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Exam 51: Insurance Law

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Question 21

Multiple Choice

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The transfer and distribution of risk done by an insurer is known as _____.

A) Insurance management
B) Insured protection
C) Spread protection
D) Risk management
E) Casualty management

F) A) and D)
G) B) and E)

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Question 22

Multiple Choice

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An insurer may also be called a[n] _____.

A) Overseer
B) Underseer
C) Overwriter
D) Underwriter
E) Guarantor

F) B) and D)
G) A) and E)

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Question 23

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Insurance is defined as a contract in which the insured party makes payments to the insurer in exchange for the insurer's promise to make payment or transfer goods to another party in the event of injury or destruction to the insured party's property or life.

If the purpose of an insurance policy is to protect property from loss or damage, the insurance is ______ insurance.

Which of the following types of insurance provides a specific sum of money on the death of the insured?

The government spends large amounts on social insurance.

A policy of title insurance is an example of which of the following types of insurance?

What is the effect of an appraisal clause in a policy of insurance, and how do these usually work?

What is an incontestability clause in a policy of insurance, and what is its effect? Discuss whether you believe that ethically these clauses should be required of insurers.

Which of the following types of insurance protects contractors against liability for injuries that might occur while completing a job, excluding injuries to employees?

Through the insurance agreement, the insured party transfers his or her risk of loss of property or life to the insurance company.

The ______ is the term used for the date an insurance policy begins coverage of an insured.

Which of the following types of insurance should a business manager purchase to obtain protection against a broad range of risks?

Which of the following was the result in Life Partners Inc., v. Miller, the case in the text involving the validity of a state law in Virginia requiring that viatical insurance companies pay certain amounts to terminally-ill policyholders who sell their policies?

Which of the following is true regarding whether the insureds in the "Case Opener" were entitled to insurance coverage for imported toxic Chinese drywall used in their home?

Which of the following suggests that people who are insulated from risk sometimes behave differently?

In an insurance contract, the beneficiary is another name for the insured.

"Wild Things." Image Company, a company specializing in photography of exotic and wild animals, took out a life insurance policy through ABC Insurance on its president Bruno and also on a company-owned jeep that he drove. Bruno got a better offer from Wild Things Company, another company specializing in the photography of exotic animals, and went to work for them. He parted on good terms with Image Company and taking the jeep with him under the mistaken idea that the jeep was part of his severance benefits. Neither of the insurance policies was cancelled by Image. Unfortunately, while photographing a lion for Wild Things Company, Bruno was attacked and eaten. His jeep was then stolen by an unknown bystander who apparently saw the attack and took the opportunity to take the jeep. Image Company had been in the process of contacting Bruno in an attempt to obtain possession of the jeep but had not reacquired it at the time of his death. Image Company had renewed the policy on the jeep reaffirming to the insurer that its purpose was for use by Image employees because Image planned to have possession of the vehicle shortly. Image Company filed a claim to collect on the life insurance policy and also on the vehicle policy. ABC Insurance denied both claims. -Which of the following is true regarding whether ABC Insurance will be required to provide coverage on the jeep?

A[n] ______ is an agreement between an applicant and an insurance company that gives temporary insurance until the company decides to accept or reject the insurance application.

"Teenage Driver." Sally bought a new car, a yellow convertible. She also had a teenage son at home, Bobby, but she did not plan to let him drive the car. She was annoyed because Bobby had run her last car into the lake. Sally decided to change insurers because she thought her previous insurance agent was annoyed over Bobby's antics. She went to ABC Insurance to apply. She got an application from Mark. Sally was a little nervous because the application asked about other drivers in the home. It also asked if there were any teenagers in the home. Sally answered "no" on both counts because she had no plans to let Bobby drive. Sally got full coverage on the car, and the policy was issued shortly after she completed the application. She renewed the policy without revising any of the information she provided. Thirteen months later, Sally really needed some gas in the car for the next day. Under the belief that he had sufficiently matured, Sally sent Bobby to get some gas at the station just down the street. Unfortunately, a drunk driver who had no insurance hit the car and totaled it. Sally immediately called Mark. When Mark reviewed the police report, however, he told Sally that there would be no coverage on the car because Bobby was driving. Sally said that was completely unfair and that she would appeal to the jury. Sally told Mark that ABC issued the policy and that she was relying on the incontestability clause. Mark told Sally that she was wrong and that based on how disputes were handled under the policy, she would not even see a jury. -Which of the following, if any, will ABC Insurance most likely be required to prove in order to deny coverage based on the discrepancy between the application and Bobby's driving?