1A: Al's insurance agent is on the ninth hole of a golf course when Al calls his cellphone and requests the agent to cover the new boat Al had just purchased. The agent assures Al that coverage is bound but forgets about the conversation before he even reaches the fifteenth hole. If Al's boat is involved in an accident before he discovers the agent never issued a policy,

a. Al cannot enforce the agent's binder because he has no written proof of the conversation.

b. Al should be covered because an agent's oral binder is enforceable. However, Al might find it hard to prove that the agent orally bound coverage.

c. There is no contract because there was no meeting of the minds concerning the types and amounts of coverage.

d. There is no contract because Al never paid a premium.

1B: Burl, a savvy insurance agent, spent a great deal of time reviewing Holt Company's exposures before he identified the combination of insurance policies and coverages that will meet Holt Company's needs. What skills does Burl need to determine what insurance to recommend to Holt?

a. Burl needs post-loss policy analysis skills that enable him to determine whether a specific loss is covered.

b. Burl needs pre-loss policy analysis skills that enable him to recognize what loss exposures various available policies and endorsements can cover.

c. Burl needs risk management skills to supplement his insurance recommendations with other risk control and risk financing recommendations.

d. Burl needs sales skills to convince Holt that he is capable of addressing Holt's needs

1C: A commercial property coverage form may be supplemented by one of three causes-of-loss forms: basic, broad, or special. Which of these causes-of-loss forms, if any, covers the most perils?

a. Basic

b. Broad

c. None of them deal with perils. Covered perils are described in the property coverage form to which these causes-of-loss forms are attached.

d. Special

1D: Ann Agent and Beau Toner agreed that the ABC watercraft policy Ann was issuing on Beau's boat would take effect on the date his XYZ current boatowners policy, which was purchased through another insurance agency, terminates. When XYZ's renewal notice arrived, Beau carelessly paid the renewal premium and renewed the current boatowners policy. If Beau now has a boating accident and makes a claim against the ABC policy,

a. ABC can provide admissible evidence that there was no legally binding agreement between ABC and Beau Toner.

b. ABC will probably pay the claim and seek contribution from XYZ.

c. ABC will not pay the claim.

d. Beau Toner will be able to collect from both insurers for the same loss.

1E: Georgina submitted a water damage claim under her homeowners policy after the home developed a plumbing leak. During his investigation, Cary, the adjuster handling Georgina's claim, discovered evidence that the house was 19 years old, but Georgina's homeowners application stated that the house was only 17 years old. Cary wants to use this extrinsic evidence of a discrepancy in denying Georgina's claim. In all likelihood, a court would consider that this evidence

a. clarifies the purpose of the contract.

b. is immaterial.

c. is relevant.

d. is material.

1F: In insurance, the word "captive" can refer to a type of insurance company. The term "captive" is also used to refer to an insurance agent who represents only one insurance company. If an insurance contract uses the term "captive" without defining it, a court will select the meaning

a. in a common dictionary.

b. most favorable to the insurer.

c. that is listed first in a dictionary of insurance terms.

d. that seems most appropriate, given the word's context.

1G: Martha paid a craftsman $5,000 to customize her Dodge Charger by adding a secret compartment that she would supposedly use to hide her expensive jewelry. She arranged her auto insurance to add an endorsement for this custom equipment, which was described in the endorsement. The car crashed while Martha was being pursued by police who suspected her of smuggling drugs. On what grounds, if any, might Martha's insurer successfully avoid paying for the cost of repairing her car's custom equipment?

a. Because the customized equipment (the secret compartment) was specifically described and insured, the insurer cannot deny coverage for it.

b. The insurer could declare the vehicle a constructive total loss.

c. The insurer could introduce evidence that the secret compartment was used for an illegal purpose.

d. The insurer could reform the policy to eliminate remove the endorsement.

1H: The ejusdem generis rule for interpreting insurance policy language means that

a. most of the language in an insurance policy is generalized so the policy can be used with many different insureds to cover many different exposures.

b. one term in a list will be interpreted in light of the meaning of the other words in the list.

c. policy provisions dealing with the same subject matter should be read together and harmonized if at all possible.

d. when a list ends with a catchall provision, the courts presume the list was intended to include other items of the same character or class as the items on the list.

1I: The reasonable expectations doctrine is sometimes triggered by

a. a misstatement in the insured's policy.

b. insurance policy restrictions that appear to violate public policy.

c. premature cancellation of a personal insurance policy.

d. the insured's surprise at how policy provisions are said to apply.

1J: Computer Repair Shop (CRS), the named insured in a businessowners policy, was recently presented with a claim by a customer who claimed that the shop had damaged her computer's hard drive. Contending that computer repair is a profession, the insurer denied coverage because of the policy's professional services exclusion. What legal doctrine might CRS most appropriately cite in its contention that the exclusion should not apply?

a. Ambiguity

b. Preferred meaning

c. Public policy

d. Reasonable expectations

1K: Patrica and her insurance company have different opinions on how certain wording in Patrica's insurance policy applies to her claim. Her sister Danica suggests that their impasse can easily be resolved by applying the contra proferentem rule. Under what circumstances should this rule be used?

a. Contra proferentem should be used as the first rule of construction, and it resolves most issues quickly without further litigation.

b. When both parties are in a hurry to resolve the dispute or time is of the essence for some other reason

c. When other rules of construction that were tried have failed to resolve the dilemma

d. Whenever the policyholder had a hand in drafting the policy language