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Flashcards in Property- Policy Provisions and Contract Law Deck (11)
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1
Q

All of the following statements regarding concealment are false EXCEPT:
A. If concealment is suspected, the burden of proof is on the insured
B. Concealment involves answering a question without intent to defraud
C. Concealment is never grounds for rescission of a policy
D. Concealment is the failure to disclose any material fact.

A

Answer: D

2
Q
An insurance company owned by its policyholders, who receive a return of unused premiums in the form of policy dividends, is a(n):
A. Assessment insurer
B. Fraternal insurer
C. Mutual company
D. Stock company
A

Answer: C. Mutual company

3
Q
Failure to disclose known facts when filling out an insurance application is an act of:
A. Impersonation
B. Estoppel
C. Concealment
D. Aleatory action
A

Answer: C. Concealment

4
Q
In which company may policyholders receive policy dividends when there is a profit?
A. Stock
B. Mutual
C. Assessment
D. Service
A

Answer: B. Mutual

5
Q
In the formation of a legal contract, each party must give something of value. Under contract law, this is referred to as:
A. Adhesion
B. Agreement
C. Indemnity
D. Consideration
A

Answer: D. Consideration

Consideration is defined as the exchange of values.

6
Q
When a property insurance applicant makes a statement on an application that becomes part of the contract and includes a promise by the insured, the statement is considered to be a:
A. Waiver
B. Warranty
C. Representation
D. Condition precedent
A

Answer: B. Warranty

7
Q
Which element of an insurance contract requires that the insured have the legal capacity to make a contract?
A. Competent parties
B. Legal object
C. Consideration
D. Agreement
A

Answer: A. Competent parties

8
Q
Each of the following elements is necessary for formation of a legally valid contract EXCEPT:
A. Competent parties
B. Signatures of each party
C. Agreement
D. Consideration
A

Answer: B. Signatures of each party

9
Q

All of the following statements are true about a representation EXCEPT:
A. Representations are sometimes given orally
B. It usually appears in an application
C. A representation of a fact is the same as an expression of opinion
D. A policy is usually voided if a misrepresentation is of a material fact

A

Answer: C

10
Q
Which of the following would not be covered by the Terrorism Act?
A. CGL
B. Health insurance
C. Surety insurance
D. Worker's compensation
A

Answer: B. Health insurance

11
Q
In which company may stockholders share in the profits and losses of the insurer?
A. Assessment
B. Service
C. Mutual
D. Stock
A

Answer: D. Stock

Stockholders may receive dividends from the shares of stock they own in a stock company.