Which of the following is true?

1. Which of the following is true? Jayden’s auto insurance policy protects his car from damage When Jayden sold his truck to Bill, he lost his insurance auto insurance coverage Jayden‘s auto insurance policy now covers bill who bought Jayden‘s truck Jayden‘s insurance policy covers him for losses to his new car even though he sold his truck which was previously covered under his policy to bill

2. Which of the following is true? Jayden’s auto insurance policy protects his car from damage – insurance protects the policy holder not the property When Jayden sold his truck to Bill, he lost his auto insurance coverage – not true Jayden‘s auto insurance policy now covers bill who bought Jayden‘s truck – auto insurance policies are not transferable Jayden‘s insurance policy covers him for losses to his new car even though he sold his truck which was previously covered under his policy to bill Insurance is a personal contract, Jayden will still be covered under his auto policy when he sells his car and gets a new one

3. Which of the following is true? Jayden’s auto insurance policy protects his car from damage When Jayden sold his truck to Bill, he lost his insurance auto insurance coverage Jayden‘s auto insurance policy now covers bill who bought Jayden‘s truck Jayden‘s insurance policy covers him for losses to his new car even though he sold his truck which was previously covered under his policy to bill Insurance is a personal contract, Jayden will still be covered under his auto policy when he sells his car and gets a new one

4. What is the primary distinguishing characteristic of the contract of adhesion? • A contract of adhesion benefits only one party to the contract • A contract of adhesion takes precedence over a contract of utmost good faith • The contract of adhesion implies an unequal balance of power in the creation of a contract • The amounts exchange over the course of the contract or an equal

5. What is the primary distinguishing characteristic of the contract of adhesion? Contract of Adhesion – An insurance contract is an adhesion contract, which means that the contract is drafted by one party with stronger bargaining power (the insurance company) and accepted by another party with weaker bargaining power (the insured).

6. What is the primary distinguishing characteristic of the contract of adhesion? • A contract of adhesion benefits only one party to the contract • A contract of adhesion takes precedence over a contract of utmost good faith • The contract of adhesion implies an unequal balance of power in the creation of a contract • The amounts exchange over the course of the contract or an equal

7. Steven offers to lend Daniel his truck so he can pick up some stones for his landscaping project. Steven tells Daniel, “don’t worry, my truck is insured.“ what is Steven really saying?​ • Steven’s financial interest in the truck is protected, should a covered loss occurred. • Daniel is protected from damage while driving Steven’s truck • Daniel’s financial interest in the truck is protected, should a covered loss occurred • Steven’s truck is protected from damage

8. Steven offers to lend Daniel his truck so he can pick up some stones for his landscaping project. Steven tells Daniel, “ don’t worry, my truck is insured.“ what is Steven really saying?​ • Steven’s financial interest in the truck is protected, should a covered loss occurred. • Daniel is protected from damage while driving Steven’s truck - Only parties with insurable interest can insure a property or person • Daniel’s financial interest in the truck is protected, should a covered loss occurred - Only parties with insurable interest can insure a property or person • Steven’s truck is protected from damage - Insurance Protects the insured’s financial interest in her car Only parties with insurable interest can insure a property or person You cannot insure a car you do not own or have come financial interest in

9. Steven offers to lend Daniel his truck so he can pick up some stones for his landscaping project. Steven tells Daniel, “don’t worry, my truck is insured.“ what is Steven really saying?​ • Steven’s financial interest in the truck is protected, should a covered loss occurred. • Daniel is protected from damage while driving Steven’s truck • Daniel’s financial interest in the truck is protected, should a covered loss occurred • Steven’s truck is protected from damage

10. Steven offers to lend Daniel his truck so he can pick up some stones for his landscaping project. Steven tells Daniel, “ don’t worry, my truck is insured.“ what is Steven really saying?​ • Steven’s financial interest in the truck is protected, should a covered loss occurred. • Daniel is protected from damage while driving Steven’s truck • Daniel’s financial interest in the truck is protected, should a covered loss occurred • Steven’s truck is protected from damage • Insurance Protects the insured’s financial interest in her car

11. An insurance applicant revealing his convictions for driving while under the influence to an insurer is an example of: • A contract of adhesion • Aleatory • Utmost good faith • A unilateral contract

