978-1285770178 Solution Manual BL ComLaw 1e SM-Ch30

subject Type Homework Help
subject Pages 17
subject Words 4713
subject Authors Roger LeRoy Miller

Unlock document.

This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
page-pf1
in whole or in part.
ANSWERS TO QUESTIONS
AT THE ENDS OF THE CASES
CASE 30.1QUESTIONS (PAGE 590)
WHAT IF THE FACTS WERE DIFFERENT?
THE ECONOMIC DIMENSION
Why did Valero and the Milas appeal the lower court’s judgment in the insurer’s favor?
The plaintiffs pursued an appeal in this case most likely for the same reason that a claim was
filed in the first placeto avoid personal liability for the costs. Insurers spread the risk for certain
events across their policyholders in exchange for the payment of premiums. These amounts
Are the acts of the principal partiesWoo, Alberts, and Fireman’s—ethically justifiable in
the circumstances of this case? Discuss. Woo’s boar-tusk joke was not ethically justifiable if
he knew that Alberts did not find his comments about her pigs to be “friendly.” This would
conceivably be a transgression of the Golden Rule. Alberts’s legal action in response to the joke
is arguably excessive, considering that Woo did not appear to act with malicious intent and tried
page-pf2
page-pf3
CHAPTER 30: INSURANCE 3
in whole or in part.
continuously,” and that when they are unoccupied, they may be secured by alarms or other
measures.
4A. What fact, if it was different, might have persuaded the court in this case to rule in
Allstate’s favor? Discuss. Among the facts that might have convinced the court to rule in the
risk. A homeowner might invest in more security when a house will be left vacant. If the
homeowner is an elderly person, as in the Luster case, his or her presence might cause a
greater risk of firethe person might inadvertently leave appliances on, fail to remove
flammable materials, or not fix defective wiring. Had Luster, or someone on her behalf, occupied
the house after her fall and injury, the subsequent events in this case might not have occurred.
convincing circumstance might have been notice of the insurer’s intent to cancel its policy.
Cancellation of an insurance policy can occur for various reasons, depending on the type of
insurance. When an insurance company can cancel its insurance contract, the policy or a state
statute usually requires that the insurer give advance written notice of the cancellation to the
insured. The lack of notice in this case was the fact on which the U.S. Court of Appeals for the
If there is a clear record of physician treatment for anxiety that resulted in drugs being
prescribed, most people would understand that to fall under emotional, mental, or nervous
disorder. The application was broad in the questions asked, so the misrepresentation was clear.
page-pf4
4 UNIT SEVEN: PROPERTY AND ITS PROTECTION
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
2A. Ambiguity
When the terms in a policy are unclear courts generally interpret them against the insurance
company. Since policies are often difficult to understand, courts do not want insurers hiding
behind fancy language that a policy holder would be unlikely to comprehend.
3A. Terms
Disorders such as panic are recognized as real medical problems that can create disability. So
ANSWER TO DEBATE THIS QUESTION IN THE REVIEWING FEATURE
AT THE END OF THE CHAPTER
Whenever an insurance company can prove that the applicant committed fraud
have to rise for all those covered by insurance.
Granted, it is unethical to lie on an insurance application, but after enough years have
transpired since the beginning of coverage, the insured will statistically become just like the
average policyholder. Insurance companies should not be able to avoid their duty to pay claims
just because, many years before, applicants lied on their applications. Taken to the extreme,
1A. Neal applies to Farm Insurance Company for a life insurance policy. On the
application, Neal understates his age. Neal obtains the policy, bur for a lower premium
than he would have had to pay had he disclosed his actual age. The policy includes an
incontestability clause. Six years later, Neal dies. Can the insurer refuse payment? Why
page-pf5
CHAPTER 30: INSURANCE 5
in whole or in part.
or why not? No. An incorrect statement as to the age of an insured is a misrepresentation.
(usually two or three years), the insurer cannot cancel the policy or avoid a claim on the basis of
statements made in the application.
2A. Al is divorced and owns a house. Al has no reasonable expectation of benefit from
the life of Bea, his former spouse, but applies for insurance on her life anyway. Al obtains
To obtain insurance on another’s life, one must have a reasonable expectation of benefit
from the continued life of the other. The benefit may be founded on a relationship, but “ex-
spouse” alone is not such a relationship. An interest in someone’s life must exist when the
policy is obtained.
the insured has an insurable interest. A person has an insurable interest in property if damage
to or destruction of the property would cause that person direct pecuniary loss. It is immaterial
whether the person has a legal or equitable interest in the property insured. Moreover, the
insurable interest in the property must exist at the time the loss occurs, not at the time the
contract for insurance is entered into. Here is the point at which Adia loses in her claim against
reasonable expectation of suffering a loss by the insured’s death is sufficient to show an
insurable interest. This relationship must exist at the time of entering the insurance contact, not
at the time of the insured’s death. Although many courts would hold that third cousins are not
