Mark CPCU 500 Ch. 8 Top Questions and Correct Answers

Insurable Interest - An interest in the subject of an insurance policy that is not unduly remote and that would cause the interested party to suffer financial loss if an insured event occurred. Factual expectancy - A situation in which a party experiences an economic advantage if an insured event does not occur or, conversely, economic harm if the event does occur. Agent - In the agency relationship, the party that is authorized by the principal to act on the principal's behalf. Trustee - Someone who has the legal title to a property but is responsible that it be used, handled, and transferred solely for the benefit of the beneficiary. Bailee - The party temporarily possessing the personal property in a bailment. Bailor - The owner of the personal property in a bailment. 1-1. Danford Hospital has hired Surewell Construction Management as an agent to solicit bids from construction firms for building a parking garage on the hospital's premises and to handle all communications with the construction firm selected. Surewell has awarded the bid for construction to Zelles Construction Company. Danford has signed a construction loan contract and ultimate mortgage commitment with Etchley Financial. Zelles has begun construction of the garage. The new parking garage is being constructed in the location of the former employee parking lot. During the construction, employees of Danford Hospital must park in an overflow parking lot one block from the hospital. For each of the following, indicate whether that entity has an insurable interest in the parking garage by answering "yes" or "no" and, if answering "yes," describe the basis for that interest. a. Danford Hospital b. Surewell Construction - Insurable interest can arise from a legal relationship between the party filing the claim and the subject of insurance. The legal bases for insurable interest include Ownership interest in property, Contractual obligations, Exposure to legal liability, Factual expectancy, and Representation of another party. a. Danford Hospital: Yes. Danford has an ownership interest in the parking garage b. Surewell Construction Management: Yes. Surewell has an agent interest in the parking garage as a representative of Danford