Policy Provisions Contract Law

Question 1

When is an appraisal needed and how can it be requested?

Answer 1

If an insured and an insurer disagree about the value of a property loss, either party can make a written demand for an appraisal

Question 2

What is consideration in an insurance contract?

Answer 2

Consideration is something of value that each party gives to the other. Consideration on the part of the insurer is binding.

Question 3

Where is the policy period stated in an insurance policy?

Answer 3

On the declaration page

Question 4

What process is used to settle a casualty claim when the insured and the insurer cannot agree?

Answer 4

Arbitration

Question 5

Persons who are not named on the declaration page of a policy but who are protected by the policy are known as what type of insured?

Answer 5

Additional insured

Question 6

When does pro rata liability apply?

Answer 6

When an insured has more than one policy covering a loss

Question 7

What does an endorsement do to an insurance contract?

Answer 7

It modified the policy’s original terms

Question 8

In property and casualty policies, what is required for an assignment to be valid?

Answer 8

A written consent of the insurer

Question 9

In insurance contracts, when does acceptance usually occur?

Answer 9

When the insurer approves a prepaid application

Question 10

What are the four elements of an insurance contract?

Answer 10

Agreement (offer and acceptance), consideration, competent parties, and legal purpose

Question 11

What is the prove of loss?

Answer 11

A sworn statement from an insured notifying the insurer about a loss

Question 12

What is additional coverage in an insurance policy?

Answer 12

A provision that adds more coverage for a specific loss at no additional premium

Question 13

What part of an insurance policy contains the insurer’s promise to pay a claim?

Answer 13

Insuring agreement

Question 14

what are an insured’s duties after loss?

Answer 14

Protect the damaged property from further damage, prepare an inventory of damaged property, cooperate with the insurer in settling a loss, notify police in case of theft; and submit proof of loss

Question 15

What method of loss valuation is contrary to the principle of indemnity?

Answer 15

Replacement cost

Question 16

What provision defines how a policy will respond if there is more than one insurance policy written on the same risk

Answer 16

other insurance

Question 17

What is a binder?

Answer 17

A temp. insurance to be covered until the real deal comes in

Question 18

What is a warranty in an insurance contract?

Answer 18

An absolutely true statement upon which the validity of the policy depends

Question 19

What is the difference between cancellation and nonrenewal?

Answer 19

Cancellation is cancelling. Nonrenewal is not offering a continuation of a policy.

Question 20

Info. about changes to the policy or return of premium can be found in what section of a policy?

Answer 20

Conditions

Question 21

What does the exclusions section of a policy specify?

Answer 21

What perils are not insured against, or what persons are not covered in a policy

Question 22

What part of a policy shows the amount of insurance, premium, and policy terms?

Answer 22

Declarations

Question 23

What part of an insurance policy indicates the general rules or procedures that the insurer and insured agree to follow under the terms of the policy?

Answer 23

Conditions

Question 24

What is consideration on the part of the insurer?

Answer 24

A promise to pay in the event of a loss

Question 25

What insurance principle does pro rata liability protect?

Answer 25

Indemnity

Question 26

Who is an insured in property and casualty insurance?

Answer 26

Anyone covered under the policy, even if not specifically named

Question 27

In commercial property policies, who has control of the policy, and who can cancel it?

Answer 27

First named insured

Question 28

What section personalized an insurance policy?

Answer 28

Declarations

Question 29

What does the terms unilateral contract mean?

Answer 29

A unilateral contract is a one-sided contract. This means only one party makes an enforceable promise

Question 30

In insurance contracts, when is the offer usually made?

Answer 30

When the insurance application is submitted