Question 1

Either party to an insurance contract may claim the benefit of a violation of the contract by the other party.

Accepted Answer

A) True 
 B)False

Question 2

Untrue statements or unfulfilled promises by the insured permit the insurer to declare the policy void.

Accepted Answer

A) True 
 B)False

Question 3

The party agreeing to compensate a person for a certain loss is known as the _____.

Accepted Answer

A)   policyholder
B)   beneficiary
C)   insurer
D)   insured

Question 4

Which of the following best defines concealment?

Accepted Answer

A)   It is a willful failure to disclose any information pertinent to the insurance contract by the insured.
B)   It is an unintentional failure to disclose any information pertinent to the insurance contract by the insurer.
C)   It is an unintentional failure to disclose any information pertinent to the insurance contract by the underwriter.
D)   It is a willful failure to disclose any information irrelevant to the insurance contract by the insurer.

Question 5

A company in which policyholders are the members and owners and correspond to the stockholders in a stock company is known as a(n)  ______.

Accepted Answer

A)   mutual insurance company
B)   premium insurance company
C)   assessment insurance company
D)   stock insurance company

Question 6

Insurance contracts must specify the particular risks being transferred from one party to another.

Accepted Answer

A) True 
 B)False

Question 7

A willful failure to disclose pertinent information by the insured is known as subrogation.

Accepted Answer

A) True 
 B)False

Question 8

A creditor has insurable interest in the life of the debtor beyond the extent of the debt.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following best defines subrogation?

Accepted Answer

A)   It is the right of an insurer to claim warranty in case of breach of contract.
B)   It is the right of an insurer to assume the legal rights of the insured.
C)   It is the right of an insured to conceal certain facts from the insurer.
D)   It is the right of an insurer to deny life insurance claims in the case of suicide.

Question 10

A partner does not have an insurable interest to the extent of the possible loss in the property owned by a firm.

Accepted Answer

A) True 
 B)False

Question 11

A minor who wishes to disaffirm is bound on insurance contracts.

Accepted Answer

A) True 
 B)False

Question 12

James mortgaged his house and received a certain amount of money in return as a loan. However, he repaid half the loan in six months. Which of the following is likely to be true in this scenario, at the present moment?

Accepted Answer

A)   The mortgagee has an insurable interest towards 25 percent of the loan amount.
B)   The mortgagee does not have an insurable interest in the loan amount.
C)   The mortgagee has an insurable interest towards the entire loan amount.
D)   The mortgagee has an insurable interest towards half the loan amount.

Question 13

The danger of a loss of, or injury to, property, life, or anything else, is called a _____.

Accepted Answer

A)   rider
B)   face
C)   peril
D)   hazard

Question 14

The maximum amount that the insurer agrees to pay in case of a loss is known as the face of the policy.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following best defines insurance?

Accepted Answer

A)   It is a contract whereby a party transfers his right to receive interest to a third-party such as an agent.
B)   It is a contract whereby a party transfers a risk of physical injury to the risk bearer for a fee.
C)   It is a contract whereby a party transfers his right to a claim for a particular fee.
D)   It is a contract whereby a party transfers a risk of financial loss to a risk bearer for a fee. D

Question 16

A "binder" on an insurance policy is a clause added to another contract to limit the base contract.

Accepted Answer

A) True 
 B)False

Question 17

A stock insurance company is a corporation for which the original investment was made by stockholders.

Accepted Answer

A) True 
 B)False

Question 18

Explain subrogation.

Accepted Answer

In insurance, subrogation is the right of the insurer under certain circumstances to assume the legal rights of, or to "step into the shoes" of, the insured. Subrogation particularly applies to some types of automobile insurance. If the insurer pays a claim to the insured, under the law of subrogation the insurer has a right to any claims that the insured had because of the loss.

Question 19

A bailee has an insurable interest in the property bailed to the extent of possible loss.

Accepted Answer

A) True 
 B)False  True

Question 20

An oral or written misstatement of a material fact by the insured prior to the finalization of a contract is called a _____.

Accepted Answer

A)   repudiation
B)   false representation
C)   subrogation
D)   concealment

Exam 37: Principles of Insurance

Either party to an insurance contract may claim the benefit of a violation of the contract by the other party.

