Questions and Answers
What makes an insurance policy a unilateral contract?
Only the insurer is legally bound.
Intentional withholding of material facts that would affect an insurance policy's validity is called what?
Concealment.
Legal purpose is a term used in contract law meaning what?
There must be legal reasons for entering into the contract.
What are an applicant's statements concerning occupation, hobbies, and personal health history regarded as?
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Which type of clause describes the following statement: 'We have issued the policy in consideration of the representations in your applications and payment of the first-term premium'?
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When the principal gives the agent authority in writing, it's referred to as what?
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The term which describes the fact that both parties of a contract may NOT receive the same value is referred to as what?
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In the scenario where Bob dies 12 months after retiring and dissolving a business he had with Tom, who will receive Bob's policy proceeds?
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What is implied authority defined as?
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In an insurance contract, the element that shows each party is giving something of value is called what?
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In order for a contract to be valid, it must what?
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A professional liability for which producers can be sued for mistakes of putting a policy into effect is called what?
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Insurable interest does NOT occur in which of the following relationships?
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The power given to an individual producer that is not specifically addressed in his/her contract is considered what type of authority?
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The deeds and actions of a producer indicate what kind of authority?
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Study Notes
Unilateral Contract
- An insurance policy is unilateral, meaning only the insurer is legally obligated to fulfill the contract terms.
Concealment
- Concealment is the intentional withholding of material information that could affect the validity of an insurance policy.
Legal Purpose
- Legal purpose in contract law refers to the necessity for a contract to have lawful reasons for its existence.
Representation
- An applicant's statements regarding occupation, hobbies, and personal health history are considered representations.
Consideration Clause
- The consideration clause indicates the agreement "We have issued the policy in consideration of the representations in your applications and payment of the first-term premium."
Express Authority
- Express authority is the authority granted to an agent by the principal in written form.
Aleatory Contract
- An aleatory contract is one where the value exchanged by the parties may not be equal, dependent on uncertain events.
Policy Proceeds Scenario
- In the case of Bob's death, the policy proceeds would be received by Tom, as both partners were beneficiaries in their insured relationship.
Implied Authority
- Implied authority pertains to the authority an agent possesses that is not explicitly stated in the agency contract but is necessary to perform duties.
Consideration in Insurance
- Consideration represents the value each party contributes to the insurance contract, demonstrating they both give something of value.
Valid Contract Requirements
- For a contract to be valid, it must contain an offer and acceptance between the involved parties.
Errors and Omissions
- Errors and omissions refer to a producer's professional liability for mistakes made during the policy establishment process.
Insurable Interest
- Insurable interest does not occur in the relationship between a business owner and a business client; it requires a more personal stake.
Implied Authority in Contracts
- Implied authority indicates powers granted to an individual producer that are not specifically detailed in their contract.
Apparent Authority
- Apparent authority is characterized by the actions and behaviors of a producer that imply they have certain authority to act on behalf of the principal.
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Description
This quiz covers essential concepts of insurance contract law, including unilateral contracts, concealment, legal purposes, and representations. Test your understanding of the fundamental principles that govern insurance agreements and the obligations of the parties involved.
