STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ19—1ȱQUIZȱ
LegalȱConceptsȱ
Directions:ȱInȱtheȱAnswersȱcolumn,ȱwriteȱtheȱletterȱfromȱColumnȱ1ȱthatȱrepresentsȱ
theȱwordȱorȱphraseȱthatȱmatchesȱtheȱstatementȱinȱColumnȱ2.ȱ
ȱColumnȱ1ȱȱColumnȱ2ȱAnswersȱ
ȱȱ 1.ȱTheȱpartyȱwhoȱisȱcoveredȱorȱprotectedȱbyȱȱ ȱȱ1. ______ ȱ
anȱinsuranceȱpolicyȱ
ȱȱ 2.ȱPartyȱwhoȱbenefitsȱfromȱtheȱactsȱofȱothersȱȱ ȱȱ2. ______ ȱ
ȱȱ 3.ȱTheȱconsiderationȱforȱaȱcontractȱofȱȱ ȱȱ3. ______ ȱ
insuranceȱ
ȱȱ 4.ȱAȱpartyȱwhoȱagreesȱtoȱindemnifyȱȱȱ4. ______ ȱ
ȱȱ 5.ȱTheȱstatedȱmaximumȱamountȱthatȱcouldȱȱ ȱȱ5. ______ ȱ
beȱpaidȱtoȱtheȱbeneficiaryȱ
ȱȱ 6.ȱTheȱwrittenȱcontractȱofȱinsuranceȱȱȱ6. ______ ȱ
ȱȱ 7.ȱAȱcontractualȱarrangementȱthatȱprotectsȱȱ ȱȱ7. ______ ȱ
againstȱlossȱȱ ȱȱ
ȱȱ 8.ȱThisȱprogramȱshouldȱincludeȱaȱscenarioȱȱȱ ȱȱ8. ______ ȱ
analysisȱofȱanythingȱthatȱcouldȱgoȱwrongȱ
ȱȱ ȱ9.ȱTheȱpotentialȱtoȱsustainȱlossȱifȱtheȱinsuredȱȱ ȱȱȱ9. ______ ȱ
propertyȱisȱdamagedȱorȱdestroyedȱorȱifȱtheȱ
insuredȱpersonȱisȱinjuredȱorȱdiesȱ
ȱȱ 10.ȱWhenȱaȱprospectiveȱinsuredȱandȱorȱȱ ȱȱ10.______ ȱ
ȱȱ ȱbeneficiaryȱbehavesȱinȱaȱharmfulȱorȱreckȬ
lessȱmannerȱknowingȱtheyȱwillȱbeȱcompenȬ
satedȱforȱtheirȱlossȱwhetherȱtheyȱsucceedȱorȱ
failȱinȱtheirȱendeavorȱ
LegalȱApplicationȱ
A.ȱpremiumȱ
B.ȱinsurerȱ
C.ȱmoralȱhazardȱ
D.ȱbeneficiaryȱ
E.ȱfaceȱvalueȱ
F.ȱinsuredȱ
G.ȱriskȱmanagementȱ
H.ȱinsurableȱȱ
ȱinterestȱ
I.ȱpolicyȱ
J
.ȱinsuranceȱ
11.ȱRyanȱBenchekȱappliedȱforȱaȱtermȱlifeȱinsuranceȱpolicyȱonȱhimselfȱwhenȱheȱwasȱ
25ȱyearsȱold.ȱTheȱtermȱofȱtheȱpolicyȱwasȱ20ȱyears.ȱRyan’sȱwifeȱwasȱlistedȱasȱtheȱ
beneficiary.ȱRyanȱdiedȱofȱaȱheartȱattackȱwhenȱheȱwasȱ46ȱyearsȱold.ȱCanȱhisȱwifeȱ
collectȱonȱtheȱpolicy?ȱExplainȱyourȱanswer.ȱ
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ19—1ȱPRACTICEȱACTIVITYȱ
Readȱtheȱfollowingȱcasesȱandȱanswerȱtheȱquestionsȱaboutȱthem.ȱAttachȱaȱpageȱifȱadditionalȱ
spaceȱisȱneededȱforȱanswers.ȱ
ȱ
1.ȱTheȱSteiglersȱtookȱoutȱaȱpolicyȱofȱfireȱinsuranceȱonȱtheirȱhomeȱwithȱtheȱInsurȬ
anceȱCompanyȱofȱNorthȱAmerica.ȱAlthoughȱMr.ȱSteiglerȱsubsequentlyȱsetȱfireȱtoȱ
ofȱtheȱfireȱinsuranceȱproceedsȱbecauseȱsheȱwasȱtheȱinnocentȱcoȬownerȱofȱtheȱ
house.ȱWillȱMrs.ȱSteiglerȱgetȱherȱshare?ȱExplain.ȱ[Steiglerȱv.ȱInsuranceȱCompanyȱofȱ
NorthȱAmerica,ȱInc,ȱ384ȱA.ȱ2dȱ398ȱ(Del.ȱ1977)]ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
2.ȱJackȱSecor’sȱlifeȱwasȱinsuredȱbyȱaȱ$50,000ȱpolicyȱhisȱemployerȱpurchasedȱforȱ
him.ȱTheȱcompanyȱwasȱtheȱbeneficiaryȱofȱtheȱpolicyȱandȱpaidȱtheȱpremiumsȱ
icyȱtoȱtheȱemployer.ȱMrs.ȱSecorȱthinksȱthatȱsheȱshouldȱreceiveȱtheȱproceedsȱsinceȱ
herȱhusbandȱwasȱnoȱlongerȱemployedȱbyȱtheȱcompany.ȱWillȱsheȱbeȱallowedȱtoȱ
doȱso?ȱExplain.ȱ[Secorȱv.ȱPioneerȱFoundryȱCompany,ȱ173ȱN.W.ȱ2dȱ780ȱ(Mich.ȱApp.ȱ
Chapter 19 Insurance Law
4-48
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ19—1ȱRETEACHȱ
Directions:ȱCircleȱtheȱanswerȱtoȱeachȱquestionȱinȱtheȱpuzzleȱbelow.ȱAnswersȱmayȱ
appearȱinȱhorizontalȱorȱverticalȱform.ȱTheyȱmayȱalsoȱbeȱwrittenȱbackwardsȱorȱfromȱ
theȱbottomȱofȱtheȱpuzzleȱtoȱtheȱtop.ȱ
1.ȱWhoȱisȱcoveredȱorȱprotectedȱbyȱanȱinsuranceȱpolicy?ȱ
2.ȱWhoȱisȱtheȱrecipientȱofȱtheȱamountȱpaidȱbyȱtheȱinsurer?ȱ
