Robin plans to open a bar in a high-crime area. She had difficulty obtaining insurance for the business. She found an insurer willing to write the coverage, but only if Robin agreed to have a security alarm system in operation at all times when the business is closed. Robin’s promise to have a security alarm […]
Date: September 19th, 2020
Ted’s insurance claim was denied by XYZ Insurance Company. When Ted inquired why the claim was denied, he was told to, “Read the exclusion on page 5 of the policy.” Ted read the exclusion. In his opinion, the exclusion was poorly worded and vague. If a court of law agrees with Ted’s assessment of the […]
Date: September 19th, 2020
When Ben applied for life insurance, he was asked on the application if he smoked or used tobacco products. Ben answered “No.” In reality, Ben smokes two packs of cigarettes a day. The policy was issued at the “preferred, nonsmoker rate.” If Ben dies 6 months after the policy is issued, upon what grounds will […]
Date: September 19th, 2020
Dave is an agent for Easy Pay Insurance. Easy Pay insures only high-quality applicants. Dave wanted to earn more commissions, so he sold some policies to applicants he knew were below-average risks. When these policyowners started filing claims, Easy Pay tried to deny the claims stating that Dave had not acted appropriately. Which general rule […]
Date: September 19th, 2020
Mark owns a bar. The bar has a back room where Mark has some slot machines. Mark lets some of his patrons play the machines, and Mark keeps any profits. This type of gambling is illegal where Mark lives. Mark wanted to purchase insurance in case his slot machines were confiscated by the police. Such […]
Date: September 19th, 2020
Which distinct legal characteristic of insurance contracts states that only the insurer’s promise to perform is legally enforceable? A) contracts of adhesion B) unilateral contracts C) aleatory contracts D) personal contracts ANSWER Answer: B
Date: September 19th, 2020
What is the practical effect of an insurance policy being a conditional contract? A) The insurer can refuse to a pay claim if the insured has not complied with all policy provisions. B) The insured can assign the policy only with the insurer’s consent. C) The insurer can sue the insured for failure to pay […]
Date: September 19th, 2020
The general rule that ambiguity in insurance contracts is construed against the insurer is reinforced by an important legal principle. This principle states the insured is entitled to coverage under a policy that he or she would assume the policy would provide, and exclusions must be conspicuous, plain, and clear. This principle is known as […]
Date: September 19th, 2020
Which of the following types of insurance policies can usually be assigned without the insurer’s consent? I. Life insurance II. Property insurance A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: A
Date: September 19th, 2020
Some states have a law that requires payment of the face amount of insurance to the insured if a total loss to real property occurs from a peril specified in the law. These laws are called A) agreed amount laws. B) replacement cost laws. C) homestead laws. D) valued policy laws. ANSWER Answer: […]
Date: September 19th, 2020
