Question 1

If a statute requires that any limitations on coverage be stated in an insurance contract, an insurer can avoid liability by relying on an unexpressed restriction.

Accepted Answer

A) True 
 B)False

Question 2

Actuarial Insurance Inc. collects and analyzes data to estimate the frequency and costs of the claims of its insured. A prediction concerning potential loss based on known and unknown factors is

Accepted Answer

A)  business management.
B)  a binding forecast.
C)  a wager on liability.
D)  risk.E) A) and B)
F) A) and D)

Question 3

A life insurance contract determines only the extent of the insurer's liability on the death of the insured.

Accepted Answer

A) True 
 B)False

Question 4

Greta applies for a homeowners' policy with Home Insurance Company through Ivy, an insurance agent. As a general rule, Home is bound by

Accepted Answer

A)  Ivy's acts.
B)  Greta's acts.
C)  the acts of both Greta and Ivy.
D)  the acts of neither Greta nor Ivy.E) C) and D)
F) A) and C)

Question 5

Courts interpret insurance policies as containing any provisions mandated by statute.

Accepted Answer

A) True 
 B)False

Question 6

An insurance company can raise as a defense against payment on a policy any of the defenses that would be valid in an ordinary action on a contract.

Accepted Answer

A) True 
 B)False

Question 7

Because an insurance agent is an agent of an applicant for insurance, not the insurance company, the agent owes fiduciary duties to the applicant.

Accepted Answer

A) True 
 B)False

Question 8

Insurance is a contract in which the insurer promises to reimburse the insured or a beneficiary in the event of a loss.

Accepted Answer

A) True 
 B)False

Question 9

Quia obtains a fire insurance policy on her house from Residential Insurance Company. Later, after she moves out and the house is empty, a fire destroys the structure. Most fire insurance policies require that at the time of a loss, the insured premises be

Accepted Answer

A)  vacant and uninhabitable.
B)  occupied.
C)  unoccupied but habitable.
D)  empty.E) A) and C)
F) B) and C)

Question 10

Commerce Insurance Corporation promises to compensate Data Company on the death of Elko, a key Data executive. This contract is

Accepted Answer

A)  a statutory mandate.
B)  a binder.
C)  a wager.
D)  insurance.E) B) and D)
F) A) and B)

Question 11

Rena is the chief executive officer for Sales Inc., a successful market research firm. The company obtains insurance on Rena's life from Tempo Insurance Company. This is

Accepted Answer

A)  key-person insurance.
B)  liability insurance.
C)  life insurance.
D)  none of the choices.E) B) and D)
F) None of the above

Question 12

Life insurance requires that an insurable interest in the continued life of the insured exist when a policy is obtained.

Accepted Answer

A) True 
 B)False

Question 13

Quinn applies to Real Insurance Company for property insurance. Real issues a policy but later discovers that the application includes misstatements. The misstatements can void the policy if the insurer can show that

Accepted Answer

A)  the broker who obtained the policy did not know the true facts.
B)  Quinn would not have applied for a policy if he had foreseen avoidance.
C)  the agent who wrote the policy did not investigate the facts.
D)  Real would not have issued the policy if it had known the facts.E) All of the above
F) B) and C) D

Question 14

An insured with multiple insurance policies covering a loss can collect only each insurer's proportionate share of the liability relative to the total amount of insurance.

Accepted Answer

A) True 
 B)False

Question 15

Eden Orchards, the insured under a policy with Farm Insurance LLC, files a claim for a covered loss. The parties cannot agree on the amount of the loss. Under an appraisal clause,

Accepted Answer

A)  the loss will be shared proportionately by the insurer and the insured.
B)  an estimate by an impartial, qualified third party can be demanded.
C)  the dispute will be submitted to an impartial third party for resolution.
D)  the loss will be appraised to the difference between the disputed values.E) B) and C)
F) A) and D)

Question 16

Mia applies for an insurance policy with National Insurance Company through a broker. Mia pays the initial premium, but the broker fails to procure the policy. Mia is

Accepted Answer

A)  covered until the due date of the subsequent premium.
B)  protected until National accepts or rejects the application.
C)  protected from the time of the application until the end of the policy.
D)  not insured.E) A) and D)
F) C) and D) D

Question 17

Sid obtains a life insurance policy with no cash surrender value and names his daughter Teri as the beneficiary. This is