12. An insurance applicant revealing his convictions for driving while under the influence to an insurer is an example of: • A contract of adhesion - An insurance contract is an adhesion contract, which means that the contract is drafted by one party with stronger bargaining power (the insurance company) and accepted by another party with weaker bargaining power (the insured). • Aleatory -Aleatory Contract - An insurance contract is aleatory, which means it is contingent upon an uncertain (random) event, that provides for an unequal transfer of value between the parties. Insureds who pay a premium but have no losses, will not receive claim payments under the policy. • Utmost good faith - each party to the contract must substantially rely on the honesty and integrity of the other party. • A unilateral contract - is a “one-sided contract”. Only the insurance company is “legally-bound” to perform its part of the agreement. Insureds are not legally-bound to pay their premium; their policy will simply be cancelled for nonpayment of premium.

13. An insurance applicant revealing his convictions for driving while under the influence to an insurer is an example of: • A contract of adhesion • Aleatory • Utmost good faith • A unilateral contract

14. Shawn brought a policy from Coconut insurance. Several months later, he filed a claim which was denied. After reviewing his policy, he found multiple ambiguities in the policy and decided to challenge the insurance decision. When the dispute went to trial, the court ruled in Shawn’s favor. This is because insurance policies are:​ • Aleatory contracts • Contracts of upmost good faith • Contracts of adhesion • Personal contracts

15. Shawn brought a policy from Coconut insurance. Several months later, he filed a claim which was denied. After reviewing his policy, he found multiple ambiguities in the policy and decided to challenge the insurance decision. When the dispute went to trial, the court ruled in Shawn’s favor. This is because insurance policies are:​ • Aleatory contracts - only one party dictates the terms, while the other simply agrees to them--or decides not to purchase. • Contracts of upmost good faith – (The Doctrine of Utmost Good Faith) – To form an insurance contract, each party to the contract must substantially rely on the honesty and integrity of the other party. • Contracts of adhesion - only one party dictates the terms, while the other simply agrees to them--or decides not to purchase. • Personal contracts - This means that the contract actually protects the person, not the insured item.

16. Shawn brought a policy from Coconut insurance. Several months later, he filed a claim which was denied. After reviewing his policy, he found multiple ambiguities in the policy and decided to challenge the insurance decision. When the dispute went to trial, the court ruled in Shawn’s favor. This is because insurance policies are:​ • Aleatory contracts • Contracts of upmost good faith • Contracts of adhesion • Personal contracts

17. Shawn brought a policy from Coconut insurance. Several months later, he filed a claim which was denied. After reviewing his policy, he found multiple ambiguities in the policy and decided to challenge the insurance decision. When the dispute went to trial, the court ruled in Shawn’s favor. This is because insurance policies are:​ • Aleatory contracts • Contracts of upmost good faith • Contracts of adhesion • Personal contracts

18. Tim decides to purchase an insurance policy to protect his home. According to the definition of a personal contract which of the following most accurately describes what Tim’s insurance actually protects? • Tim’s house and the entire property • Tim’s financial interest in the home • Tim’s entire family • The house itself

19. Tim decides to purchase an insurance policy to protect his home. According to the definition of a personal contract which of the following most accurately describes what Tim’s insurance actually protects? • Tim’s house and the entire property • Tim’s financial interest in the home • Tim’s entire family • The house itself Coverage does not prevent his home or property from being damaged. Rather it protects Tom against significant financial losses if covered damage does occur.

20. Tim decides to purchase an insurance policy to protect his home. According to the definition of a personal contract which of the following most accurately describes what Tim’s insurance actually protects? • Tim’s house and the entire property • Tim’s financial interest in the home • Tim’s entire family • The house itself

21. Which of the following statements is not true about an insurance policy? • The insurer holds the balance of power in the creation of an insurance policy • the concept of utmost good faith only applies to the insured • Ambiguities in contracts of adhesion often favor the insured • An insurance policy actually protects the policyholders financial interest in the insured Item not the insured item itself

22. Which of the following statements is not true about an insurance policy? Contracts of adhesion. This means only one party dictates the terms, while the other simply agrees to them--or decides not to purchase. (Take it or Leave it). Insurance contracts rely on the utmost good faith of both parties. This applies particularly to the insured. The insurer simply makes a promise to pay in the event of a covered loss. The insured, on the other hand, is responsible for being totally honest and open about the risk involved in the contract Contracts of adhesion. Ambiguities in court favor the insured. The insurer has the power when creating the policy