3.ȱWhatȱisȱtheȱconsiderationȱforȱaȱcontractȱofȱinsuranceȱcalled?ȱ
4.ȱWhatȱpartyȱagreesȱtoȱindemnify?ȱ
5.ȱWhatȱisȱtheȱstatedȱmaximumȱamountȱthatȱcouldȱbeȱpaidȱtoȱaȱbeneficiary?ȱ
6.ȱAȱwrittenȱcontractȱofȱinsuranceȱisȱcalledȱa(n)ȱȱ .ȱ
7.ȱWhatȱisȱaȱcontractualȱarrangementȱthatȱprotectsȱagainstȱloss?ȱ
8.ȱWhatȱtermȱmeansȱtheȱpossibleȱlossȱarisingȱfromȱinjuryȱtoȱorȱdeathȱofȱaȱpersonȱorȱ
fromȱdamageȱtoȱpropertyȱfromȱaȱspecifiedȱdanger?ȱ
9.ȱWhatȱisȱtheȱactȱofȱpayingȱtoȱcompensateȱforȱtheȱlossȱtoȱtheȱsufferingȱparty?ȱ
10.ȱAȱpersonȱhasȱa(n)ȱ__?_____ȱinterestȱinȱhisȱorȱherȱlife.ȱ
ȱ
MȱEȱRȱPȱKȱSȱRȱDȱRȱUȱSȱNȱIȱ
EȱFȱMȱUȱIȱMEȱRȱPȱTȱBȱAȱNȱ
LȱFȱOȱIȱNȱSȱUȱRȱEȱRȱMRȱSȱ
Chapter 19 Insurance Law 4-49
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ19—1ȱENRICHMENTȱ
Thisȱlessonȱdiscussedȱtheȱcommonȱtypesȱofȱinsurance:ȱpropertyȱinsurance,ȱcasualtyȱ
insurance,ȱlifeȱinsurance,ȱhealthȱandȱdisabilityȱinsurance,ȱsocialȱinsurance,ȱmarineȱ
insurance,ȱinlandȱmarineȱinsurance,ȱandȱfidelityȱandȱsuretyȱbondingȱinsurance.ȱ
Casualtyȱinsuranceȱincludesȱtheȱfollowing:ȱinsuranceȱagainstȱcriminalȱactivityȱsuchȱ
asȱburglary,ȱrobbery,ȱtheft,ȱandȱlarceny;ȱautomobileȱinsurance;ȱliabilityȱinsurance;ȱ
accidentȱhealthȱinsurance;ȱandȱworkers’ȱcompensationȱinsurance.ȱInterviewȱaȱfamilyȱ
memberȱorȱbusinessȱownerȱwhoȱhasȱaȱvarietyȱofȱinsuranceȱpolicies.ȱAskȱthemȱtoȱ
helpȱyouȱcompareȱtheȱvitalȱinformationȱaboutȱtheȱpolicies.ȱForȱeachȱpolicy,ȱanswerȱ
theȱfollowingȱquestions.ȱ
ȱ
1.ȱWhatȱtypeȱofȱinsuranceȱisȱthis?ȱ
ȱ
ȱ
ȱ
2.ȱWhoȱisȱtheȱinsurerȱandȱwhoȱisȱtheȱinsured?ȱ
ȱ
ȱ
ȱ
3.ȱWhatȱisȱtheȱpremiumȱonȱtheȱpolicyȱandȱhowȱoftenȱmustȱitȱbeȱpaid?ȱ
ȱ
ȱ
ȱ
4.ȱWhoȱisȱnamedȱasȱtheȱbeneficiary?ȱ
ȱ
ȱ
ȱ
5.ȱWhenȱwouldȱaȱbenefitȱbeȱpaidȱandȱhowȱmuchȱwouldȱtheȱbenefitȱbe?ȱ
ȱ
ȱ
ȱ
6.ȱWhatȱisȱtheȱtermȱforȱtheȱpolicy?ȱHowȱcanȱitȱbeȱrenewed?ȱ
ȱ
ȱ
ȱ
7.ȱWhatȱareȱtheȱnotableȱexclusionsȱforȱeachȱpolicy?ȱ
Chapter 19 Insurance Law
4-50
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ19—2ȱQUIZȱ
LegalȱConceptsȱ
Directions:ȱFillȱinȱtheȱblank(s)ȱwithȱtheȱmostȱappropriateȱtermȱorȱphraseȱtoȱcompleteȱ
theȱsentence.ȱ
ȱȱ Answersȱ
1.ȱTheȱtypeȱofȱinsuranceȱthatȱindemnifiesȱforȱlossesȱ
resultingȱfromȱaccident,ȱchance,ȱorȱnegligenceȱisȱ
ȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱinsurance.ȱ
1.ȱ____________________ȱ
2.ȱ ȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱinsuranceȱisȱtheȱgeneralȱtypeȱofȱinsurȬ
anceȱintendedȱtoȱindemnifyȱforȱharmȱtoȱtheȱinȬ
sured’sȱpersonalȱorȱrealȱpropertyȱbroughtȱaboutȱbyȱ
perilsȱsuchȱasȱfire,ȱtheft,ȱandȱwindstormȱ
2.ȱ____________________ȱ
3.ȱ ȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱareȱexceptionsȱtoȱinsuranceȱpolicies.ȱ3.ȱ_____________________ȱ
4.ȱ ȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱinsuranceȱcoversȱtheȱdirectȱlossȱtoȱpropȬ
ertyȱresultingȱfromȱfire,ȱlightningȱstrike,ȱorȱreȬ
movalȱfromȱpremisesȱendangeredȱbyȱfire.ȱ
4.ȱ_____________________ȱ
5.ȱStandardȱinsuranceȱpoliciesȱcanȱbeȱmodifiedȱbyȱ
a(n)ȱȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱtoȱeliminateȱcertainȱrisksȱfromȱcovȬ
5.ȱ_____________________ȱ
6.ȱ ȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱinsuranceȱcoversȱpersonalȱinjuryȱorȱ
