Insurance Principles and Contracts Quiz

Insurance Principles and Contracts Quiz

Professional Development

16 Qs

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Insurance Principles and Contracts Quiz

Insurance Principles and Contracts Quiz

Assessment

Quiz

Other

Professional Development

Hard

Created by

Quizizz Content

FREE Resource

16 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the role of estoppel in insurance contracts?

To allow insurers to increase premiums without notice

To enable insureds to cancel policies at will

To prevent insurers from denying claims if they induced reliance

To allow insurers to change policy terms unilaterally

Answer explanation

Estoppel prevents insurers from denying claims if they have induced reliance by the insured. This principle ensures that insurers cannot backtrack on their commitments when the insured has acted based on the insurer's representations.

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the significance of an aleatory contract in insurance?

It guarantees a profit for the insured

It ensures equal exchanges between parties

It involves unequal exchanges where premiums may exceed or fall short of claims

It allows for automatic policy renewal

Answer explanation

An aleatory contract in insurance involves unequal exchanges, where the premiums paid by the insured may exceed or fall short of the claims made. This uncertainty is a key characteristic of insurance contracts.

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What does the principle of indemnity ensure in an insurance contract?

The insurer profits from a claim

The insured receives double the claim amount

The insured's pre-loss financial position is restored

The insured profits from a claim

Answer explanation

The principle of indemnity ensures that the insured is compensated only to the extent of their loss, restoring their pre-loss financial position without allowing them to profit from a claim.

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is a contract of adhesion?

A contract that can be easily modified by the insured

A standardized insurer-drafted form with a take-it-or-leave-it choice

A contract that allows for negotiation between parties

A contract that is voidable by the insurer

Answer explanation

A contract of adhesion is a standardized form created by the insurer, offering a take-it-or-leave-it choice to the insured, meaning the terms cannot be negotiated.

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the consequence of fraud in an insurance contract?

The contract is voided and may lead to criminal penalties

The insurer must pay the claim

The contract is upheld with a penalty

The insured receives a warning

Answer explanation

Fraud in an insurance contract typically results in the contract being voided, meaning the insurer is not obligated to pay claims. Additionally, it may lead to criminal penalties for the fraudulent party.

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the significance of 'reasonable expectations' in insurance contracts?

It allows insurers to deny claims based on technicalities

It ensures courts honor an insured's reasonable expectations of coverage

It permits insureds to modify policy terms

It guarantees coverage for all risks

Answer explanation

The significance of 'reasonable expectations' in insurance contracts is that it ensures courts honor an insured's reasonable expectations of coverage, protecting them from unexpected denials based on technicalities.

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What constitutes the 'consideration' in an insurance contract?

The insured's personal information

The insurer's underwriting guidelines

The insured's premium and the insurer's promise to indemnify

The insurer's marketing materials

Answer explanation

In an insurance contract, 'consideration' refers to what each party provides. The insured pays a premium, and in return, the insurer promises to indemnify against covered losses, making this the correct choice.

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