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Exam 35: Insurance

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Question 31

True/False

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Businesses typically protect their financial interests by obtaining insurance. 

A) True
B) False

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Question 32

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An absolute defense against payment exists if the insurer can show that the insured lacked an insurable interest.

A) True
B) False

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Question 33

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An arbitration clause requires arbitration of disputes that arise between the insurer and the insured concerning the settlement of claims.

Speedy Shipping Corporation applies to TransInsurance Company for a fire insurance policy on Speedy's warehouse.On the application,Speedy misrepresents the age of the property to obtain a lower premium.When a fire soon destroys the warehouse,TransInsurance can 

For property insurance,the insurable interest must exist when a policy is purchased.

A person who obtains insurance from an insurance company's agent is not usually protected until a formal written policy is issued.

Quality Insurance Company provides life insurance policies.Quality applies a concept of insuring a large number of people with the knowledge that only a small proportion of them will die in a given year.The large number of premiums provides the funds to pay for the small number of deaths.This concept is known as 

An insurer has a duty to avoid paying a claim even if it means acting in bad faith.

Frank applies to GuardDog Insurance Company for homeowners' insurance.The company issues a policy,but later discovers that Frank's application includes several misstatements.Most likely,these misstatements can 

U-Rents Company wants to insure the equipment that it rents to consumers.To obtain insurance,U-Rents must have an insurable interest in the property 

Greg obtains from Helpful Insurance Company a policy that provides that Greg has thirty days after a premium's due date to pay it before the policy will be canceled.This is 

Donald applies for a life insurance policy with Equity Insurance Company through Fletch,an agent who works for Equity.Donald pays the initial premium.Fletch writes a binder,which 

Estimable Credit Company loans funds to Farmland Granaries,LLC,to buy a silo.Estimable obtains an insurance policy from Grangers Insurance,Inc.,to cover the silo.Farmland also obtains a policy from Grangers to cover the silo.Later,Farmland sells the silo to Hi-Yield Harvest Company but keeps the policy.Hi-Yield also obtains a policy from Grangers to cover the silo.Estimable agrees to finance Hi-Yield's purchase of the property.A fire totally destroys the silo.Who can recover for the loss?

Allie applies for a life insurance policy with Long Life Insurance Company.The consideration Allie pays to Long Life is 

Ricky obtains an insurance policy from Security Insurance,Inc.The policy provides that on Ricky's death Security will pay $500,000 to Tori,Ricky's spouse and beneficiary.This is 

Insurance policies are governed by the principles of common law.

Myles obtains a property insurance policy from Nova Insurance Company for Myles's restored 1957 Chevy.Nova can cancel the policy 

Commerce & Business Insurance,Inc.,has a valid reason to cancel a policy issued to DIY Auto & Truck Parts Company.In most states,Commerce & Business could cancel the policy on 

An incorrect statement as to the age of the insured provides an insurance company with an excuse to avoid payment on the insured's death.

Property insurance cannot be canceled for nonpayment of premiums.