propertyȱdamageȱclaimsȱforȱwhichȱtheȱinsuredȱisȱ
legallyȱresponsible.ȱ
6.ȱ_____________________ȱ
7.ȱ ȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱinsuranceȱprotectsȱagainstȱdirectȱandȱ
accidentalȱdamageȱdoneȱtoȱaȱcarȱthatȱisȱoverturnedȱ
orȱwreckedȱintoȱanotherȱobject.ȱ
7.ȱ_____________________ȱ
8.ȱ ȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱinsuranceȱindemnifiesȱagainstȱallȱdamȬ
ageȱtoȱtheȱinsured’sȱcarȱexceptȱthatȱcausedȱbyȱcolȬ
lisionȱorȱupset.ȱ
8.ȱ_____________________ȱ
9.ȱ ȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱinsuranceȱrequiresȱthatȱpartiesȱtoȱanȱautoȬ
mobileȱaccidentȱbeȱindemnifiedȱbyȱtheirȱownȱinsurȬ
anceȱcompanyȱregardlessȱofȱwhoȱisȱatȱfault.ȱ
9.ȱ_____________________ȱ
ȱ
ȱ
ȱ
Chapter 19 Insurance Law 4-51
LegalȱApplicationȱ
10.ȱNicoleȱGasti’sȱcarȱwasȱstolenȱfromȱaȱmallȱparkingȱlot.ȱNicoleȱhadȱjustȱpurchasedȱ
severalȱChristmasȱgiftsȱandȱhadȱleftȱthemȱinȱtheȱtrunkȱofȱherȱcar.ȱWhatȱkindȱofȱ
insuranceȱwouldȱcoverȱtheȱtheftȱofȱNicole’sȱcar?ȱDidȱherȱinsuranceȱpolicyȱalsoȱ
coverȱtheȱlossȱofȱtheȱgifts?ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
11.ȱȱ Shellyȱwithdrewȱ$1000ȱoutȱofȱtheȱbankȱinȱorderȱtoȱpayȱherȱmortgageȱtheȱnextȱ
morningȱonȱherȱwayȱtoȱwork.ȱThatȱeveningȱsheȱplacedȱtheȱ$1000ȱinȱcashȱonȱtheȱ
counterȱnextȱtoȱtheȱstove.ȱWhileȱShellyȱwasȱpreparingȱdinner,ȱtheȱmoneyȱbeganȱ
smokingȱfromȱtheȱheatȱofȱtheȱstove,ȱByȱtheȱtimeȱShellyȱnoticedȱit,ȱtheȱmoneyȱwasȱ
completelyȱdestroyed.ȱShellyȱlostȱallȱtheȱmoney.ȱWhatȱtypeȱofȱinsuranceȱwillȱ
coverȱherȱloss?ȱ
ȱ
ȱ
Chapter 19 Insurance Law
4-52
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ19—2ȱPRACTICEȱACTIVITYȱ
Readȱtheȱfollowingȱcasesȱandȱanswerȱtheȱquestionsȱaboutȱthem.ȱAnswerȱtheȱquestionsȱonȱaȱ
separateȱpieceȱofȱpaper.ȱ
ȱ
1.ȱSpindleȱbelongedȱtoȱaȱphysiciansȱgroupȱnamedȱtheȱSouthernȱCaliforniaȱPhysiȬ
ciansȱCouncil.ȱTheȱphysiciansȱgroupȱhadȱgroupȱmalpracticeȱinsuranceȱcoverageȱ
providedȱbyȱTravelersȱInsurance.ȱSpindleȱclaimsȱthatȱTravelersȱagreedȱtoȱconȬ
tinueȱtheirȱinsuranceȱasȱlongȱasȱthoseȱmembersȱdidȱnotȱhaveȱexcessiveȱclaimsȱ
ofȱtheȱCouncil.ȱSpindleȱsuedȱTravelersȱforȱbreachingȱtheirȱagreementȱnotȱtoȱcanȬ
celȱhisȱinsuranceȱexceptȱforȱexcessiveȱclaims.ȱTravelersȱarguedȱthatȱtheȱpolicyȱ
clearlyȱgaveȱthemȱtheȱrightȱtoȱcancelȱsimplyȱbyȱprovidingȱ30ȱdays’ȱnoticeȱofȱtheirȱ
intentȱtoȱdoȱso.ȱWillȱTravelersȱbeȱableȱtoȱcancelȱtheȱpolicy?ȱExplain.ȱ[Spindleȱv.ȱ
ȱ
2.ȱMattson,ȱSr.,ȱhadȱinsuranceȱwithȱStateȱFarmȱthatȱwasȱcanceled.ȱHeȱthenȱobtainedȱ
insuranceȱfromȱGEICO.ȱTheȱpolicyȱwasȱtwiceȱrenewed.ȱDuringȱtheȱcoverageȱpeȬ
riod,ȱMattson,ȱJr.,ȱwhoȱwasȱincludedȱonȱtheȱpolicyȱasȱanȱadditionalȱinsured,ȱwasȱ
issuanceȱofȱaȱvalidȱpolicyȱwasȱdependentȱuponȱtheȱapplicant’sȱtrueȱanswers,ȱandȱ
sinceȱMattson,ȱSr.’sȱanswerȱasȱtoȱpriorȱcancellationsȱwasȱnotȱtrue,ȱthereȱwasȱnoȱ
coverage.ȱWasȱMattsonȱcoveredȱbyȱtheȱGEICOȱinsurance?ȱExplain.ȱ[HawkeyeȬ
SecurityȱIns.ȱCo.ȱv.ȱGEICO,ȱ154ȱS.E.ȱ2dȱ173ȱ(Va.ȱ1967)]ȱ
Chapter 19 Insurance Law 4-53
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ19—2ȱRETEACHȱ
Directions:ȱUnscrambleȱtheȱlettersȱfollowingȱeachȱquestionȱandȱwriteȱtheȱanswerȱinȱ
theȱblankȱprovided.ȱ