Accepted Answer

A)  whole life insurance.
B)  limited-payment life insurance.
C)  universal life insurance.
D)  term insurance.E) B) and C)
F) A) and D)

Question 18

Raj obtains an insurance policy from Secure Insurance Inc. The policy provides that on Raj's death the insurer will pay $500,000 to Raj's spouse. This is

Accepted Answer

A)  major medical insurance.
B)  key-person insurance.
C)  life insurance.
D)  all-risk insurance.E) A) and B)
F) A) and C) C

Question 19

Anya obtains a liability insurance policy for her Bubble Tea Bistro from Choice Insurance LLC. In their dealings, the parties must

Accepted Answer

A)  act in good faith.
B)  attempt to deny or reduce any claim.
C)  prevent the other from asserting certain defenses.
D)  have an insurable interest.E) A) and B)
F) A) and C)

Question 20

Insurance contracts are usually obtained through an agent, who works as an independent contractor.

Accepted Answer

A) True 
 B)False

Exam 47: Insurance

If a statute requires that any limitations on coverage be stated in an insurance contract, an insurer can avoid liability by relying on an unexpressed restriction.

Correct AnswerverifiedShow Answer

Actuarial Insurance Inc. collects and analyzes data to estimate the frequency and costs of the claims of its insured. A prediction concerning potential loss based on known and unknown factors is

Correct AnswerverifiedShow Answer

A life insurance contract determines only the extent of the insurer's liability on the death of the insured.

Correct AnswerverifiedShow Answer

Greta applies for a homeowners' policy with Home Insurance Company through Ivy, an insurance agent. As a general rule, Home is bound by

Correct AnswerverifiedShow Answer

Courts interpret insurance policies as containing any provisions mandated by statute.

Correct AnswerverifiedShow Answer

An insurance company can raise as a defense against payment on a policy any of the defenses that would be valid in an ordinary action on a contract.

Correct AnswerverifiedShow Answer

Because an insurance agent is an agent of an applicant for insurance, not the insurance company, the agent owes fiduciary duties to the applicant.

Correct AnswerverifiedShow Answer

Insurance is a contract in which the insurer promises to reimburse the insured or a beneficiary in the event of a loss.

Correct AnswerverifiedShow Answer

Quia obtains a fire insurance policy on her house from Residential Insurance Company. Later, after she moves out and the house is empty, a fire destroys the structure. Most fire insurance policies require that at the time of a loss, the insured premises be

Correct AnswerverifiedShow Answer

Commerce Insurance Corporation promises to compensate Data Company on the death of Elko, a key Data executive. This contract is

Correct AnswerverifiedShow Answer

Rena is the chief executive officer for Sales Inc., a successful market research firm. The company obtains insurance on Rena's life from Tempo Insurance Company. This is

Correct AnswerverifiedShow Answer

Life insurance requires that an insurable interest in the continued life of the insured exist when a policy is obtained.

Correct AnswerverifiedShow Answer

Quinn applies to Real Insurance Company for property insurance. Real issues a policy but later discovers that the application includes misstatements. The misstatements can void the policy if the insurer can show that

Correct AnswerverifiedD

An insured with multiple insurance policies covering a loss can collect only each insurer's proportionate share of the liability relative to the total amount of insurance.

Correct AnswerverifiedShow Answer

Eden Orchards, the insured under a policy with Farm Insurance LLC, files a claim for a covered loss. The parties cannot agree on the amount of the loss. Under an appraisal clause,

Correct AnswerverifiedShow Answer

Mia applies for an insurance policy with National Insurance Company through a broker. Mia pays the initial premium, but the broker fails to procure the policy. Mia is

Correct AnswerverifiedD

Sid obtains a life insurance policy with no cash surrender value and names his daughter Teri as the beneficiary. This is

Correct AnswerverifiedShow Answer

Raj obtains an insurance policy from Secure Insurance Inc. The policy provides that on Raj's death the insurer will pay $500,000 to Raj's spouse. This is

Correct AnswerverifiedC

Anya obtains a liability insurance policy for her Bubble Tea Bistro from Choice Insurance LLC. In their dealings, the parties must

Correct AnswerverifiedShow Answer

Insurance contracts are usually obtained through an agent, who works as an independent contractor.

Correct AnswerverifiedShow Answer

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D

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D

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C

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