23. Which of the following statements is not true about an insurance policy? • The insurer holds the balance of power in the creation of an insurance policy • the concept of utmost good faith only applies to the insured • Ambiguities in contracts of adhesion often favor the insured • An insurance policy actually protects the policyholders financial interest in the insured Item not the insured item itself

24. Mark wants to add “towing and labor costs” coverage to his auto insurance policy. Under which part of the policy would he add this coverage?​ • Declarations • Conditions • Endorsements • Exclusions

25. An insurance contract has four essential parts (D.D.I.C.E.E.) • Declarations – information that makes the policy unique to specific insured • Definitions • Insuring Agreement • Conditions - List requirements that the insured must meet for coverage to apply • Exclusions – causes of loss or items of property that are not covered by the policy • Endorsements – add, reduce, or change the coverage of the policy in someway

26. Mark wants to add “towing and labor costs” coverage to his auto insurance policy. Under which part of the policy would he add this coverage?​ • Declarations • Conditions • Endorsements • Exclusions

27. Jenelle wants to change her coverage for personal property in her homeowners policy from ACV to replacement cost. She visits her local insurance agent and ask him to make this change to her policy while keeping all of the other details the same. Which section of her policy would the agent use to make this change?​ • Insuring agreement • Conditions • Endorsements • Exclusions

28. Conditions – List requirements that the insured must meet for coverage to apply • Exclusions – causes of loss or items of property that are not covered by the policy • Endorsements – add, reduce, or change the coverage of the policy in someway • Insuring Agreement – Essence of the contract. Summarizes what the insurer will cover and how

29. Jenelle wants to change her coverage for personal property in her homeowners policy from ACV to replacement cost. She visits her local insurance agent and ask him to make this change to her policy while keeping all of the other details the same. Which section of her policy would the agent use to make this change? • Insuring agreement • Conditions • Endorsements - add, reduce, or change the coverage of the policy in someway • Exclusions

30. In an insurance policy, where might one find the make and model of the covered vehicle? • Declarations • Definitions • Conditions • Exclusions

31. Declarations – information that makes the policy unique to specific insured • Definitions – Explains exactly what specific words mean in the context of the policy. • Conditions – List requirements that the insured must meet for coverage to apply • Exclusions – causes of loss or items of property that are not covered by the policy

32. In an insurance policy, where might one find the make and model of the covered vehicle? • Declarations - information that makes the policy unique to specific insured • Definitions • Conditions • Exclusions

33. A contract in which only 1 party makes a promise to perform is which of the following? • Personal contract • Utmost good faith contract • Unilateral contract • Aleatory contract https://www.youtube.com/watch?v=1uEfSQr8Sgo

34. Personal contract - The insurance contract is bound to the “personal insurable interest” of the named insured in the policy • Utmost good faith contract - Doctrine of Utmost Good Faith – To form an insurance contract, each party to the contract must substantially rely on the honesty and integrity of the other party. • Unilateral contract - a “one-sided contract”. Only the insurance company is “legally-bound” to perform its part of the agreement. Insureds are not legally-bound to pay their premium; their policy will simply be cancelled for nonpayment of premium. • Aleatory contract - An insurance contract is aleatory, which means it is contingent upon an uncertain (random) event, that provides for an unequal transfer of value between the parties. Insureds who pay a premium but have no losses, will not receive claim payments under the policy. On the other hand, insureds who suffer a loss, often receive a great deal more from the insurer than they have paid in premiums. https://www.youtube.com/watch?v=1uEfSQr8Sgo

35. A contract in which only 1 party makes a promise to perform is which of the following? • Personal contract • Utmost good faith contract • Unilateral contract • Aleatory contract https://www.youtube.com/watch?v=1uEfSQr8Sgo

36. A contract in which only 1 party makes a promise to perform is which of the following? • Personal contract - The insurance contract is bound to the “personal insurable interest” of the named insured in the policy. • Utmost good faith contract - Doctrine of Utmost Good Faith – To form an insurance contract, each party to the contract must substantially rely on the honesty and integrity of the other party. • Unilateral contract - a “one-sided contract”. • Aleatory contract - contingent upon an uncertain (random) event, that provides for an unequal transfer of value between the parties. https://www.youtube.com/watch?v=1uEfSQr8Sgo

