1. What is the insurance significance of the incoterms? Does it have anything to do with the insurable interest doctrine?
2. Say that you bought a life insurance policy against the early death of your neighbor down the street. Then the neighbor dies. Will the insured be allowed to collect on the policy?
3. Now lets change the scenario. You have a manufacturing business and you employ salespersons. Your business would be in major trouble if anything were to happen to your star salesperson. Your revenue would take a major hit, so to protect against this peril, you decide to buy a life insurance policy against the early death of your star salesperson. Then the salesperson dies. Will the insured be allowed to collect on the policy?
4. Does having insurance against a given peril mean that you are protected against that peril? Please explain what you mean by protected.
5. Imagine that you have one house in a neighborhood of 1,000 essentially identical houses. Please explain why the fire risk to your house is higher in your hands than it would be in the hands of the Really Local Insurance Company that had written policies on all 1,000 houses.
6. Now lets change the scenario slightly. The Really Local Insurance Company now faces competition from State-Wide Insurance Company that also insures 1,000 essentially identical houses, but those houses are located all over the state. Which insurer has less risk? Why do you say so?