CPCU 530 - Chapter 3 Questions (Insurance
Contract Law) Exam | Questions with 100%
Correct Answers | Verified | Latest Update
2026/2027
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Terms in this set (35)
What are the 6 distinctive 1. Conditional contracts
characteristics of insurance 2. Fortuity and the exchange of unequal amounts
contracts? 3. Utmost good faith
4. Adhesion
5. Indemnity
6. Nontransferable contract
What is a conditional contract? Performance is dependent on an uncertain event
or condition
What is fortuity? Chance event, contract may never pay out
What is utmost good faith? Parties must disclose all information related to the
transaction, without concealment or
misrepresentation
What is adhesion? Insurance policies are drafted by one party and
presented to the other on a take it or leave it basis
What is indemnity? Restores insured to the same financial position held
before the loss
, Why are insurance contracts Because they are personal contracts, so coverage
nontransferable? runs with the insured.
What is a producers sales activities They are considered a solicitation of offers.
considered?
In insurance what is the offer and Application is the offer and policy issued is the
what is the acceptance? acceptance
When considering whether a delay is 1. The distance from the agents office to the
unreasonable courts consider? insurer's office
2. Difficulty underwriting the risk
3. The insurer's workload
4. Type of coverage
What are the five necessary terms in 1. The type of coverage
an insurance contract? 2. The object or premises insured
3. The amount of insurance
4. The name of the insured
5. The duration of coverage
If parties have agreed on necessary 1. Parties previous dealing
terms, courts will use what four 2. Business practices
things as a basis for missing implied 3. Customary usage of terms
terms? 4. Legal requirements
What does the law say regarding Delivery is not required to complete formation,
delivery of an insurance policy? rarely an issue in P&C anyway, due to binders
Contract Law) Exam | Questions with 100%
Correct Answers | Verified | Latest Update
2026/2027
Save
Terms in this set (35)
What are the 6 distinctive 1. Conditional contracts
characteristics of insurance 2. Fortuity and the exchange of unequal amounts
contracts? 3. Utmost good faith
4. Adhesion
5. Indemnity
6. Nontransferable contract
What is a conditional contract? Performance is dependent on an uncertain event
or condition
What is fortuity? Chance event, contract may never pay out
What is utmost good faith? Parties must disclose all information related to the
transaction, without concealment or
misrepresentation
What is adhesion? Insurance policies are drafted by one party and
presented to the other on a take it or leave it basis
What is indemnity? Restores insured to the same financial position held
before the loss
, Why are insurance contracts Because they are personal contracts, so coverage
nontransferable? runs with the insured.
What is a producers sales activities They are considered a solicitation of offers.
considered?
In insurance what is the offer and Application is the offer and policy issued is the
what is the acceptance? acceptance
When considering whether a delay is 1. The distance from the agents office to the
unreasonable courts consider? insurer's office
2. Difficulty underwriting the risk
3. The insurer's workload
4. Type of coverage
What are the five necessary terms in 1. The type of coverage
an insurance contract? 2. The object or premises insured
3. The amount of insurance
4. The name of the insured
5. The duration of coverage
If parties have agreed on necessary 1. Parties previous dealing
terms, courts will use what four 2. Business practices
things as a basis for missing implied 3. Customary usage of terms
terms? 4. Legal requirements
What does the law say regarding Delivery is not required to complete formation,
delivery of an insurance policy? rarely an issue in P&C anyway, due to binders
