Module 2 Flashcards
A binder is the same thing as an insurance contract. True or False?
False. A binder is not the same thing as an insurance contract. A binder is a temporary and incomplete contract which is replaced by the actual policy once issued.
A contract of adhesion is formed when the drafting party offers terms to the non-drafting party on a “take it or leave it” basis. True or False?
True.
The first rule of interpretation states that “Coverage is narrowly construed and exclusions are broadly construed.” True or False?
False. The first rule of interpretation states that “Coverage is broadly construed and exclusions are narrowly construed.”
In the Vargas case, the court determines that the policy language is ___________.
a) ambiguous
b) unambiguous
a) ambiguous
and under NY law, contra proferentem applies
Can be established with reference only to the contract.
a) patent ambiguity
b) latent ambiguity
a) Patent Ambiguity
Must be established by extrinsic evidence
a) patent ambiguity
b) latent ambiguity
b) Latent Ambiguity
In the Stone Container case, the judge notes that the drafting party is entitled to an opportunity to present extrinsic evidence to “disambiguate the ambiguity” before the application of contra proferentum. True or False?
True
The Atwater case is a good example of which of the following?
a) Ambiguous Language
b) Doctrine of Contra Proferentum
c) Reasonable Expectations Doctrine
d) Completed Operations Exclusion
c) Reasonable Expectations Doctrine
Typically represents the insurer and is authorized to solicit and prepare coverage applications.
a) Broker
b) Agent
b) Agent
Operates primarily on behalf of individuals and enterprises seeking coverage.
a) Broker
b) Agent
a) Broker
Sell exclusively for one insurer
a) Captive agents
b) Independent agents
a) Captive agents
Sell for multiple insurers.
a) Captive Agents
b) Independent Agents
b) Independent Agents
Normally, a claim for estoppel can be used to create coverage that was not provided for in the policy initially. True or False?
False.
Expectation damages normally put the insured back into a better position than he would have been in had been no breach. True or False?
False. Expectation damages normally put the insured back into the position he would have been in had there been no breach. They do not make the insured richer or better off.
Texas has strong public policy against insurance coverage for punitive damage awards. True or False?
True. As demonstrated in the Hartford Casualty Ins. Co. v. Powell case, Texas does have a strong public policy against insurance coverage for punitive damage awards.
