Section 3 - legal concepts of the insurance contract Flashcards
(24 cards)
The unwritten authority given to a producer to carry out necessary incidental acts of the agency agreement is called _____
Implied authority
Insurable interest involves what assumption?
One person benefits from another person’s continued life
Under the law of agency, the principal is considered to be _____
The insurer
The powers directly given to a producer in an agency contract are called _____
Express authority
An insurance company can be liable for a producers, unauthorized acts _____
When the agency contract is unclear concerning the authority given.
An agent whose actions exceed the authority granted by contract is ____
Not backed by the insurer
An agreement is reached when an insurance contract is formed. What is not considered to be an element of an agreement?
Equity
What qualifies as acceptance of an insurance contract offer?
An issued policy
Which situation would not require the insured consent when a life insurance policy is issued?
A policy is purchased by a parent for a minor child
Which element of a contract constitutes a definite and unqualified proposal by one party to another?
Offer
What does NOT indicate the presence of insurable interest in a life insurance contract?
Lifelong friendship
Marriage
Blood related
Co-owning a business
Lifelong friendship
The insurer’s obligation to pay a claim depends on whether the insured or beneficiary has complied with all policy conditions. This makes the policy a(n) _____
Conditional contract
Name a situation, where an insurance agent would need to guard against liability for professional errors and omissions
Making a recommendation to a potential insured to replace existing coverage
Ambiguities in insurance contracts are typically interpreted in favor of the insured. This rule is referred to as
Reasonable expectations
An appointed producers implied authority is derived
Express authority
XYZ insurance company gives direct authority to its producers to sell insurance through an agency contract, but nothing is stated regarding the collection of premiums. Which authority grants, the producer, the right to collect premiums?
Implied authority
What happens when an initial offer is answered with a counter offer?
The initial offer is void
Voluntarily terminating an insurance policy is also known as
Cancellation
All of these statements correctly, describe an aleatory contract EXCEPT
-A legal wager is considered an aleatory contract
-Potential unequal exchange of value for both parties
-Only one party makes any kind of legally enforceable offer
-Element of chance is involved
Only one party makes any kind of legally enforceable offer
A false statement on an application is called
Material misrepresentation
The payment of the first premium, the promise to pay a covered loss, and the agreement to abide by policy conditions are all examples of
Consideration
An insurance companies failure to enforce a contracts provision is called a
Waiver
An arrangement where an individual is authorized to act on behalf of another person, or company is established through
The law of agency
A contract is considered void when
When consideration is unequal
