CPCU - Question of the Day

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Information:http://www.theinstitutes.org/program/chartered-property-casualty-underwriter-cpcu

I thought it'd be good to look at some question maybe one every few days.

Today's question: <-- I will put the question here:
An insurance agent sent an application for insurance to a non-admitted insurer. The insurer issued the policy. How has an agency relationship been created?
[By ratification] <- I will put the answer in the square brackets

Exaplain: <- the explanation I found or came up with
confirmation by an insurance company of the acts of its agent , regardless of whether or not these acts were committed within the limit of authority granted the agent by the company. By so ratifying the agent's acts, the company becomes responsible for consequences arising from these acts. For example, if the insurance company, with full knowledge of the agent's misdeeds in soliciting the application and the premium from the prospect , accepts the premium for the policy from the agent, this acceptance constitutes ratification of the act of the agent.

Enjoy studying.

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关键词：question Quest CPCU CPC Day question

Which one of the following is the best description of the European Unions Common Market?
[The Common Market is the European Union's single unified market in which goods services people and capital can move freely across the borders of all member nations.]

Comment: this is a question from cpcu 530.

The area surrounding Bills business property has all been zoned for commercial use but under current zoning ordinance, his lot is too small for him to have his own enterprise.  Therefore Bill has requested that he be allowed to continue doing business from his location even though the size of his lot does not conform to the ordinances required for the zone.  Bill is requesting
[A hardship variance.]
Comments: a specific case about zoning.

In a contract for 1,000 loaves of bread, grocer Andy wrote out the words one thousand but typed in the number 100.  The supplier delivered 100 loaves which resulted in a loss of a major customer.  Which one of the following priorities will apply in this case?
[Handwriting prevails over typewriting.]
comment: this is actually common knowledge in business law.

Which one of the following statements is true regarding the International Court of Justice (ICJ), located at the Peace Palace in The Hague?
[The ICJ cannot include more than one judge of any nationality.]
comment: part of the arbitration chapter; just an example of recall type question.

Which one of the following is a source for bad faith cause of action?
[Retaliatory cancellations]
comment: found this really good explanation:
Bad faith refers to dishonesty or fraud in a transaction, such as entering into an agreement with no intention of ever living up to its terms, or knowingly misrepresenting the quality of something that is being bought or sold. It may involve an intent to deceive or mislead another in order to gain some advantage. It is often related to a breach of a the obligation inherent in alll contracts to deal with the other parties in good faith and with fair dealing, such as in paying claims, or issuing a cancellation under an insurance policy. Insurers may be guilty of bad faith for failing to promptly and thoroughly investigate a claim, unreasonably delaying payment, unreasonably denying benefits to a claim, using unreasonable interpretations in translating policy language, or refusing to settle the case or reimburse you for the entirety of your loss, etc. Unless a time period for settling a claim is defined in the policy, a "reasonable time" generally applies, which is a subjective term, depending on the facts and circumstances in each case. Bad faith may also be claimed against a person who files suit solely for purposes of harassment. In this case, the defendant's attorney fees may be awarded if such bad faith motives are proven.

Tenant Dixie complained to her landlord that she was too cold in her leased apartment.  The landlord refused to upgrade the furnace.  Dixie had baseboard heaters installed and hard-wired into the apartment.  These heaters are
[Fixtures.]

Beatrice decided to purchase a condominium rather than lease an apartment.  After two years, she wanted to mortgage the condominium rather than sell the unit.  In this situation, Beatrice
[Has a direct property interest in the condominium and may mortgage it.]

Agencies often have investigatory and prosecutorial duties. Which one of the following best explains how the Fourth Amendment protection against unreasonable searches and seizures limits the power of administrative agencies to demand the production of records?
[Agencies must show that the records they demand are somehow relevant to the investigation.]
Comment: law and order viewer should know this cold.

Buyers and sellers have several options as to where goods will be delivered and which party bears the risk and expense of delivery used in marine insurance. Which of the following best describes the FOB (free on board) vessel?
[Goods are loaded on board the vessel at the sellers risk and expense and then ownership passes to the buyer.]
Comment: a financial accounting question

Ellas Heart Fund relied on donations to support her local heart clinic.  Luke pledged $1,500 to the charitable organization.  Luke did not honor the pledge. Which one of the following legal doctrines would courts apply if they decide to enforce the pledge?
[Promissory estoppel]
Comment: promiseee relies on the promisor's word to her detriment, thus enforceable.



