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Exam 36: Insurance

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Question 21

True/False

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Under no-fault insurance, an insurer is obligated to pay an injured person without regard to whose fault caused the harm.

A) True
B) False

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Question 22

Multiple Choice

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A person who would suffer a direct pecuniary loss if a particular piece of property were destroyed has a(n) :

A) contractual risk.
B) hazard.
C) underwriting.
D) insurable interest.

E) C) and D)
F) B) and C)

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Question 23

True/False

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Any false statement in an application binds the insured.

Paul purchased a house and also purchased fire insurance coverage on the house. The policy contained an 80 percent coinsurance clause. Paul maintained coverage in the amount of $150,000 and the value of the house was $250,000. A fire caused a loss of $100,000. Paul will collect:

Insurance is a contract by which one party for a stipulated consideration promises to pay another party a sum of money on the destruction of, loss of, or injury to something in which the other party has an interest, or to indemnify that party for any loss or liability to which that party is subjected.

What is a correct statement concerning burden of proof?

If an insurer denies liability for a loss, the insured or the beneficiary of the policy has the burden of proving that there was a loss that came within the coverage of the policy.

For the purposes of fire insurance, all fires that cause damage are considered hostile fires.

Winona was a person of average intelligence, education, and experience in business. She negotiated for the purchase of insurance and paid the premium. The policy was mailed to her, but before it arrived a loss was suffered. When the policy was read, Winona could not determine whether the loss was covered because the policy was too difficult to understand. The loss is:

An incontestability clause ordinarily bars contest of the validity of a life insurance policy by the insurer after the lapse of:

A person who obtains life insurance generally can name anyone as beneficiary, regardless of whether that beneficiary has an insurable interest in the life of the insured.

A coinsurance clause requires the insured to maintain insurance on the covered property up to a certain amount or a certain percent of the value, generally 80 percent.

If an insured person tells her current husband that she is going to name him as beneficiary of her life insurance in place of her former husband and dies a year later without having taken any further steps with respect to the change of the policy beneficiary, the insurance company must pay the proceeds of the policy to:

Mike Reilly suffered the loss of his home as a result of a chimney fire that was caused by the ignition of soot in the chimney. This fire would be described as:

Armenia purchased life insurance on her life. Regarding the beneficiary:

An insurer may cancel any contract of insurance by the insurer's unilateral act as long as the insurer gives advance written notice.

An insurer's bad faith refusal to pay a claim generally is considered to be any frivolous or unfounded refusal to comply with the demand of a policyholder to pay according to the policy.

For the purposes of Personal Auto Policy (PAP) coverage, an insured person "uses" an automobile by unloading groceries from the car while it is parked in the garage.

When a provision of an endorsement conflicts with a provision of a policy, the endorsement controls.

A homeowner's policy commonly provides protection from losses caused by theft.