ȱAnswerȱ
ȱȱ1.ȱWhatȱtypeȱofȱinsuranceȱisȱtheȱgeneralȱtypeȱofȱinȬ
suranceȱintendedȱtoȱindemnifyȱforȱharmȱtoȱtheȱinȬ
ȱȱ1.ȱ________________ȱ
ȱȱ2.ȱWhatȱtypeȱofȱinsuranceȱrequiresȱthatȱpartiesȱtoȱ
anȱautomobileȱaccidentȱbeȱindemnifiedȱbyȱtheirȱ
ownȱinsuranceȱcompanyȱregardlessȱofȱwhoȱisȱatȱ
ȱȱ2.ȱ________________ȱ
ȱȱ3.ȱWhatȱtypeȱofȱinsuranceȱprotectsȱagainstȱdirectȱandȱ
accidentalȱdamageȱdoneȱtoȱaȱcarȱthatȱisȱoverturnedȱ
orȱwreckedȱintoȱanotherȱobject?ȱȱ
ȱȱ3.ȱ________________ȱ
ȱȱ4.ȱWhatȱkindȱofȱinsuranceȱcoversȱpersonalȱpropertyȱ
whileȱitȱisȱbeingȱtransportedȱacrossȱlandȱorȱinlandȱ
ȱȱ4.ȱ________________ȱ
ȱȱ5.ȱWhatȱkindȱofȱinsuranceȱindemnifiesȱforȱlossesȱ
resultingȱfromȱaccident,ȱchance,ȱorȱnegligence?ȱycȬ
salutaȱ
ȱȱ5.ȱ________________ȱ
ȱȱ6.ȱWhatȱareȱexceptionsȱtoȱinsuranceȱpoliciesȱcalled?ȱ
ȱȱ6.ȱ________________ȱ
ȱȱ7.ȱWhatȱisȱaȱmodificationȱtoȱaȱstandardȱinsuranceȱ
ȱȱ7.ȱ________________ȱ
ȱȱ8.ȱWhatȱkindȱofȱclauseȱinȱaȱfireȱinsuranceȱpolicyȱ
requiresȱtheȱinsuredȱtoȱmaintainȱcoverageȱequalȱtoȱ
aȱcertainȱpercentageȱofȱtheȱtotalȱcurrentȱvalueȱofȱ
ȱȱ8.ȱ________________ȱ
ȱȱ9.ȱWhatȱtypeȱofȱinsuranceȱcoversȱpersonalȱinjuryȱorȱ
propertyȱdamageȱclaimsȱforȱwhichȱtheȱinsuredȱisȱ
ȱȱ9.ȱ________________ȱ
10.ȱWhatȱkindȱofȱinsuranceȱindemnifiesȱagainstȱallȱ
damageȱtoȱtheȱinsured’sȱcarȱexceptȱthatȱwasȱcausedȱ
10.ȱ________________ȱ
Chapter 19 Insurance Law
4-54
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ19—2ȱENRICHMENTȱ
Thisȱlessonȱexpandedȱonȱaȱdiscussionȱofȱpropertyȱandȱcasualtyȱinsuranceȱcoverage.ȱ
Automobileȱinsuranceȱisȱoftenȱaȱteenager’sȱorȱyoungȱadult’sȱfirstȱexperienceȱwithȱ
insuranceȱcoverage.ȱAȱvarietyȱofȱcoverageȱmayȱbeȱprovidedȱbyȱautomobileȱinsurȬ
ance.ȱLiabilityȱcoverageȱobligatesȱtheȱinsurerȱtoȱrepresentȱandȱprovideȱforȱtheȱinȬ
orȱherȱownȱinsuranceȱcompanyȱwhenȱtheyȱareȱnotȱcollectibleȱfromȱtheȱpersonȱwhoȱ
causedȱtheȱharm.ȱUnderinsuredȱmotoristsȱcoverageȱcompensatesȱtheȱinsuredȱwhenȱ
theȱnegligentȱdriverȱdoesȱnotȱhaveȱsufficientȱinsuranceȱtoȱcoverȱdamages.ȱReviewȱ
yourȱautomobileȱinsuranceȱpolicyȱorȱoneȱbelongingȱtoȱaȱfamilyȱmemberȱorȱfriend.ȱInȱ
theȱspacesȱprovided,ȱdetailȱtheȱpolicy’sȱcoverageȱforȱeachȱofȱtheȱitemsȱjustȱdiscussed.ȱ
ȱ
1.ȱLiabilityȱcoverageȱ
ȱ
ȱ
ȱ
ȱ
2.ȱMedicalȱpaymentsȱcoverageȱ
ȱ
ȱ
ȱ
ȱ
3.ȱCollisionȱandȱcomprehensiveȱcoverageȱ
ȱ
ȱ
ȱ
ȱ
4.ȱUninsuredȱandȱunderinsuredȱcoverageȱ
Chapter 19 Insurance Law 4-55
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ19—3ȱQUIZȱ
LegalȱConceptsȱ
Directions:ȱPlaceȱaȱTȱforȱTrueȱorȱanȱFȱforȱFalseȱinȱtheȱAnswersȱcolumnȱtoȱshowȱ
whetherȱeachȱofȱtheȱfollowingȱstatementsȱisȱtrueȱorȱfalse.ȱ
ȱ
Answersȱ
ȱȱ1.ȱȱ Someȱlifeȱinsuranceȱpoliciesȱcontainȱprovisionsȱthatȱexemptȱtheȱ
insurerȱfromȱliabilityȱwhenȱdeathȱisȱdueȱtoȱcertainȱcauses.ȱ
ȱȱ1.ȱ_____ȱ
ȱȱ2.ȱȱ Anȱincontestabilityȱclauseȱprohibitsȱtheȱinsurerȱfromȱrefusingȱtoȱ
performȱdueȱtoȱmisrepresentationȱorȱfraudȱafterȱtheȱpolicyȱhasȱ
beenȱinȱeffectȱforȱaȱspecifiedȱperiod—usuallyȱtwoȱyears.ȱ
ȱȱ2.ȱ_____ȱ
ȱȱ3.ȱȱ IfȱanȱinsuredȱpersonȱcommitsȱsuicideȱbeforeȱaȱoneȬȱorȱtwoȬyearȱ
limit,ȱtheȱinsuredȱisȱnotȱrequiredȱtoȱpayȱtheȱbeneficiaryȱanyȱ
amountȱofȱmoney.ȱ
ȱȱ3.ȱ_____ȱ
