RMI 3011 Quiz 2 Questions with
complete solution
Insurance is a Contract of ____________________ - correct answer
✔indemnity
What is indemnity? - correct answer ✔Try to put you in the same position
financially after loss as you enjoyed before the loss
Exceptions to Indemnity - correct answer ✔valued policy, valued policy laws,
replacement cost insurance, life insurance
What is an Insurance interest? - correct answer ✔You must own the item
you lost
When is an insurable interest required for property/casualty to be paid out? -
correct answer ✔At the time of the loss
When is insurable interest required for life insurance to be paid out? - correct
answer ✔At the time of application
What is subrogation? (Example) - correct answer ✔If you hit a car, and the
owner of the car files claim with their particular insurance carrier, the ability to
sue you gets transferred to the insurance company
principle of utmost good faith - correct answer ✔A higher degree of honesty
is imposed on both parties to an insurance contract than is imposed on parties
to other contracts
, 3 Factors of utmost good faith - correct answer ✔Representations
Concealments
Warranties
Example of material misrepresentation - correct answer ✔Broken TV is a
new Samsung instead of old crappy tv
Example of concealment - correct answer ✔Not telling insurance company
that tv stand was loose before it fell
5 requirements of insurance contract - correct answer ✔1) Offer and
Acceptance (Applicant makes an offer)
2) Exchange of Consideration (Insured pays premiums/ Abides by terms)
3) Competent Parties (Can't make deal with 6 year old)
4) Legal Purpose (Can't insure cocaine)
5) Legal Form (Written document not required)
5 Things a contract is in the insurance world - correct answer ✔Aleatory
Unilateral
Personal
Conditional
Adhesion
What is an aleatory contract? - correct answer ✔Unequal value is exchanged
b/w parties to contract(premium vs coverage)
What is a unilateral contract? - correct answer ✔promise for an act
complete solution
Insurance is a Contract of ____________________ - correct answer
✔indemnity
What is indemnity? - correct answer ✔Try to put you in the same position
financially after loss as you enjoyed before the loss
Exceptions to Indemnity - correct answer ✔valued policy, valued policy laws,
replacement cost insurance, life insurance
What is an Insurance interest? - correct answer ✔You must own the item
you lost
When is an insurable interest required for property/casualty to be paid out? -
correct answer ✔At the time of the loss
When is insurable interest required for life insurance to be paid out? - correct
answer ✔At the time of application
What is subrogation? (Example) - correct answer ✔If you hit a car, and the
owner of the car files claim with their particular insurance carrier, the ability to
sue you gets transferred to the insurance company
principle of utmost good faith - correct answer ✔A higher degree of honesty
is imposed on both parties to an insurance contract than is imposed on parties
to other contracts
, 3 Factors of utmost good faith - correct answer ✔Representations
Concealments
Warranties
Example of material misrepresentation - correct answer ✔Broken TV is a
new Samsung instead of old crappy tv
Example of concealment - correct answer ✔Not telling insurance company
that tv stand was loose before it fell
5 requirements of insurance contract - correct answer ✔1) Offer and
Acceptance (Applicant makes an offer)
2) Exchange of Consideration (Insured pays premiums/ Abides by terms)
3) Competent Parties (Can't make deal with 6 year old)
4) Legal Purpose (Can't insure cocaine)
5) Legal Form (Written document not required)
5 Things a contract is in the insurance world - correct answer ✔Aleatory
Unilateral
Personal
Conditional
Adhesion
What is an aleatory contract? - correct answer ✔Unequal value is exchanged
b/w parties to contract(premium vs coverage)
What is a unilateral contract? - correct answer ✔promise for an act
