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Exam 35: Insurance

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Question 31

True/False

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

A) True
B) False

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Question 32

Multiple Choice

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Clark obtains from Dependable Insurance Inc. a policy that provides if a dispute arises between the parties concerning the settlement of a claim, the dispute must be submitted to an impartial third party, not a court, for resolution. This is

A) an antilapse clause.
B) an arbitration clause.
C) an appraisal clause.
D) an incontestability clause.

E) B) and C)
F) A) and B)

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Question 33

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An insurer can cancel a policy because the insured has appeared as a witness in a case against the insurance company.

Under an appraisal clause , ordinarily the insured has a grace period within which to pay an overdue premium before the policy is canceled.

Energy Inc. obtains an insurance policy with Fidelity Insurance Inc. that provides if the parties cannot agree on the amount of a covered loss, either party can demand an estimate by an impartial and qualified third party. This is

Insurance companies deal with risk through risk dodging .

Gina obtains an insurance policy from Hope Insurance Company. The policy includes an incontestability clause. Under such a clause, after a policy has been in force for a specified period of time, such as two or three years

Bram applies for a homeowners' insurance policy with Castle Insurance Inc. through Dian, an agent. In this transaction, Dian is

Insurance companies deal with risk by

Insurance protection may compensate for

World Hotels, Inc., insures its real and personal property to protect its financial interest should some event undermine its security. This is risk

Dino is the beneficiary of a life insurance policy on Erin's life obtained from Fidelity Insurance LLC through Gillian, Fidelity's agent. The insured of this policy is

If there is no ambiguity in an insurance policy, the policy generally is interpreted against the insurance company.

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

A binder is a written, permanent insurance policy.

Irene obtains an insurance policy that protects her against some risks of loss to the contents of her residence. This is

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

Estimable Credit Company loans funds to Farmland Granaries, LLC, to buy a silo. Estimable obtains an insurance policy from Grangers Insurance, Inc., to cover the silo. Farmland also obtains a policy from Grangers to cover the silo. Later, Farmland sells the silo to Hi-Yield Harvest Company but keeps the policy. Hi-Yield also obtains a policy from Grangers to cover the silo. Estimable agrees to finance Hi-Yield's purchase of the property. A fire totally destroys the silo. Who can recover for the loss?

Incontestability clauses prevent the insurer from asserting certain defenses.

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.