John contracts with Rex to purchase three steel braces by April 5.  In the contract, they agree that the amount of damages either of them would pay in the event of breach would be $50,000.  The $50,000 is the result of their good faith effort to estimate actual damages that probably would result from a breach.  These types of damages are known as
[Liquidated damages.]
Comment: parties designate amount during the formation of the contract. Contract law question.

Colson makes knives and swords as a hobby selling his products on a non-advertised basis. He does not package his products but does provide a warranty against defects. If a parent whose child is injured by one of Colsons ever-sharp knives sues Colson under strict liability, which one of the following statements may be true?
[Colson would be strictly liable only if the knife was unreasonably dangerous in normal use.]
Comment: a fine point on product liability.

A homeowner added an aboveground swimming pool and a slide to his unfenced backyard. Worried that this pool might attract nosy neighbors, the homeowner posted several No Trespassing signs. Which one of the following best describes the liability that the homeowner would face if a child trespassed onto the property and was injured by the pool?
[Under the attractive nuisance doctrine the homeowner can be liable for injuries to trespassing children caused by his unsafe pool.]
Comment: a very interesting point about attr. nuis.

The purpose of the Due Process Clause of the U.S. Constitution is to  
[Ensure no one is deprived of life liberty and property without notice and a hearing.]
Comment: 5th and 14th amendments.

Which one of the following is the most important factor indicating whether a communication is an offer?
[The language that the offeror uses in the offer]

One of the ways of agency termination is changed circumstances.  Which one of the following is an example of changed circumstances?
[Bankruptcy]

Delmond Insurance is a large life insurance company. It is required by state law to include an incontestable clause in all life insurance policies. Delmond publicly advocated changing state law so that it can remove this clause from its policies. Which one of the following is Delmonds best argument for repealing the state law requiring inclusion of the incontestable clause in all life insurance policies?
[The clause is inconsistent with the maxim that fraud vitiates consent]
Comment: to vitiate is to impair - and this doctrine would dictate that fraud would simply void the contract, definitely Delmond's best bet here.

Company A wishes to gain control over Company B by acquiring sufficient proxies from Company Bs stockholders to elect its own board of directors.  To purchase shares, Company A creates an arrangement with Company Bs stockholders whereby Company A would purchase shares directly from Company Bs stockholders.  This activity is known as a
[Tender offer.]

Which one of the following is the primary way that formal mediation differs from a pretrial settlement conference?
[Formal mediation requires the parties to submit their dispute to an agreed-upon outside mediator but the parties do not necessarily select who will conduct a pretrial settlement conference.]

If an insurer ratifies an agents unauthorized actions with full knowledge of the facts, then the insurer
[Accepts the benefits of those actions.]
Comment: see above about ratification

Charlene, having rented her apartment from landlord Wanda, stated that she no longer has to pay rent because after three months of complaining to Wanda about a rat infestation problem, the rats remain.  To ensure that she no longer needs to pay Wanda rent, Charlene needs to
[Leave the premises.]
Comment: Yuck.

Julieta went out to dinner with Hanna, her friend of several years.  Hanna picked Julieta up and told her she had a bad headache and was nervous.  Hanna subsequently took four tranquilizers, which Julieta knew to be an unsafe dosage, with a glass of wine.  A few minutes later, Hanna drove into a grocery store badly injuring Julieta. Which one of the following is Hannas best defense in a suit against her by Julieta?
[Assumption of risk]
Comment: key word here is knowingly allowing someone

Intentional physical torts against persons include
[Infliction of emotional distress.]
Comment: a very common one.

The type of government based on religious doctrine, where religious leaders may govern, is a
[Theocratic government.]

The City of Denbar contracts with Water Company to maintain adequate water pressure in its fire hydrants.  Bobs home in Denbar catches fire and cannot be saved due to inadequate water pressure. What rights does Bob have under Denbars contract with Water Company?
[None because Bob is an incidental beneficiary with no enforceable rights.]
Comment: finally a trick question. An incidental beneficiary is a third party who benefits from a contract between two other parties, but it is not intended that the third party benefit. Therefore, the third party does not have any legal rights under the contract. Boom!

The term usual scope of business of the partnership refers not only to what the partnership usually does but also
[What similar partnerships do in the geographical area ordinarily.]

Which one of the following types of agents has the broadest authority of all insurance agents and fully represents an insurer?
[The general agent]
Comment: distribution channel is always a very important topic to study.


Which one of the following descries one of the types of decisions a corporations board of directors makes? [Decide the corporation's business policy]

Ricky took his car to Mike, a mechanic, for repair. Which one of the following is true?[Ricky is the bailor and Mike is the bailee.]
Comment: Bailee is a person or party to whom goods are delivered for a purpose, such as custody or repair, without transfer of ownership.