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AIC 301 EXAM AND PRACTICE EXAM NEWEST
2025 ACTUAL EXAM COMPLETE 300
QUESTIONS AND CORRECT DETAILED
ANSWERS (VERIFIED ANSWERS) |ALREADY
GRADED A+
What are the offer and acceptance components of an insurance contract? - ANSWER-An insurance application, signed by the applicant and sent to the insurer through the producer, is an offer. If the insurer agrees to provide coverage for the insured, the insurance policy that is issued will be the acceptance
Concerned that she's left herself vulnerable to a sizeable loss, Crystal emails her insurance agent asking to increase the combined single liability limit on her auto policy from $200,000 to $700,000. The agent immediately replies by email, "Of course we can do that!" Crystal then asks when the increased limits will take effect. What will the agent tell her? - ANSWER-The agent's promise is binding, so the agent should indicate that Crystal's increased limits become effective at the time the return email is sent.
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Why have courts ruled that an insurer can be held liable under its contract if it delays action on an application beyond a reasonable time? - ANSWER-Courts apply the rationale that insurance is a business that holds a public interest. Because insurers generally solicit these contractual offers through advertising or sales calls, and because applicants frequently pay premiums in advance, the insurer has a responsibility to act promptly in accepting or rejecting the offer
Why is delivery of a contract rarely disputed in property- casualty insurance? - ANSWER-In property-casualty insurance, delivery is rarely in dispute. The wide use of preliminary oral agreements and written binders results in effective dates of coverage that seldom involve the question of policy delivery
Charlie signed an agreement to purchase a vacation home on a beach, but the closing won't take place for another six weeks.When should he purchase insurance on the property? - ANSWER-Charlie will have an equitable interest in the vacation home as soon as both parties sign the agreement of sale. Even though the seller has legal title, he will own the home, subject to paying the purchase price, under the doctrine of equitable conversion. One result of this equitable ownership is that Charlie will bear the risk of loss (in most states) and must therefore 2 / 4
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secure an insurance policy before the agreement is signed to protect his interest in the property
What forms can protection from fire insurers now take? -
ANSWER-Protection can now take several forms:
• The insurer waives its subrogation rights against the lessee by endorsement to the lessor's fire policy.• A lease provision that makes the lessor financially responsible to pay for damage to the property.• The lessee is included as an additional insured on the lessor's policy.• The lessee purchases an insurance policy protecting against liability for damaging the lessor's property.• The lessee purchases a separate fire policy covering the leased premises.
What is the likely consequence of a policyholder's intentionally false representation or misrepresentation of facts on an insurance application? - ANSWER-Intentionally false representation, or misrepresentation, can make an insurance contract voidable.
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What are the two requirements that must be present for a promise to be a warranty? - ANSWER-These two requirements
must be present for a promise to be a warranty:
• The parties must have clearly and unmistakably intended it to be a warranty.• The statement must form a part of the contract itself.
What are affirmative warranties and continuing (promissory) warranties? - ANSWER-An affirmative warranty states that specific facts exist at the time the contract is formed. A continuing, or promissory, warranty states that the parties will do certain things or that certain conditions will continue to exist throughout the policy term
What is the effect on coverage when courts interpret policies as severable? - ANSWER-When courts interpret policies as severable, if one policy provision is invalid, it doesn't invalidate the entire policy. Instead, the invalid provision can be severed, or separated, from other provisions. Therefore, noncompliance with a warranty concerning one type of covered property doesn't defeat coverage for another type of property to which the violated warranty doesn't apply
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