Study 6

Question 1

A ______ is an agreement enforceable at law

Answer 1

Contract

Question 2

Under common law, the following conditions must exist or the contract is void

Answer 2

Genuine Internet
Legal Capacity
Legality of purpose
Agreement
Consideration

Question 3

To be legally effective, consideration must contemplate the following three things

Answer 3

1. It must have a price
2. It must have some value
3. It must be in the present or future

Question 4

The following persons have limited ability to contract legally

Answer 4

1. Infants or minors
2. Insane or mentally incompetent
3. Intoxicated persons

Question 5

For a contract to be enforceable it must be a lawful purpose. It is unenforceable and void if it is any of the following:

Answer 5

1. Forbidden by law
2. Against public policy
3. For the purpose of commutating a crime

Question 6

when more then one policy has been issued to insure a given risk, a loss must be divided equitably among the various policies. According to their amount and terms, each “Contributes” its share of the loss

Answer 6

Contribution

Question 7

Contribution Calculation =

Answer 7

Amount of coverage / Total combined coverage X amount of loss = ratable portion

Question 8

Insurance that does not participate until all other similar insurance on the same subject is exhausted, or until loss exceeds the previously agreed upon amount

Answer 8

Excess Insurance

Question 9

A fact that would affect a contract of insurance enough to influence an insurers decision

Answer 9

Material Fact

Question 10

A material fact if known would affect insurers when deciding the folloing

Answer 10

the acceptability of risk, the amount of premium to be charged and the conditions applicable to accepting the risk

Question 11

an incorrect statement made about a material fact. It can also be an omission of certain facts

Answer 11

Misrepresentation

Question 12

what are three types of misrepresentation

Answer 12

1. Innocent - an oversight
2. Fraudulent - an outright lie intended to mislead or hide
3. One of extreme carelessness - statement made with no regard to weather is be true or false

Question 13

Silence when there is an obligation to speak is known as

Answer 13

Non-Disclosure (Concealment)

Question 14

With holding information pertinent to the risks

Answer 14

Non-Disclosure (Concealment)

Question 15

What are the two time periods to disclose Material Facts

Answer 15

1. Facts as they exist up to the time the contract is formed
2. New facts that arise

Question 16

What is needed for an offer to become and agreement “Meeting of the Minds”

Answer 16

acceptance of the offer

Question 17

A contract that was never made and never existed

Answer 17

Void Contract

Question 18

Three Requirements of a Insurance Contract

Answer 18

Insurable Interest
Indemnity
Utmost Good Faith

Question 19

“No more and No less”

Answer 19

Indemnity

Question 20

Policy wording that does not conform to the standard wording in general use within the insurance industry and that is unique to the policy involved

Answer 20

Manuscript Wording

Question 21

A short term certificate issued at the renewal

Answer 21

Renewal Certificate

Question 22

A ___________ will overrule any wording in the policy itself that is inconsistent with the endorsement, unless an express stipulation to the contrary is included

Answer 22

Endorsement

Question 23

What could the affects of misrepresentation lead to

Answer 23

Void contract

Question 24

A policy covering a risk that is divided among a number of insurers; the policy is issued by the “Lead” company and signed by all participating companies

Answer 24

Subscription Policy

Question 25

A temporary confirmation that coverage is in effect given to the insured - which can be oral or written

Answer 25

Binder

Question 26

True or false the premium is shown on Binders

Answer 26

False

Question 27

A temporary confirmation that coverage is in effect given to the insurer

Answer 27

Cover Note

Question 28

True or false the premium is not shown on Cover Notes

Answer 28

True

Question 29

Five main sections of a policy

Answer 29

``` Coverage Summary Insuring Agreements Statutory Conditions (QC General Conditions) Policy Conditions Signature Clause ```

Question 30

This section of the policy sometimes referred to as declarations , contains the parties of the contract (insured and insurer), The commencement date, Term, Expiry date, The premium and rate, and the amounts insured

Answer 30

Coverage Summary

Question 31

This section of the policy states the following: the subject matter of the insurance - Description of property covered. The perils covered against. the exclusions and the circumstances under which the insured may receive the proceeds of the insurance

Answer 31

Insuring Agreements

Question 32

This clause states that the policy is to be signed by the insurer only and is one of the sections of the policy

Answer 32

Signature Clause

Question 33

Insurer cancellation of policy - cancellation of policy with the return premium credit being the full proportion of premium for the unexpired term of the policy

Answer 33

Pro rata Cancellation

Question 34

Insured Cancellation of policy - cancellation of policy before its natural expiration, the insurer pays a return premium less the penalty

Answer 34

Short rate Cancellation