ȱȱ4.ȱMostȱinsuranceȱcontractsȱprovideȱforȱaȱoneȬmonthȱgraceȱperiod.ȱȱ
ȱ4.ȱ_____ȱ
ȱȱ5.ȱNoȱadditionalȱcoverageȱcanȱbeȱwrittenȱintoȱanȱestablishedȱlifeȱ
insuranceȱpolicy.ȱ
ȱȱ5.ȱ_____ȱ
ȱȱ6.ȱTheȱfederalȱgovernmentȱcontrolsȱallȱunemploymentȱcompensaȬ
tionȱprograms.ȱ
ȱȱ6.ȱ_____ȱ
ȱȱ7.ȱHMOsȱusuallyȱrequireȱaȱprimaryȱcareȱphysicianȱtoȱapproveȱmostȱ
servicesȱbeforeȱtheyȱareȱperformed.ȱ
ȱȱ7.ȱ_____ȱ
ȱȱ8.ȱTheȱSocialȱSecurityȱretirementȱinsuranceȱprogramȱwasȱmeantȱtoȱ
provideȱtheȱsoleȱincomeȱofȱretiredȱpeople.ȱ
ȱȱ8.ȱ_____ȱ
ȱȱ9.ȱIndividualȱapplicationsȱforȱhealthȱinsuranceȱareȱlessȱlikelyȱtoȱbeȱ
deniedȱorȱchargedȱaȱhigherȱpremiumȱthanȱthoseȱforȱgroupȱpoliȬ
cies,ȱbecauseȱgroupȱpoliciesȱareȱmoreȱstringentlyȱunderwritten.ȱ
ȱȱ9.ȱ_____ȱ
10.ȱMedicareȱconsistsȱofȱaȱhospitalȱinsuranceȱprogramȱandȱaȱmedicalȱ
insuranceȱprogram.ȱ
10.ȱ_____ȱ
ȱLegalȱApplicationsȱ
11.ȱMikeȱBizubȱwillȱcelebrateȱhisȱsixtiethȱbirthdayȱinȱtwoȱweeks.ȱHeȱplansȱtoȱquitȱhisȱ
partȬtimeȱjobȱnextȱmonthȱbecauseȱheȱbelievesȱheȱwillȱbeȱableȱtoȱbeginȱreceivingȱ
SocialȱSecurityȱretirementȱinsuranceȱchecks.ȱIsȱMikeȱcorrect?ȱExplainȱyourȱanȬ
swer.ȱ
ȱ
12.ȱErinȱSimyakȱwasȱunableȱtoȱpayȱherȱlifeȱinsuranceȱpremiumȱthisȱmonth.ȱIfȱErin’sȱ
insurerȱterminatesȱtheȱpolicyȱimmediately,ȱwhatȱoptionsȱdoesȱErinȱhave?ȱExȬ
Chapter 19 Insurance Law
4-56
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ19—3ȱPRACTICEȱACTIVITYȱ
Readȱtheȱfollowingȱcasesȱandȱanswerȱtheȱquestionsȱaboutȱthem.ȱAttachȱaȱpageȱifȱadditionalȱ
spaceȱisȱneededȱforȱanswers.ȱ
ȱ
1.ȱJMRȱboughtȱfromȱMutualȱBenefitȱLifeȱInsuranceȱCompanyȱ(“Mutual”)ȱaȱ$250,000ȱ
“keyȱman”ȱlifeȱinsuranceȱpolicyȱwhichȱinsuresȱcompaniesȱagainstȱtheȱlossȱofȱ
riodȱofȱcontestability,ȱandȱMutualȱdiscoveredȱthatȱGoanȱwasȱaȱsmoker.ȱMutualȱ
suedȱtoȱrescindȱtheȱpolicy.ȱWillȱitȱbeȱableȱtoȱdoȱso?ȱExplain.ȱ[MutualȱBenefitȱLifeȱ
InsuranceȱCompanyȱv.ȱJMRȱElectronicsȱCorp.,ȱ848ȱF.ȱ2dȱ30ȱ(2d.ȱCir.ȱ1988)]ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
2.ȱAndrewȱMcElroy,ȱaȱ13ȬyearȬoldȱboy,ȱwasȱdiagnosedȱasȱhavingȱaȱcancerousȱbrainȱ
tumor.ȱAndrew’sȱdoctorsȱrecommendedȱthatȱheȱbeȱtreatedȱwithȱhighȬdoseȱcheȬ
policy.ȱShouldȱBlueȱCross/BlueȱShieldȱbeȱrequiredȱtoȱpayȱforȱtheȱtreatments?ȱExȬ
plain.ȱ[McElroyȱv.ȱBlueȱCross/BlueȱShield,ȱ825ȱF.ȱSupp.ȱ1064,ȱ(N.D.ȱGa.ȱ1993)]ȱ
Chapter 19 Insurance Law 4-57
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ19—3ȱRETEACHȱ
Directions:ȱFindȱandȱshadeȱinȱtheȱanswerȱtoȱeachȱquestionȱinȱtheȱtableȱbelowȱandȱ
thenȱwriteȱeachȱanswerȱinȱtheȱanswerȱcolumn.ȱWriteȱtheȱremainingȱunshadedȱlettersȱ
inȱorderȱfromȱleftȱtoȱrightȱtoȱrevealȱaȱstatementȱaboutȱlifeȱinsuranceȱpolicies.ȱ
ȱȱ Answersȱ
1.ȱWhatȱisȱtheȱprimaryȱsourceȱforȱsocialȱinsuranceȱcoverageȱinȱ
thisȱcountry?ȱ
1.______________ȱ
2.ȱWhatȱisȱtheȱearliestȱageȱthatȱaȱpersonȱmayȱreceiveȱSocialȱSeȬ
curityȱretirementȱinsuranceȱchecks?ȱ
2.______________ȱ
3.ȱWhatȱtypeȱofȱinsuranceȱcoversȱaȱpersonȱwhoȱisȱunableȱtoȱdoȱ
anyȱsubstantialȱwork?ȱ
3.______________ȱ
4.ȱWhatȱkindȱofȱchildȱcanȱreceiveȱbenefitsȱfromȱsurvivor’sȱinȬ
surance?ȱ
4.______________ȱ
5.ȱWhatȱisȱtheȱnormalȱgraceȱperiodȱforȱaȱlifeȱinsuranceȱpolicy?ȱ5.______________ȱ
6.ȱWhatȱkindȱofȱclauseȱprohibitsȱtheȱinsurerȱfromȱrefusingȱtoȱ