Correct Answer
verified

Untrue statements or unfulfilled promises by the insured permit the insurer to declare the policy void.

Correct Answer
verified

The party agreeing to compensate a person for a certain loss is known as the _____.

Correct Answer
verified

Which of the following best defines concealment?

Correct Answer
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A company in which policyholders are the members and owners and correspond to the stockholders in a stock company is known as a(n) ______.

Correct Answer
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Insurance contracts must specify the particular risks being transferred from one party to another.

Correct Answer
verified

A willful failure to disclose pertinent information by the insured is known as subrogation.

Correct Answer
verified

A creditor has insurable interest in the life of the debtor beyond the extent of the debt.

Correct Answer
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Which of the following best defines subrogation?

Correct Answer
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A partner does not have an insurable interest to the extent of the possible loss in the property owned by a firm.

Correct Answer
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A minor who wishes to disaffirm is bound on insurance contracts.

Correct Answer
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James mortgaged his house and received a certain amount of money in return as a loan. However, he repaid half the loan in six months. Which of the following is likely to be true in this scenario, at the present moment?

Correct Answer
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The danger of a loss of, or injury to, property, life, or anything else, is called a _____.

Correct Answer
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The maximum amount that the insurer agrees to pay in case of a loss is known as the face of the policy.

Correct Answer
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Which of the following best defines insurance?

Correct Answer
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D

A "binder" on an insurance policy is a clause added to another contract to limit the base contract.

Correct Answer
verified

A stock insurance company is a corporation for which the original investment was made by stockholders.

Correct Answer
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Explain subrogation.

A bailee has an insurable interest in the property bailed to the extent of possible loss.

Correct Answer
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True

An oral or written misstatement of a material fact by the insured prior to the finalization of a contract is called a _____.

Correct Answer
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Exam 37: Principles of Insurance

Either party to an insurance contract may claim the benefit of a violation of the contract by the other party.

Correct AnswerverifiedShow Answer

Untrue statements or unfulfilled promises by the insured permit the insurer to declare the policy void.

Correct AnswerverifiedShow Answer

The party agreeing to compensate a person for a certain loss is known as the _____.

Correct AnswerverifiedShow Answer

Which of the following best defines concealment?

Correct AnswerverifiedShow Answer

A company in which policyholders are the members and owners and correspond to the stockholders in a stock company is known as a(n) ______.

Correct AnswerverifiedShow Answer

Insurance contracts must specify the particular risks being transferred from one party to another.

Correct AnswerverifiedShow Answer

A willful failure to disclose pertinent information by the insured is known as subrogation.

Correct AnswerverifiedShow Answer

A creditor has insurable interest in the life of the debtor beyond the extent of the debt.

Correct AnswerverifiedShow Answer

Which of the following best defines subrogation?

Correct AnswerverifiedShow Answer

A partner does not have an insurable interest to the extent of the possible loss in the property owned by a firm.

Correct AnswerverifiedShow Answer

A minor who wishes to disaffirm is bound on insurance contracts.

Correct AnswerverifiedShow Answer

James mortgaged his house and received a certain amount of money in return as a loan. However, he repaid half the loan in six months. Which of the following is likely to be true in this scenario, at the present moment?

Correct AnswerverifiedShow Answer

The danger of a loss of, or injury to, property, life, or anything else, is called a _____.

Correct AnswerverifiedShow Answer

The maximum amount that the insurer agrees to pay in case of a loss is known as the face of the policy.

Correct AnswerverifiedShow Answer

Which of the following best defines insurance?

Correct AnswerverifiedD

A "binder" on an insurance policy is a clause added to another contract to limit the base contract.

Correct AnswerverifiedShow Answer

A stock insurance company is a corporation for which the original investment was made by stockholders.

Correct AnswerverifiedShow Answer

Explain subrogation.

A bailee has an insurable interest in the property bailed to the extent of possible loss.

Correct AnswerverifiedTrue

An oral or written misstatement of a material fact by the insured prior to the finalization of a contract is called a _____.

Correct AnswerverifiedShow Answer

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D

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True

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