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Exam 18: Insurance and Guarantee

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Question 31

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An insurance contract is one that is usually said to require utmost good faith on the part of the parties.

A) True
B) False

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Question 32

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Uncle Ralph told Jody's parents to; "Supply Jody with what she needs to get off to a good start at university and I'll take care of all the bills". Legally, we identify Uncle Ralph as

A) the maker of a promise of Indemnity.
B) Jody's educational guarantor.
C) Jody's sponsor.
D) the one to provide a guaranteed education.
E) the guarantor of all university bills.

F) D) and E)
G) C) and E)

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Question 33

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If a material change in risk occurs after a fire insurance policy has been entered into, what must the insured do in order to maintain his coverage? When this occurs, what options does the insurer have?

If an insured has been negligent, the insurance policy will generally be void.

IBM pays for a life insurance policy on each of its employees where the _ is usually the beneficiary. IBM has a second insurance policy on some of its key employees. On this second policy, is the beneficiary.

Property insurance is not assignable without

An expert in the appraisal of property losses, who offers these services to insurance companies for a fee, is the insurance

What is the purpose of insurance and how does it achieve its purpose?

This means the insurance company can actively seek to recover from a third party the money that it has paid to the insured:

Larson had a fire last month in his sportswear shop. Luckily he had "business interruption insurance". This insurance will NOT pay for

What constitutes the consideration to the guarantor in a contract of guarantee?

When the parties agree to a change in the terms of an existing insurance contract, they may do so by attaching a separate paper called

Bill was a good friend of John and thought that John was gradually getting quite sickly. In fact it looked so serious that Bill thought John might lose his job due to depression and illness. Hoping to benefit from the situation, Bill purchased a life and disability policy on John. This policy would provide monthly payments to Bill if John was disabled due to illness. As it turned out, John was disabled due to illness and pursuant to the terms of the policy of insurance, Bill made a claim under the policy. Will the insurance company pay Bill the monthly payments provided for under the policy? Explain your answer and comment on the applicable legal principles.

Sam needs a loan for his carpet business. The bank agrees to make him a loan provided that his wife Pam gives the bank a personal guarantee agreeing to be responsible is there is default under the loan agreement. Pam signs a guarantee for the loan. Sam defaults under the loan agreement and the bank sues Pam on the personal guarantee. Pam's defence is that there was no consideration for the guarantee because she had no ownership or financial interest in her husband's business, and she received none of the loan proceeds. Is she correct that she is not bound by the guarantee because there is no consideration?

An integral part of the duty of utmost good faith is the duty of disclosure.

Key Bank would not give Tony a business loan without a suitable guarantor. So Tony's father signed as a guarantor. He must make the loan payments when

Contracts of insurance are enforceable because

Which is NOT one of the four basic aspects of an insurance contract?

Which of the following does NOT affect the enforceability of a guarantee?

A deductible clause is one that requires the insured to bear the loss up to a stated amount.