performȱdueȱtoȱmisrepresentationȱorȱfraudȱafterȱtheȱpolicyȱ
hasȱbeenȱinȱeffectȱforȱoneȱorȱtwoȱyears?ȱ
6.______________ȱ
7.ȱWhatȱisȱtheȱminimumȱageȱforȱaȱwidowȱorȱwidowerȱtoȱreȬ
ceiveȱsurvivor’sȱinsurance?ȱ
7.______________ȱ
8.ȱHowȱlongȱmustȱaȱdisabilityȱbeȱpredictedȱtoȱlastȱforȱaȱpersonȱ
toȱbeȱeligibleȱforȱdisabilityȱinsurance?ȱ
8.______________ȱ
9.ȱWhatȱlevelȱofȱgovernmentȱcontrolsȱunemploymentȱcomȬ
pensationȱprograms?ȱ
9.______________ȱ
ȱ
TȱHȱEȱPȱDȱIȱSȱAȱBȱIȱLȱIȱ
TȱYȱRȱOȱCȱEȱEȱSȱIȱXȱTȱYȱ
DȱSȱOȱFȱAȱDȱEȱPȱEȱNȱDȱEȱ
TȱYȱTȱWȱOȱOȱLȱIȱCȱYȱAȱOȱ
NȱEȱMȱOȱNȱTȱHȱRȱEȱPȱAȱIȱ
DȱTȱOȱBȱNȱCȱOȱNȱTȱEȱSȱTȱ
AȱBȱIȱLȱIȱTȱYȱEȱNȱEȱFȱIȱ
IȱNȱDȱEȱFȱIȱNȱIȱTȱEȱLȱYȱ
CȱIȱAȱRȱSȱTȱAȱTȱEȱIȱEȱSȱ
Chapter 19 Insurance Law
4-58
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ19—3ȱENRICHMENTȱ
Inȱthisȱlesson,ȱyouȱlearnedȱthatȱtheȱprimaryȱsourceȱforȱsocialȱinsuranceȱcoverageȱinȱ
theȱUnitedȱStatesȱisȱtheȱfederalȱgovernment’sȱSocialȱSecurityȱAct.ȱUnderȱtheȱSocialȱ
SecurityȱAct,ȱallȱworkingȱpeopleȱhaveȱaȱportionȱofȱtheirȱpaychecksȱwithheldȱasȱaȱ
FICAȱtaxȱ(FederalȱInsuranceȱContributionsȱAct).ȱTheseȱfundsȱareȱusedȱtoȱpayȱSocialȱ
Securityȱretirementȱinsuranceȱbenefitsȱtoȱcurrentȱretirees.ȱAsȱmentionedȱinȱtheȱtext,ȱ
thereȱhasȱbeenȱsomeȱdebateȱaboutȱwhetherȱfundsȱwillȱbeȱavailableȱtoȱpayȱbenefitsȱtoȱ
currentȱcontributorsȱwhenȱtheyȱretire.ȱResearchȱtheȱfutureȱofȱSocialȱSecurityȱbyȱreadȬ
ingȱthroughȱnewspaper,ȱperiodical,ȱorȱInternetȱarticles.ȱThenȱanswerȱtheȱquestionsȱ
below.ȱ
ȱ
1.ȱWhatȱareȱsomeȱofȱtheȱargumentsȱindicatingȱthatȱSocialȱSecurityȱretirementȱbeneȬ
fitsȱwillȱnotȱbeȱavailableȱforȱtoday’sȱyoungȱworkingȱadultsȱwhenȱtheyȱreachȱreȬ
tirementȱage?ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
2.ȱWhatȱareȱsomeȱofȱtheȱargumentsȱindicatingȱthatȱSocialȱSecurityȱretirementȱbeneȬ
fitsȱwillȱcontinueȱtoȱbeȱavailableȱforȱallȱworkersȱinȱyearsȱtoȱcome?ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
3.ȱAreȱanyȱofȱtheȱwritersȱadvocatingȱforȱaȱchangeȱtoȱtheȱnation’sȱsocialȱinsuranceȱ
program?ȱIfȱso,ȱwhatȱareȱsomeȱofȱtheȱrecommendationsȱforȱchange?ȱ
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱ
TESTȱ
CHAPTERȱ19
SECTION I—IDENTIFY LEGAL TERMS
Directions:ȱPlaceȱaȱTȱforȱTrueȱorȱanȱFȱforȱFalseȱinȱtheȱAnswersȱcolumnȱtoȱshowȱ
hetherȱeachȱofȱtheȱfollowingȱstatementsȱisȱtrueȱorȱfalse.ȱw
Answers
1
.ȱInsuranceȱisȱaȱcontractualȱarrangementȱthatȱprotectsȱagainstȱloss.ȱ
2.ȱTheȱinsurerȱagreesȱtoȱpayȱtheȱinsuredȱforȱlossȱsufferedȱbyȱtheȱbeneȬ
ficiary.ȱ
3.ȱToȱobtainȱaȱcontractȱofȱinsuranceȱagainstȱaȱrisk,ȱaȱpremiumȱmustȱbeȱ
paid.ȱ
4.ȱInlandȱmarineȱinsuranceȱcoversȱoceanicȱpropertyȱagainstȱlossȱorȱ
damageȱwhileȱitȱisȱbeingȱtransportedȱoverȱland.ȱ
5.ȱStandardȱpolicyȱandȱformsȱofȱfireȱinsuranceȱmayȱbeȱmodifiedȱbyȱ
insurableȱinterest.ȱ
6.ȱTheȱtermȱfloaterȱrefersȱtoȱprotectionȱthatȱfollowsȱtheȱpropertyȱreȬ
gardlessȱofȱlocation.ȱ
7.ȱAutomobileȱliabilityȱinsuranceȱcoverageȱmayȱbeȱaugmentedȱbyȱanȱ
omnibusȱclause.ȱ
8.ȱNoȬfaultȱinsuranceȱrequiresȱthatȱpartiesȱtoȱanȱautomobileȱaccidentȱ
beȱindemnifiedȱbyȱtheirȱownȱinsuranceȱcompany.ȱ
10.ȱMedicareȱprovidesȱcoverageȱprimarilyȱforȱthoseȱagedȱ62ȱandȱolder.
