Property And Casualty Insurance License Policy Provisions and Concepts 3

Question 1

What does 'utmost good faith' (uberrimae fidei) require in insurance?

Accepted Answer

Both parties must disclose all material facts relevant to the insurance contract

Answer

The insurer must accept all applications submitted in good faith

Answer

The insured must pay premiums promptly

Answer

The insurer must settle all claims fairly

Question 2

What is 'misrepresentation' in insurance applications?

Accepted Answer

Making a false statement of a material fact on an insurance application

Answer

Filing a fraudulent claim after a loss

Answer

Failing to read the policy before signing

Answer

Submitting an incomplete claim form

Question 3

What is the 'appraisal clause' in a property policy used for?

Accepted Answer

Resolving disputes over the amount of loss when coverage is not in question

Answer

Determining insurable interest before policy issuance

Answer

Establishing the replacement cost of the property

Answer

Scheduling personal property for floater coverage

Question 4

What is a 'mortgagee clause' (also called a mortgage clause) in a property policy?

Accepted Answer

A provision protecting the lender's interest in insured property even if the borrower violates policy conditions

Answer

A clause allowing the mortgage lender to cancel the policy

Answer

A requirement that the insured pay the mortgage before receiving claim proceeds

Answer

A clause that names the lender as the sole beneficiary

Question 5

What is meant by 'assignment' of an insurance policy?

Accepted Answer

The transfer of the insured's rights and interests under the policy to another party

Answer

The insured's right to change beneficiaries

Answer

The insurer's transfer of a policy to a reinsurer

Answer

The process of renewing a policy automatically

Question 6

What does 'liberalization' clause in a property policy provide?

Accepted Answer

Automatic extension of broader coverage to in-force policies if the insurer broadens coverage with no additional premium

Answer

The right to increase coverage limits without additional premium

Answer

Coverage for losses not listed in the exclusions

Answer

Freedom for the insured to choose any repair contractor