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Contracts / Policies

Ga P & C Insurance Exam - Contracts / Policies

QuestionAnswer
What validates that someone (i.e. contractor) has current insurance coverage? Certificate of insurance
What are the four essential elements of a contract? 1. Offer & Acceptance 2. Consideration 3. Legal Purpose 4. Competent parties (legal capacity)
In an insurance policy, which party makes the offer and how? insured makes offer by applying for ins. & paying premium
In an insurance policy, which party accepts an offer and how? insurer accepts the offer (appl) by issuing the policy
What is the term for an oral or written interim insuring agreement? Binder
Id an insurer issues a binder, do they have to subsequently issue the insured a policy? No
In contract law what is the definition of consideration? something of value exchanged by the parties to the contract
What is the applicant's consideration in an insurance policy? statements made on appl and premium
What is the ins. co.'s consideration in an insurance policy? promise to pay benefits in event of loss
The legal purpose section of a contract (i.e. ins. policy) simply establishes what? that the activity insured is a legal activity
What type of contract implies one party acting in exchange for a promise from the other party? unilateral
What type of contract implies both parties making a promise to one another? bilateral
What type of contracts are insurance policies? unilateral
What type of contract implies one party draws contract language and the other party agrees to, accepts and adheres to the terms? contract of adhesion
An ins. policy is a personal contract which implies what? ins. co. cannot reassign policy to someone else
What are the six parts of an insurance policy? 1. Declarations page 2. Insuring agreement 3. Conditions 4. Exclusions 5. Endorsements 6. Key Definitions
What is the second main part of an ins. policy and what are the two types? Insuring Agreement 1. Named perils 2. All risk
In which part of an ins. policy are the policy cancellation procedures listed? conditions
In which part of an ins. policy do you list changes or modifications to a policy? endorsements
What is the term for statements on an appl. for ins. made by an applicant that he /she believes are true? representations
What is the term for statements on an appl. for ins. made by an applicant that MUST be true and caan result in a policy cancellation if false? warranties
What is the term for the willful failure on part of the insured to disclose relevant facts on an appl. for ins.? concealment
What is the term for lying on an appl. by applicant for ins.? misrepresentation
Which is easier to prove in court/ more certain to result in policy cancellation supported by court decision- concealment or misrepresentation? misrepresentation (harder to prove concealment was willful)
What is the term for an insured taking advantage of an ins. policy illegally for financial gain? fraud
What must be the same in a binder and the subsequent issued ins. policy? named insured, coverages, premiums, deductibles, etc
What are the min. and max. time periods for a binder to be valid? min = 30 days max = 90 days
What is the name of the ins. provision that states an ins. agent's oral statements cannot alter the written contract drawn by ins. co? parole evidence rule
What is the term for people in a position of trust? fiduciaries
What is the term for a party to a contract giving up a known right? waiver
Once an ins. co. mails a policy RENEWAL to an insured, what must happen for that renewal to be subsequently denied before the end of the policy term? insured must violate contract
In the ins. industry, who is the producer representing the ins. co.? What are the two types? Agent 1. captive 2. independent
What type of ins. agent represents only one co. and does NOT own his/ her clients' business? (example?) captive
What type of ins. agent can represent more than one company and DOES own his/ her clients' business? independent
In the ins. industry, who is the producer representing the insured? broker
What type of insured entity uses ins. brokers to represent their interests? large companies
What type of account must agents deposit premium payments and what is the term for failing to do so? business acct. (commingling)
If an agent collects $ from a customer and the $ goes missing, then who is responsible: the ins. co. or ins. agent? Agent
What is the term for powers specifically expressed in an ins. agreement (i.e. power to collect premium)? Expressed authority
What is the term for powers NOT specifically expressed in an ins. agreement but are implied by the contract? Implied authority
What is the term for when an agent tells insured something disallowed by an ins. contract, but the client believes the agent has legal authority for the statements? Apparent authority
What is an aleatory contract (i.e. ins policy)? contract where performance of contracted duties depends on the occurrence of an uncertain event (loss)
Created by: jkbick