sufficiently close by blood relationship to create an insurable interest, the third cousin was living
with Adia, and Adia apparently had assumed responsibility for her well-being. Therefore, a court
page-pf6
in whole or in part.
page-pf7
in whole or in part.
percent of its value, the insured can recover the full amount as provided by the face amount of
restore or rebuild the property. Because of this reduced liability of the insurer, the insurer will
probably pay Fritz the $7,500 and not exercise its option to restore or replace.
30-5A. Interpreting provisions
(Chapter 30 Pages 588589)
this ambiguity, the policies could be construed in favor of the insureds. The defendants could
assert that the flood exclusions in the policies unambiguously precluded coverage for losses
caused by flooding due to breached levees, regardless of whether the levees were breached
because they were negligently designed, constructed, or maintained. Although the term “flood”
was not defined in the policies, the event ensuing from the breach of the levees fit squarely
MPC had no duty to defend Bubenik. Under Missouri law, to deny liability coverage under an
insurance contract’s cooperation provision, an insurer must prove (1) a material breach of the
cooperation clause; (2) the existence of substantial prejudice as a result of the breach; and (3)
the exercise of reasonable diligence to secure the insured’s cooperation. Bubenik’s
uncooperative behavior in the malpractice suit filed against him, in violation of the malpractice
Amendment did not waive MPC’s right to deny coverage due to no cooperation.
page-pf8
8 UNIT SEVEN: PROPERTY AND ITS PROTECTION
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
307A. Bad faith actions
(Chapter 30Page 592)
Liability insurance protects against liability imposed on the insured resulting from injuries to the
person or property of another. Once an insurer has accepted a risk and issued a policy, and an
event occurs that gives rise to a claim, the insurer has a duty to investigate to determine the
facts. When a policy provides insurance against a third party claim, the insurer is obligated to
make a reasonable effort to settle the claim. If a settlement is not reached, the insurer has a
duty to defend any consequent suit against the insured. The insurer also has a duty to pay any
the employees’ families—even if the payment exceeds the policy’s coverage limitsand might
also be entitled to recover punitive damages.
In the actual case on which this problem is based, on reasoning similar to that set out
above, the court held that the insurer had no basis for denying benefits and awarded the amount
of those benefits, plus punitive damages.
an insurable interest exists when the insured derives a pecuniary benefit from the preservation
and continued existence of the property. One has an insurable interest in property when one
would sustain a financial loss from its destruction. As for an insurance policy’s language, courts
interpret the words according to their ordinary meanings and in light of the nature of the
coverage involved.
In the actual case on which this problem is based, in Philadelphia’s suit against
Farrington, the court entered a judgment in the insurer’s favor.
309A. A QUESTION OF ETHICSInsurance coverage
(a) The court enforced the water-damages exclusion clause, but struck the ACC
page-pf9
CHAPTER 30: INSURANCE 3
in whole or in part.
continuously,” and that when they are unoccupied, they may be secured by alarms or other
measures.
4A. What fact, if it was different, might have persuaded the court in this case to rule in
Allstate’s favor? Discuss. Among the facts that might have convinced the court to rule in the
risk. A homeowner might invest in more security when a house will be left vacant. If the
homeowner is an elderly person, as in the Luster case, his or her presence might cause a
greater risk of firethe person might inadvertently leave appliances on, fail to remove
flammable materials, or not fix defective wiring. Had Luster, or someone on her behalf, occupied
the house after her fall and injury, the subsequent events in this case might not have occurred.
convincing circumstance might have been notice of the insurer’s intent to cancel its policy.
Cancellation of an insurance policy can occur for various reasons, depending on the type of
insurance. When an insurance company can cancel its insurance contract, the policy or a state
statute usually requires that the insurer give advance written notice of the cancellation to the
insured. The lack of notice in this case was the fact on which the U.S. Court of Appeals for the
If there is a clear record of physician treatment for anxiety that resulted in drugs being
prescribed, most people would understand that to fall under emotional, mental, or nervous
disorder. The application was broad in the questions asked, so the misrepresentation was clear.
4 UNIT SEVEN: PROPERTY AND ITS PROTECTION
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
2A. Ambiguity
When the terms in a policy are unclear courts generally interpret them against the insurance
company. Since policies are often difficult to understand, courts do not want insurers hiding
behind fancy language that a policy holder would be unlikely to comprehend.
3A. Terms
Disorders such as panic are recognized as real medical problems that can create disability. So
ANSWER TO DEBATE THIS QUESTION IN THE REVIEWING FEATURE
AT THE END OF THE CHAPTER
Whenever an insurance company can prove that the applicant committed fraud
have to rise for all those covered by insurance.
Granted, it is unethical to lie on an insurance application, but after enough years have
