4 - Insurable Interest Flashcards
(14 cards)
(1) What must exist for there to be insurable interest?
Self-test questions
a. Subject-matter, ownership and financial value
b. Subject-matter, ownership and financial loss
c. Subject-matter, legal relationship and financial value
d. Subject-matter, legal relationship and financial loss
(42) Which insurance principle will NOT permit Jack’s car to be insured by his neighbour?
iF1 Exam 2023
A. Contribution
B. Indemnity
C. Insurable interest
D. Subrogation
(2) Dorothy and James are getting married and have taken out insurance for their wedding day. In terms of insurable interest, their wedding day is the
Self-test questions
a. Legal relationship
b. Subject-matter
c. Financial value
d. Risk
(43) Paul has a fire insurance policy fully covering a building. The building is destroyed by an insured peril two weeks after Paul had sold it to Colin. What will Paul receive, if anything, from his fire
insurer?
iF1 Exam 2023
A. Nothing
B. The rebuilding cost, less the sale price
C. The rebuilding cost only
D. The sum insured
(3) If an insurance company wants to reinsure part of a risk they hold, their financial interest in the original insurance is known as the
Self-test questions
a. Subject-matter of insurance
b. Anticipated insurable interest
c. Legal liability
d. Subject matter of the contract
(44) When purchasing a life insurance policy, Ann must be able to demonstrate insurable interest at which point in time?
iF1 Exam 2023
A. At the point of purchase only
B. At the point of purchase and the claims stage
C. At the claims stage only
D. At renewal only
(4) A couple arranged a joint life insurance contract shortly after they were married. They divorced five years later. It is true to say that the contract is:
Self-test questions
a. Still enforceable because insurable interest existed at inception.
b. Not enforceable because insurable interest no longer exists.
c. Still enforceable but only if either partner remarries.
d. Only enforceable until the point they are divorced.
(5) Aiden sold his car to his friend Darren. Two weeks later Darren had an accident in the car causing significant damage. As Aiden had not cancelled his original insurance policy he submitted a claim on Darren’s behalf. His claim was refused because:
Self-test questions
a. He was covered only for third party fire and theft.
b. He had no insurable interest in the car at the time of the damage.
c. Darren was not a named driver on the policy.
d. His claim amount exceeded the cover on the policy.
(45) What is the most common way that insurable interest in a car arises?
iF1 Exam 2023
A. Being a passenger in the car
B. Being involved in a car accident
C. Driving the car
D. Owning the car
Which class of insurance requires the existence of insurable interest at both inception and at the time of a loss?
Self-test questions
a. Level term assurance.
b. Marine insurance.
c. An endowment plan.
d. General insurance.
Insurable interest can be created by:
Self-test questions
a. Ownership, contract and court order
b. Ownership, contract and legislation
c. Ownership, agency agreement and legislation
d. Ownership, contract and agency agreement
A dry cleaner has an insurable interest in the garments it cleans because it is a(n):
Self-test questions
a. Bailee
b. Tenant
c. Agent
d. Part owner
Why does a tenant have insurable interest in the property they live in?
Self-test questions
a. They own the property for insurance purposes
b. They act as an agent for the owner
c. They may be liable for the cost of repairs
d. They are treated as part owners for insurance purposes
Robert is effecting an insurance policy on behalf of another party. Robert is not the owner of the property but he is able to arrange insurance because he is a(n):
Self-test questions
a. Bailee
b. Principal
c. Agent
d. Tenant
