AD Banker Chapter 2 Questions And Answers guarenteed success

Each of the following is an element of a legal contract, except: A Legal Purpose B Indemnity C Agreement D Consideration - ANSWERSB) Indemnity Which principle of insurance restores the insured to the same economic condition that existed before the loss? A Insurable interest B Insurability C Underwriting D Indemnity - ANSWERSD) Indemnity M purchases an insurance policy by paying the policy premium. If a loss does not occur during the policy period, M may have paid the premium without getting anything of value in return. If a loss does occur, however, M may receive a claim payment that far exceeds the premium amount. This unequal exchange indicates that the insurance contract is a(n): A Conditional contract B Unilateral contract C Contract of adhesion D Aleatory contract - ANSWERSD) Aleatory Contract A warranty is defined as which of the following? A What a reasonable and prudent buyer can expect B An intentional misrepresentation on the application C A false statement in the application D A statement in the application that is guaranteed to be true - ANSWERSD) A statement that is guaranteed to be true The Declarations page of a property insurance policy includes all of the following information, except: A Covered perils B Policy period C Premium amount D Any applicable deductible - ANSWERSA) Covered Perils Each of the following is a typical property insurance policy exclusion, except: A Fire B Flood C Neglect D Ordinance or Law - ANSWERSA) Fire The duties and obligations of the insured are found under what part of the insurance policy? A Additional Coverages B Insuring Agreement C Declarations D Conditions - ANSWERSD) Conditions Which of the following has the broadest coverage under the insurance policy? A First named insured B Named insured C Insured D Additional insured - ANSWERSB) Named Insured Which of the following has the broadest coverage under the insurance policy? A Additional insured B First named insured C Insured D Named insured - ANSWERSD) Named Insured An insurance policy that responds to a loss first is a: A Nonconcurrent policy B Excess policy C Primary policy D Concurrent policy - ANSWERSC) Primary Policy Which of the following documents informs an insurer that a loss has occurred? A Proof of loss B Notice of loss C Certificate of insurance D Occurrence notice - ANSWERSB) Notice of loss A Liberalization Clause serves which of the following purposes? A The insurer has the right to recover from any party causing a loss B The insured is given permission to bring suit against the insurer C At each annual renewal, the policy limit automatically increases in value D Broadened coverage with no premium increase applies automatically to all policies - ANSWERSD Broadened coverage with no premium increase applies automatically to all policies Duties in the event of a loss - ANSWERSThis condition specifies the obligations of the insured in the event of a loss. These obligations typically include: Providing prompt notice of loss to the insurer Promptly notifying the police in the case of theft Protecting the property from further damage Cooperating with the insurer in any investigation it conducts Preparing an inventory of lost property Forwarding any legal papers associated with claims or suits against the insured Submitting a formal proof of loss, typically within 60 days after the loss Submitting to an examination under oath, as requested by the insurer Allowing the insurer to access relevant books and records After a loss, the insured must provide a notice of loss to the insurer. The notice must be submitted: A Promptly B During the policy period C Immediately D Within 60 days - ANSWERSA) Promptly Two insurance policies cover the same loss. To pay the claim, each insurer pays a portion of the loss equal to the ratio of insurance written by each insurer compared to the total amount of applicable coverage. This best describes: A Pro rata liability B Primary coverage C Excess insurance D Contribution by equal shares - ANSWERSA) Pro Rata Liability The Reasonable Expectations Doctrine states that the insured: A Is entitled to coverage that a reasonable and prudent buyer can expect, even if it goes against the strict terms of the policy B May reasonably expect that all submitted claims will be paid C Must fully cooperate with the insurer during the investigation of a claim in order to determine coverage for a loss D May expect the insurer to be reasonable in its consideration of a claim - ANSWERSA Is entitled to coverage that a reasonable and prudent buyer can expect, even if it goes against the strict terms of the policy When an insurance policy is not clear, the court will usually interpret in favor of the insured because of which characteristic? A The policy is a bilateral contract B The policy is an aleatory contract C The policy is