transpired since the beginning of coverage, the insured will statistically become just like the
average policyholder. Insurance companies should not be able to avoid their duty to pay claims
just because, many years before, applicants lied on their applications. Taken to the extreme,
1A. Neal applies to Farm Insurance Company for a life insurance policy. On the
application, Neal understates his age. Neal obtains the policy, bur for a lower premium
than he would have had to pay had he disclosed his actual age. The policy includes an
incontestability clause. Six years later, Neal dies. Can the insurer refuse payment? Why
CHAPTER 30: INSURANCE 5
in whole or in part.
or why not? No. An incorrect statement as to the age of an insured is a misrepresentation.
(usually two or three years), the insurer cannot cancel the policy or avoid a claim on the basis of
statements made in the application.
2A. Al is divorced and owns a house. Al has no reasonable expectation of benefit from
the life of Bea, his former spouse, but applies for insurance on her life anyway. Al obtains
To obtain insurance on another’s life, one must have a reasonable expectation of benefit
from the continued life of the other. The benefit may be founded on a relationship, but “ex-
spouse” alone is not such a relationship. An interest in someone’s life must exist when the
policy is obtained.
the insured has an insurable interest. A person has an insurable interest in property if damage
to or destruction of the property would cause that person direct pecuniary loss. It is immaterial
whether the person has a legal or equitable interest in the property insured. Moreover, the
insurable interest in the property must exist at the time the loss occurs, not at the time the
contract for insurance is entered into. Here is the point at which Adia loses in her claim against
reasonable expectation of suffering a loss by the insured’s death is sufficient to show an
insurable interest. This relationship must exist at the time of entering the insurance contact, not
at the time of the insured’s death. Although many courts would hold that third cousins are not
sufficiently close by blood relationship to create an insurable interest, the third cousin was living
with Adia, and Adia apparently had assumed responsibility for her well-being. Therefore, a court
in whole or in part.
in whole or in part.
percent of its value, the insured can recover the full amount as provided by the face amount of
restore or rebuild the property. Because of this reduced liability of the insurer, the insurer will
probably pay Fritz the $7,500 and not exercise its option to restore or replace.
30-5A. Interpreting provisions
(Chapter 30 Pages 588589)
this ambiguity, the policies could be construed in favor of the insureds. The defendants could
assert that the flood exclusions in the policies unambiguously precluded coverage for losses
caused by flooding due to breached levees, regardless of whether the levees were breached
because they were negligently designed, constructed, or maintained. Although the term “flood”
was not defined in the policies, the event ensuing from the breach of the levees fit squarely
MPC had no duty to defend Bubenik. Under Missouri law, to deny liability coverage under an
insurance contract’s cooperation provision, an insurer must prove (1) a material breach of the
cooperation clause; (2) the existence of substantial prejudice as a result of the breach; and (3)
the exercise of reasonable diligence to secure the insured’s cooperation. Bubenik’s
uncooperative behavior in the malpractice suit filed against him, in violation of the malpractice
Amendment did not waive MPC’s right to deny coverage due to no cooperation.
8 UNIT SEVEN: PROPERTY AND ITS PROTECTION
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
307A. Bad faith actions
(Chapter 30Page 592)
Liability insurance protects against liability imposed on the insured resulting from injuries to the
person or property of another. Once an insurer has accepted a risk and issued a policy, and an
event occurs that gives rise to a claim, the insurer has a duty to investigate to determine the
facts. When a policy provides insurance against a third party claim, the insurer is obligated to
make a reasonable effort to settle the claim. If a settlement is not reached, the insurer has a
duty to defend any consequent suit against the insured. The insurer also has a duty to pay any
the employees’ families—even if the payment exceeds the policy’s coverage limitsand might
also be entitled to recover punitive damages.
In the actual case on which this problem is based, on reasoning similar to that set out
above, the court held that the insurer had no basis for denying benefits and awarded the amount
of those benefits, plus punitive damages.
an insurable interest exists when the insured derives a pecuniary benefit from the preservation
and continued existence of the property. One has an insurable interest in property when one
would sustain a financial loss from its destruction. As for an insurance policy’s language, courts
interpret the words according to their ordinary meanings and in light of the nature of the
coverage involved.
In the actual case on which this problem is based, in Philadelphia’s suit against
Farrington, the court entered a judgment in the insurer’s favor.
309A. A QUESTION OF ETHICSInsurance coverage
(a) The court enforced the water-damages exclusion clause, but struck the ACC

Trusted by Thousands of
Students

Here are what students say about us.

Copyright ©2022 All rights reserved. | CoursePaper is not sponsored or endorsed by any college or university.