Penn Foster College: CONTRACT LAW --- QUIZ

CONTRACT LAW --- QUIZ What role is used to determine the importance of a representation? 1. The insurable interest standard 2. That of aleatory contracts 3. The materiality of concealment 4. The law of adhesion What information can a party to a contract of insurance be allowed NOT to communicate according to California law? 1. Information which is material to the contract 2. Information which cannot be proven but is material 3. Information which the other party already knows 4. Information not specifically asked by an agent and company, even if it is considered relevant When may a representation be withdrawn? 1. Only before the insurance is in effect 2. At any time as long as both parties agree 3. It can never be withdrawn 4. Only after the policy is in effect CIC 355. A representation may be altered or withdrawn BEFORE the insurance is effective, but not afterwards. In regard to representations, which of the following is correct? 1. Representations are statements made to the best of one’s knowledge 2. Representations are guaranteed to be true 3. Representations can only be in writing 4. All of the above statements are true According to the CA Insurance Code, an insured’s policy must specify all of the following, EXCEPT: 1. The property of life being insured 2. The policy periods 3. The risks insured against 4. The financial rating of the insurer Which of the following is true regarding an aleatory contract? 1. The insured could pay nothing. 2. It can be perceived as gambling. 3. If there were a loss, the insurer would pay out considerably more compared to the insured’s premium. 4. The insured and the insurer pay equal amounts. From the following choices, select the one that best describes the concept of “concealment.” 1. Not communicating that which is not material, and the other party does not know. 2. Not communicating that which is material, and the other party knows. 3. Not communicating that which a party knows and ought to communicate. 4. All of the above. According to the California Insurance Code, an insurance policy must be 1. Approved by the Insurance Commissioner. 2. In writing. 3. Economically feasible for the insured. 4. Negotiated between the agent and the insured. Unless it is merely a statement of an expectation or a belief, a representation as to the future is considered which of the following? 1. Provision 2. Liability 3. Promise 4. Description When are parties to a contract required to communicate information solely based o n personal judgment for a matter in question? 1. Only when asked 2. Only when relevant 3. Only when the policy terms require it 4. Never A representation in an insurance contract qualifies as which of the following? 1. An express warranty 2. An implied warranty 3. An amendment 4. A policy provisions As defined by the California insurance code, “insurance” is a: 1. Risk 2. Peril 3. Contract 4. Gamble When referring to an insurance contract, when must a representation be made? 1. Only before a policy is issued 2. Either at the time of or before policy issuance 3. Only after a policy is issued 4. Either at the time of or after policy issuance A written contract attempts to indemnify another party against loss, damage, or liability arising from a contingent or unknown event. This describes: 1. Incontestability 2. An illegal contract in California 3. A provision 4. Insurance Which of the following is required to be included in the writing of an insurance contract? 1. The parties between whom the contract is made 2. The period in which the insurance is to continue 3. The risks insured against 4. All of the above In the business of insurance, concealment is defined by all of the following statements, EXCEPT: 1. Concealment can be intentional 2. Concealment can be unintentional 3. Concealment is grounds for declination by the insurer 4. Concealment does not occur if no inquiry is made All of the occurrences listed below are examples of an insurable event as defined by the CA Insurance Code, EXCEPT: 1. A guest is injured by a fall from the insured’s deck. 2. An insured is sued for unintentional slander of another person. 3. An insured is admitted to the hospital for delivery of a newborn. 4. An insured suffers a financial loss in the state lottery. What would we call a representation which fails to correspond with its stipulations or assertions? 1. Fatal 2. False 3. Fraud 4. Frivolous A failure to communicate information which a party to an insurance contract knows and should communicate, is called an act of: 1. Warranty 2. Intimidation 3. Coercion 4. Concealment According to the California Insurance Code, which of the following MUST be specified in an insurance contract? 1. Policy exclusions 2. Risks insured against 3. Additional coverages 4. Insurer financial rating