a conditional contract D The policy is a contract of adhesion - ANSWERSD The policy is a contract of adhesion When an individual faces the risk of economic loss in the event of property damage, this indicates which of the following? A Merit rating B Subrogation C Limit of recovery D Insurable interest - ANSWERSD) Insurable Interes Which kind of contract includes an unequal exchange in value? A Adhesion B Aleatory C Personal D Unilateral - ANSWERSB) Aleatory Which term describes the equal sharing of a loss by two or more insurers until the loss is paid, or until each insurer has exhausted its limits of insurance, whichever comes first? A Excess insurance B Primary insurance C Pro rata liability D Contribution by equal shares - ANSWERSD Contribution by equal shares A sworn, formal statement made by the insured that provides the necessary details for the insurer to determine its liability under a policy is called a: A Proof of loss B Certificate of authority C Certificate of insurance D Notice of loss - ANSWERSA) Proof of Loss A false statement in the application for insurance is called a: A Representation B Concealment C Warranty D Misrepresentation - ANSWERSD) Misrepresentation Which of the following is not included in the Declarations of a property policy? A A description of the property being insured B Limit of liability C The perils that are not insured against D The expiration date of the policy - ANSWERSC The perils that are not insured against Which of the following is considered an offer of a legal contract? A An applicant who submits a completed application and initial premium to the insurer B An agent who solicits an application from a customer C An applicant who submits only a completed application to the insurer D An insurer that issues a policy to an applicant who has already paid the initial premium - ANSWERSA An applicant who submits a completed application and initial premium to the insurer In an insurance contract, the value that each party gives the other is called the: A Offer B Consideration C Acceptance D Subject matter - ANSWERSB) Consideration K gets a horrible rash after using wrinkle-prevention cream for 2 months. This is considered: A An accident B Negligence C Punitive damages D An occurrence - ANSWERSD) An occurance The Assignment condition of an insurance policy states that: A The insured must give prompt notice to the insurer upon loss B No requirements may be placed upon the insured without legal action C The insured may not transfer ownership of the policy without the insurer's written permission D The naming of parties other than the insured on loss payment checks is prohibited - ANSWERSC The insured may not transfer ownership of the policy without the insurer's written permission A contract that binds only one party to future performance, is a(n): A Contract of adhesion B Unilateral contract C Conditional contract D Aleatory contract - ANSWERSB Unilateral contract If an insured submits a fraudulent claim, the insurer may: A Cancel the policy immediately B Refuse to renew the policy at the expiration of the policy period C Cancel the policy with 10 days' notice and retain the unearned premium D Void the policy from the beginning - ANSWERSD Void the policy from the beginning The court requires an insurer to pay a claim because it declared the language of a policy exclusion to be unreasonable in the eyes of a prudent policyholder. This is an example of: A The doctrine of utmost good faith B An aleatory contract C Estoppel D The doctrine of reasonable expectations - ANSWERSD The doctrine of reasonable expectations Which of the following is attached to a property and casualty insurance policy to amend policy provisions or conditions? A Consideration B Endorsement C Warranty D Exclusion - ANSWERSB Endorsement A false statement in the application for insurance is called a: A Misrepresentation B Representation C Warranty D Concealment - ANSWERSA Misrepresentation The part of an insurance policy that states where the risk is located is the: A Declarations B Conditions C Insuring Agreement D Definitions - ANSWERSA Declarations Generally, liability policies include all of the following in its coverage territory, except: A Puerto Rico B Guam C Canada D Mexico - ANSWERSD Mexico An applicant accidentally including inaccurate information in the insurance application is guilty of: A Concealment B Fraud C Misrepresentation D Estoppel - ANSWERSC Misrepresentation The concept that the insured should not profit from an insurance transaction is called: A The principle of subrogation B The principle of personal aspect C The principle of indemnity D The principle of utmost good faith - ANSWERSC The principle of indemnity An insurance contract is prepared by the insurer and submitted to the applicant on a take-it-or-leave-it basis, without negotiations. This describes which type of contract?