ȱ1.ȱȱ ȱ
ȱ2.ȱȱ ȱ
ȱ
ȱ3.ȱȱ ȱ
ȱ
ȱ4.ȱȱ ȱ
ȱ
ȱ5.ȱȱ ȱ
ȱ
ȱ6.ȱȱ ȱ
ȱ
ȱ7.ȱȱ ȱ
ȱ
ȱ8.ȱȱ ȱ
ȱ
ȱ10.ȱȱ ȱ
SECTION II—THINK CRITICALLY ABOUT LEGAL CONCEPTS
Directions:ȱInȱtheȱAnswersȱcolumnȱatȱtheȱrightȱofȱeachȱstatement,ȱwriteȱtheȱletterȱthatȱ
representsȱtheȱword,ȱorȱgroupȱofȱwords,ȱthatȱcorrectlyȱcompletesȱtheȱstatement.ȱ
ȱ
ȱȱ Answersȱ
11.ȱWhenȱanȱinsuranceȱcompanyȱmakesȱpaymentȱforȱaȱlossȱtoȱaȱsufȬ
feringȱparty,ȱtheȱinsuranceȱcompanyȱisȱsaidȱtoȱ(a)ȱbenefitȱtheȱloss,ȱ
(b)ȱendorseȱtheȱloss,ȱ(c)ȱindemnifyȱtheȱloss,ȱ(d)ȱnoneȱofȱtheseȱ
11._______ȱ
Chapter 19 Insurance Law
4-60
ȱȱ Answersȱ
12.ȱTheȱstatedȱmaximumȱamountȱofȱmoneyȱthatȱcanȱbeȱpaidȱonȱanȱ
insuranceȱpolicyȱisȱtheȱ(a)ȱbenefit,ȱ(b)ȱendorsement,ȱ(c)ȱfaceȱvalue,ȱ
(d)ȱpremiumȱ
12._______ȱ
13.ȱTheȱtypeȱofȱpropertyȱinsuranceȱthatȱcoversȱtheȱdirectȱlossȱtoȱpropȬ
ertyȱresultingȱfromȱfire,ȱlightningȱstrike,ȱorȱremovalȱfromȱpremȬ
isesȱendangeredȱbyȱfireȱisȱ(a)ȱliability,ȱ(b)ȱfire,ȱ(c)ȱinlandȱmarine,ȱ
(d)ȱcoinsuranceȱ
13._______ȱ
14.ȱȱ Theȱtypeȱofȱinsuranceȱthatȱcoversȱautomobile,ȱburglary,ȱdisability,ȱ
14._______ȱ
15.ȱInsuranceȱprovidingȱprotectionȱagainstȱclaimsȱofȱpartiesȱwhoȱsufȬ
ferȱinjuryȱorȱotherȱlossȱasȱaȱresultȱofȱnegligenceȱcommittedȱbyȱtheȱ
insuredȱwouldȱbeȱ(a)ȱfidelity,ȱ(b)ȱinlandȱmarine,ȱ(c)ȱliability,ȱȱȱȱȱȱ(d)ȱ
socialȱ
15._______ȱ
16.ȱAȱfireȱinsuranceȱclauseȱthatȱrequiresȱtheȱinsuredȱtoȱmaintainȱcovȬ
erageȱequalȱtoȱaȱcertainȱpercentageȱofȱtheȱtotalȱcurrentȱvalueȱofȱtheȱ
insuredȱpropertyȱisȱ(a)ȱcoinsurance,ȱ(b)ȱanȱendorsement,ȱȱȱȱȱȱȱȱ(c)ȱanȱ
omnibusȱclause,ȱ(d)ȱanȱexclusionȱclauseȱ
16._______ȱ
17.ȱAȱhostileȱfireȱisȱ(a)ȱaȱfireȱstartedȱbyȱaccidentȱorȱnegligence,ȱ(b)ȱaȱ
fireȱstartedȱbyȱaȱdeliberateȱactȱuncontrolledȱbyȱtheȱinsured,ȱ(c)ȱaȱ
friendlyȱfireȱthatȱbecomesȱuncontrollable,ȱ(d)ȱallȱofȱtheseȱ
17._______ȱ
18.ȱAutomobileȱinsuranceȱcoverageȱindemnifyingȱinsuredsȱforȱdamȬ
ageȱtoȱtheirȱownȱvehiclesȱisȱ(a)ȱcollision,ȱ(b)ȱcomprehensive,ȱȱȱȱȱȱȱȱ
(c)ȱnotȱavailable,ȱ(d)ȱbothȱaȱandȱbȱ
18._______ȱ
19.ȱȱ Aȱlifeȱinsuranceȱclauseȱprohibitingȱtheȱinsurerȱfromȱrefusingȱtoȱ
performȱdueȱtoȱmisrepresentationȱorȱfraudȱafterȱtheȱpolicyȱhasȱ
beenȱinȱeffectȱforȱoneȱorȱtwoȱyearsȱisȱ(a)ȱanȱendorsement,ȱ(b)ȱanȱ
exclusion,ȱ(c)ȱanȱincontestabilityȱclause,ȱ(d)ȱanȱomnibusȱclauseȱ
19._______ȱ
20.ȱTheȱprimaryȱsourceȱforȱsocialȱinsuranceȱcoverageȱinȱtheȱcountryȱisȱ
