Principle of Insurance 2

A false statement made by an applicant for insurance is an example of a

• concealment

• breach of warranty.

• misrepresentation.

• offer and acceptance

The principle of utmost good faith is supported by all of the following legal doctrines EXCEPT

• warranty

• concealment

• representation

• subrogation

Which of the following statements about subrogation is true?

• It is used primarily for losses paid under life insurance policies.

• It allows the insurer to sue its own insured who is negligent.

• The insuredʹs right to collect benefits may be forfeited if the insured interferes with the insurerʹs rights after a loss.

• The insurer is required to exercise its subrogation rights.

All of the following will support an insurable interest for purposes of purchasing property and

liability insurance EXCEPT

• ties of blood and marriage.

• potential legal liability.

• secured creditors.

• a contractual right.

Replacement cost insurance means there is no deduction for depreciation in determining the amount paid for a loss.

• TRUE

• FALSE

A representation is a statement that is material, false, and relied on by the insurer.

• TRUE

• FALSE

A warranty is a statement that becomes part of the insurance contract and is guaranteed by the maker to be true in all respects.

• TRUE

• FALSE

Actual cash value supports the principle of indemnity because it is designed to prevent profiting

from insurance.

• TRUE

• FALSE

Principle of contribution is used to support the principle of indemnity by preventing an insured from collecting twice, once from the insured and a second time from the negligent party.

• TRUE

• FALSE

In property and casualty insurance, the ownership of property, potential legal liability, unsecured creditors, and contractual rights can support the insurable interest requirement

• TRUE

• FALSE