was destroyed by fire.The fair market value of the house at the time of the fire was $150,000.What is Tom entitled to under the policy?

Accepted Answer

A) $100,000 
B) $150,000 
C) $250,000 
D) Nothing

Exam 27: Insurance Law

The insurable interest requirement with regard to property insurance:

The term for the person who receives insurance proceeds paid to them is the beneficiary.

Which of the following characterizes a coinsurance clause with regard to property insurance?

When the insurer asks the court to determine whether the insurer owes obligations to the insured under the policy in connection with the particular liability claim made against the insured by the injured third party,it is filing a(n) :

How is occurrence commonly defined in a property damage liability policy?

Most property insurance policies are open policies that allow the insured to recover the fair market value of the property,subject to the limits in the policy.

When an insurer agrees to pay a sum of money to a third party in exchange for the third party giving up his or her legal right to pursue litigation against the insured,this is called a(n) ________.

Professional insurance is also called malpractice insurance.

Yuki invites Penny over to her home.She later gets angry with Penny and pushes her down the stairs.Penny hurts herself and sues Yuki.Is it likely that Yuki's insurance will cover Penny's losses?

Which of the following would normally not be covered in a professional liability policy.

Consideration on an insurance contract is the premium paid by the individual being insured and the promise by the insurer for future coverage in the event of a peril.

The damages recoverable by an insured for the insurer's breach of the insurance contract cannot exceed the dollar limits set forth in the insurance contract.

When a party with the power to terminate an insurance policy exercises that power,a(n) ________ has occurred.

Under insurance policies (except life insurance),the insured and the beneficiary may be the same person.

Which of the following is usually a covered peril under most property insurance policies?

Settlements in liability cases occur only when:

Hans purchased an auto insurance policy from ABC Insurance (ABC) which had a liability provision.Hans was involved in a collision with Beth,caused by negligence of both Beth and Hans.Both were injured.Who would be entitled to collect money under the liability provision of Hans' policy?

Generally in business liability policies,if the insured is liable on respondeat superior grounds,then he will be covered by the policy.