CPCU 530 Questions & Answers
Daniel offers a ride to Lily, a ten-year-old, and takes her to his house where he locks her in his cellar and demands money from Lily's parents to secure her return. The parents agree to pay and Lily is returned, but Daniel never receives the money. He sues Lily's pare...
CPCU 530 Questions & Answers
Daniel offers a ride to Lily, a ten-year-old, and takes her to his house where he locks her
in his cellar and demands money from Lily's parents to secure her return. The parents
agree to pay and Lily is returned, but Daniel never receives the money. He sues Lily's
parents for breach of contract. Which one of the following explains why Daniel's contract
with Lily's parents is not legally binding? - answer It lacks a legal purpose
Maria owns a commercial building and places insurance with Bastion Insurance.
Because the annual premium is high, and cash is tight, Maria decides to enter into a
premium finance agreement with Finance Co. ("Finance"). Under the premium finance
agreement, Finance pays Bastion the full annual premium and Maria pays Finance a
monthly amount for the premium, a fee and interest. At the midpoint of the policy year,
which one of the following best describes Maria's premium finance agreement with
Finance? - answer A bilateral contract
In February, Ann contracts with Mahdi to deliver clean garden top soil for $30 a cubic
yard to Mahdi's farm in Pennsylvania. No time for delivery is stated in their contract but
the parties understand that Mahdi wants to use the soil for this year's planting season.
In March, Ann delivers garden soil that is contaminated and Mahdi refuses to pay
because he believes Ann breached their agreement. Which one of the following best
describes how a court would rule on Mahdi's claim that Ann breached their agreement?
- answer The court would find for Mahdi because Ann's goods are non-conforming.
Tile Roofing is a contractor specializing in roof installation for homes and commercial
accounts. Recently several Tile Roofing workers have fallen and suffered significant
injuries because the workers do not have any safety harnesses preventing falls. Under
which one of the following employee welfare laws would Tile Roofing potentially be
subject to civil or criminal penalties? - answer Occupational Safety and Health Act
Tool Corporation has operated successfully for decades, but in recent years stiff price
competition from overseas suppliers and a lack of skilled labor at affordable prices have
made the company unprofitable. Tool Corporation has incurred substantial debt to keep
the operation running and save jobs, but they can no longer access bank financing. Tool
Corporation believes that it can return to profitability if it reorganizes. Under which
chapter of the bankruptcy code should Tool Corporation file? - answer Chapter 11
Diego and Georgia meet in a bar and enjoy cocktails together. Diego has many more
drinks than Georgia and is stumbling and slurring his speech. Sensing an opportunity,
Georgia proposes that Diego sell her his expensive Swiss wristwatch for a mere $100
and Diego agrees. The next day, Georgia appears at Diego's office with $100 asking for
the wristwatch. Which one of the following arguments is best for Diego to avoid the
contract? - answer Diego lacked capacity to enter into a contract because he was
inebriated
, Anna was recently diagnosed with a 95 percent blockage in an artery in her brain. She
obtained life insurance coverage from Cromley's Life Insurance Company shortly after
the diagnosis. Anna answered "no" to the questions on the life insurance application
concerning preexisting conditions. She was aware the coverage might be rejected by
Cromley if she shared the information about the probability of a stroke. If Anna dies from
a stroke, which one of the following must Cromley Life Insurance Company prove to
deny Anna's beneficiary's claim? - answer Concealment
Estoppel arises in insurance law from the following sequence of events: false
representation of a material fact, reasonable reliance on that representation, and the -
answer Resulting injury or detriment to the insured
Miu applied for auto insurance with Etchley Insurance. Etchley's application asked if Miu
had any accidents in the prior three years and she said she had not. In fact she had two
at-fault accidents, one of which involved alcohol. Etchley's underwriting guidelines state
that it will not write insurance for applicants with more than one accident in the last three
years. Etchley issued the policy. If Miu has an accident and Etchley learns about the
prior accidents at that time, Etchley should - answer Deny Miu's claim due to her
material misrepresentation on which Etchley justly relied.
Leah called her insurance agent Matthias right after Leah purchased her first car. Leah
said: "I need coverage on my car (which she described in detail)—$100,000 liability and
$250 deductible collision and comprehensive." Mathias responded: "Great—you have
this insurance effective immediately." Which one of the following statements about this
conversation is true? - answer It resulted in a binding oral insurance contract.
Noncompliance with a warranty concerning one type of covered property will not defeat
coverage for another type of property to which the warranty does not relate, because
courts generally interpret insurance policies as - answer Severable.
Sue has submitted a claim to her insurer for fire damage to a building insured under a
property policy. Which one of the following questions must be answered in the
affirmative to determine whether any coverage applies? - answer Was the loss
caused by a covered peril?
Cian purchased a house with money loaned to him by Keithly Mortgage Co. (KMC).
Cian obtained a homeowner policy from Melfor Insurance—containing a standard
mortgage clause—which covered the house for damage due to windstorm. A windstorm
destroyed Cian's house three years later. Which one of the following correctly states
who is entitled to the proceeds payable under Cian's homeowner policy? - answer
KMC, as its interests appear.
Certain elements must be present for a reservation of rights notice or nonwaiver
agreement to be effective. Which one of the following is one of these elements? -
answer Must communicate the notice by letter to the insured in a timely manner
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