Chapter 1 Section 1 Part 4

Question 1

at what point in time is the true measure of indemnity determined?

Answer 1

immediately prior to loss

Question 2

how would a client meet the element of Consideration? +2

Answer 2

payment of premium

promise to pay

Question 3

Client meet element of Legal Capacity? +4

Answer 3

• Minors (if; age of majority, contracting for necessities of life)
• Mental incompetents (not be)
• Drugs, alcohol (not be under influence of)
• Trade names (not be)

Question 4

Client meet element of “insurable interest”? +2

Answer 4

• Suffer financially by loss

- Insurable interest = owner of property, mortgagee, bailee, liable to third party

Question 5

Client meet element of “utmost good faith”?

Answer 5

tell truth in application

Question 6

void contract

Answer 6

unable in law to support intended purpose

never existed

Question 7

voidable contract

Answer 7

void to wrongdoer

not void to wronged party (unless so elects)

Question 8

when a broker issues a binder, the insurer is…

Answer 8

committed to provide the contract of insurance

Question 9

binders: oral/written. what should brokers do when they give an oral binder? why?

Answer 9

confirm immediately in writing

- avoids potential disagreement (coverages, amounts insured in event of loss occurring before policy issued)

Question 10

places brokers might find limits of binding authority +2

Answer 10

dwelling, contents - half million

commercial building, contents - million