theȱ(a)ȱFederalȱInsuranceȱContributionsȱAct,ȱ(b)ȱRetirement,ȱSurȬ
vivors’,ȱDisability,ȱandȱHealthȱInsuranceȱAct,ȱ(c)ȱSocialȱSecurityȱ
Act,ȱ(d)ȱMedicareȱActȱ
20._______ȱ
Chapter 19 Insurance Law 4-61
SECTION III—APPLY LEGAL PRACTICES
21.ȱGeorgeȱneededȱtoȱborrowȱManuel’sȱtruckȱtoȱhaulȱhisȱlawnȱmowerȱtoȱbeȱrepaired.ȱ
Onȱtheȱwayȱtoȱtown,ȱheȱstruckȱaȱutilityȱpoleȱandȱtotaledȱManuel’sȱtruck.ȱWhoseȱ
insuranceȱcompanyȱisȱliable,ȱGeorge’sȱorȱManuel’s?ȱWillȱitȱmakeȱaȱdifferenceȱifȱ
Manuel’sȱautoȱinsuranceȱpremiumȱwasȱdueȱtwoȱweeksȱagoȱandȱisn’tȱpaidȱyet?ȱ
Explainȱyourȱanswer.ȱ
ȱȱ
4-62 Chapter 19 Insurance Law
ANSWERS
Lessonȱ19—1ȱ
Quiz
ȱ
Practice Activity
1.ȱYes,ȱMrs.ȱSteiglerȱwillȱbeȱableȱtoȱcollectȱherȱshareȱunderȱtheȱinsuranceȱpolicy,ȱ
2.ȱNo,ȱMrs.ȱSecorȱwillȱnotȱbeȱableȱtoȱcollectȱtheȱinsurance.ȱOrdinarily,ȱpublicȱpolicyȱ
aȱpersonȱwithȱwhomȱtheyȱhadȱnoȱrelationship.ȱHowever,ȱthatȱsameȱpolicyȱ
wouldȱnotȱpreventȱtheȱcompanyȱfromȱretainingȱinsuranceȱonȱanȱemployeeȱafterȱ
Reteach
3.ȱpremiumȱ
4.ȱinsurerȱ
7.ȱinsuranceȱ
8.ȱriskȱ
ȱ
BȱCȱDȱRȱDȱIȱRȱOȱSȱLȱAȱWȱUȱ
AȱBȱEȱNȱEȱFȱIȱCȱIȱAȱRȱYȱRȱ
RȱTȱSȱNȱMȱOȱSȱEȱVȱOȱNȱMȱAȱ
Chapter 19 Insurance Law
4-63
Enrichment Activity
Lessonȱ19—2ȱ
Quiz
5.ȱendorsementȱ
ȱ
10. Comprehensiveȱinsuranceȱcoversȱtheȱtheftȱofȱautomobiles.ȱTheȱChristmasȱgiftsȱ
11. Shellyȱwouldȱhaveȱtoȱproveȱthatȱtheȱmoneyȱwasȱdestroyedȱbyȱfire.ȱIfȱtheȱmoneyȱ
Practice Activity
1.ȱNo,ȱTravelersȱwillȱnotȱbeȱallowedȱtoȱcancelȱtheȱpolicy.ȱTravelersȱreliedȱonȱitsȱ
“absoluteȱright”ȱtoȱcancelȱtheȱpolicyȱwithȱproperȱnoticeȱforȱanyȱreasonȱforȱwhichȱ
2.ȱNo,ȱMattsonȱwasn’tȱcoveredȱbyȱtheȱGEICOȱpolicy.ȱTheȱcourtȱsaidȱthatȱinȱconsidȬ
Reteach
4-64 Chapter 19 Insurance Law
Enrichment Activity
Lessonȱ19—3ȱ
Quiz
Practice Activity
1.ȱYes,ȱtheȱcontractȱwillȱbeȱrescinded.ȱTheȱcourtȱnotedȱthatȱunderȱNewȱYorkȱlaw,ȱ
contractȱcanȱbeȱrescinded.ȱ
2.ȱNo.ȱBlueȱCross/BlueȱShieldȱisȱonlyȱrequiredȱtoȱpayȱforȱrecognizedȱtreatments,ȱ
notȱexperimentalȱones.ȱOtherwise,ȱitsȱbusinessȱofȱinsuringȱhealthȱcareȱlossesȱ
ableȱrisks.ȱȱ
Reteach
NȱTȱLȱIȱFȱEȱIȱNȱSȱOȱCȱIȱ
AȱLȱSȱEȱCȱUȱRȱIȱTȱYȱAȱCȱ
TȱYȱTȱW OȱOȱLȱIȱCȱYȱAȱOȱ
NȱEȱMȱOȱNȱTȱHȱRȱEȱPȱAȱIȱ
Theȱproceedsȱofȱaȱlifeȱinsuranceȱpolicyȱareȱpaidȱtoȱbeneficiaries.ȱ
ȱ
Chapter 19 Insurance Law
4-65
Enrichment Activity
ȱ
ANSWERS TO TEST QUESTIONS
ȱ
SECTIONȱIȱ
ȱ
SECTIONȱIIȱ
ȱ
SECTIONȱIIIȱ
4-66 Chapter 19 Insurance Law