37. Charlottes son just turned 16 and got his drivers license she wants him to be covered, so she adds him to her auto insurance policy. Where would this addition be found in Charlotte’s policy? • Exclusions • Insuring agreement • Conditions • Endorsement

38. Charlottes son just turned 16 and got his drivers license she wants him to be covered, so she adds him to her auto insurance policy. Where would this addition be found in Charlotte’s policy? • Conditions – List requirements that the insured must meet for coverage to apply • Exclusions – causes of loss or items of property that are not covered by the policy • Endorsements – add, reduce, or change the coverage of the policy in someway • Insuring Agreement – Essence of the contract. Summarizes what the insurer will cover and how

39. Charlottes son just turned 16 and got his drivers license she wants him to be covered, so she adds him to her auto insurance policy. Where would this addition be found in Charlotte’s policy? • Exclusions • Insuring agreement • Conditions • Endorsement - add, reduce, or change the coverage of the policy in someway

40. This Statement: “Property Address: 211 Brady Drive” would be found in what section of the policy? • Declarations • Definitions • Conditions • Exclusions

41. This Statement: “Property Address: 211 Brady Drive” would be found in what section of the policy? • Declarations – information that makes the policy unique to specific insured • Definitions – Explains exactly what specific words mean in the context of the policy. • Conditions – List requirements that the insured must meet for coverage to apply • Exclusions – causes of loss or items of property that are not covered by the policy

42. This Statement: “Property Address: 211 Brady Drive” would be found in what section of the policy? • Declarations - information that makes the policy unique to specific insured • Definitions • Conditions • Exclusions

43. Types of Insurers Government Insurers Private Insurers For profit Sell: home, auto, boat, liability, commercial, business, etc. Unlike government insurance programs, private insurers are generally in business to generate a profit or to supply the insurance needs of their subscribers only. • Social Insurance • Non-profit • Mandatory participation • Benefits prescribed by law • Meets needs of general public • Government has monopoly

44. Types of Insurers Stock Insurers Mutual Insurers Owned by policyholders (no shareholders) Policyholders elect board of directors “participating” insurers: policyholders participate in dividends • Trade on Stock Exchange • Stockholders provide capital for the company, • Company shares its profits with stockholders in the form of dividends. • Stock insurance companies are sometimes called non-participating insurers. • This means that policyholders do not receive dividends, unless, of course, a policyholder is also a stockholder

45. Types of Insurer Re-Insurer Reciprocal Insurer Simply put, it is a group of people or organizations that insure each other. Characteristics of reciprocal insurers: Unincorporated Non-profit Operated by an attorney-in-fact Members pay into individual accounts Cost of claims shared by whole group • Provides insurance for insurers. • In re-insurance, an insurer will buy insurance to reduce its own exposure to a loss. • For example, a private insurance company may pay a premium to a re-insurer for protection against financial losses from a widespread catastrophic loss, such as a severe outbreak of zika virus. • The re-insurer agrees to pay a percentage of the company's losses, or any losses over a predetermined amount.

46. Types of Insurers Fraternal Benefit Societies (video) https://www.youtube.com/watch?v=eSof7Z3yJYQ (2 minutes) • Also called Fraternal Associations • Non-profit, mutual aid organizations • Engage in charitable activities • Provide some types of insurance to members • Typically consist of people with similar religions, ethnicities, or occupations

47. Types of Insurers Captive Insurers If a large business chooses to retain certain risks, instead of spending the money to purchase insurance, one option it has is to self-insure by forming a “captive” insurance company. Captive insurers exist solely to serve their “parent” company; the parent company pays premiums and files claims as usual Any profit that the captive insurance company makes goes right back to the parent company

48. Which of the following is not a characteristic of social insurance programs? • The benefits of a social insurance program maybe prescribed by federal law • Social insurance programs are designed to meet the needs of the general public as a whole • Social insurance programs are for-profit programs • Social insurance programs involve mandatory participation

49. Characteristics of social insurance: Benefits prescribed by law Government insurance, also called social insurance, is a program where risks are transferred to a government agency. Social insurance is always non-profit. Designed to meet needs of general public

50. Which of the following is not a characteristic of social insurance programs? • The benefits of a social insurance program maybe prescribed by federal law • Social insurance programs are designed to meet the needs of the general public as a whole • Social insurance programs are for-profit programs • Social insurance programs involve mandatory participation