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Exam 36: Insurance

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Question 1

True/False

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When a statute requires that all terms of the insurance contract be included in the written contract, the insurer cannot claim that a provision not stated in the written contract was binding on the insured.

A) True
B) False

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Question 2

Multiple Choice

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An insured person is generally allowed, by policy provision or statute, a grace period of what length of time in which to make the payment of a premium due on a life insurance policy?

A) 2 weeks
B) 30 to 31 days
C) 2 months
D) 15 days

E) A) and B)
F) All of the above

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Question 3

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An ambiguity in an insurance policy is generally interpreted in favor of the insured.

If a provision in an insurance policy is ambiguous:

Homeowner's insurance is a combination of the standard fire insurance policy and comprehensive personal liability insurance.

In most cases, both the policy and the general statute of limitations for contract actions set time limits for bringing suit on the policy.

Part of every whole life insurance premium covers the cost of insurance. The remainder of the premium is devoted to the investment component of the policy, which builds up over time to its:

Sylvia Jurgen operates a florist shop. During a particularly busy day, she allowed one of her employees, Terry Lioni, to use her (Jurgen's) personal car to assist with deliveries. Lioni had just obtained his driver's license. Lioni was involved in an accident that was his fault. Would Jurgen's liability insurance pay in this situation?

An application for insurance:

The coverage of the Personal Auto Policy (PAP) is limited to claims arising from the "use and operation" of an automobile.

A professor knew a colleague who was quite ill. The professor applied for life insurance on the colleague's life and named himself as beneficiary. Because of a similarity in the names of the professor and the colleague, an error was made and the policy was issued. The professor also sold his car to a student. When the student drove away, it was clear that the student was an extremely reckless driver. The professor decided not to cancel his property insurance policy that he had maintained on the vehicle that he sold to the student. Shortly thereafter, the colleague died and the student demolished the car. The professor applied for insurance benefits under both policies and each of the insurers resisted payment. Decide both cases.

For property insurance, an insurable interest must exist:

Generally, the terms broker and agent are synonymous because both work directly for the insurer.

Exceptions to coverage are generally strictly interpreted against the insurer.

If a man names his wife as beneficiary of his life insurance and the two are thereafter divorced, the insurance policy:

A contract of insurance is to be interpreted as it would be understood by a person with technical knowledge of the law or of insurance.

An insurable interest in property must exist at the time that the loss is suffered, while an insurable interest in life must exist at the time that the policy is issued.

An insurance broker generally is an independent contractor who is not employed by any one insurance company.

Subornation is the right of a party secondarily liable to stand in the place of the creditor after making payment to the creditor and to enforce the creditor's right against the party primarily liable in order to obtain indemnity from such primary party.

In general, there is no requirement that an insurable interest exist at the time that a property insurance contract is created.