CAIB 1 CH1 (Discussion Questions) with Complete Solutions

CAIB 1 CH1 (Discussion Questions) with Complete Solutions A broker friend told you that she recently sold a Tenants' Package Policy to a 16 year old who was attending university. It is your understanding that minors cannot enter into contracts for things not deemed to be the "necessities of life." What position does the law take regarding the enforceability of insurance contracts entered into by minors? The law recognizes that such persons are not entitled to enter into certain contracts. However, when they do, their right to void the contract because of their status as a minor is forfeited after a reasonable length of time. Indicate whether the following persons would have an insurable interest in the property owned by your client. Mortgagee Yes Indicate whether the following persons would have an insurable interest in the property owned by your client. Next Door neighbor No Indicate whether the following persons would have an insurable interest in the property owned by your client. Owners of local storage warehouse at which insured property is being stored Yes The Statutory Conditions outline the duties and responsibilities of both the insured and insurer in a contract of insurance. Explain the responsibility of the insurer in the following claims: a. In their application for insurance, the insureds stated they had no claims during the previous three years. This week they made a $7,200 claim for a theft loss. On checking with their previous insurer, the insurer discovered they had four thefts over the last three years Claim denied on basis of "Misrepresentation" of a material fact The Statutory Conditions outline the duties and responsibilities of both the insured and insurer in a contract of insurance. Explain the responsibility of the insurer in the following claims: b. The insureds recently converted their private garage into a boat repair shop. The insurer was not advised of this change in occupancy. Last week, a fire occurred while the insured was heating materials to be used in applying fiberglass to a customer's boat Claim denied on basis of insured's failure to report a material change The Statutory Conditions outline the duties and responsibilities of both the insured and insurer in a contract of insurance. Explain the responsibility of the insurer in the following claims: c. Your insureds recently suffered a fire loss to their dwelling. In the proof of loss filed by them, a claim was made for a $1,200 compact disc player and 180 compact discs. During the investigation of the claim, the insurer discovered that the insureds did not own the items claimed Claim denied on basis of "Fraud"...the entire claim is invalidated The Statutory Conditions outline the duties and responsibilities of both the insured and insurer in a contract of insurance. Explain the responsibility of the insurer in the following claims: d. Your insured submitted a proof of loss to the insurer over three months ago. They have not yet been advised whether the insurer intends to rebuild their property or provide a cash settlement Insurer obligated to settle claim on cash settlement basis Your client recently suffered a theft loss to personal property. What obligation is placed by the "Additional Conditions" on persons having crime related losses? When the cause of the loss is due to certain criminal acts, the insured must give immediate notice to police or other authorities having jurisdiction.