Question 1

Fidelity insurance or a fidelity bond is insurance against losses caused by a company's own employees such as fraud or theft.

Accepted Answer

Fidelity insurance or a fidelity bond is designed to protect a company from losses due to dishonest acts by its employees, such as fraud or theft.

Question 2

Coverage terms in insurance policies will be interpreted broadly and exclusions narrowly.

Accepted Answer

Courts often interpret insurance policy coverage terms broadly to favor the insured, while exclusions are interpreted narrowly to ensure that the insurer clearly and explicitly states what is not covered.

Question 3

The duty of utmost good faith owed by an applicant for insurance to an insurance company requires that the applicant for insurance must disclose all information that may materially affect the risk but only when asked to do so.

Accepted Answer

The duty of utmost good faith requires the applicant to voluntarily disclose all material information that may affect the risk, not just when asked.

Question 4

A company can take out a life insurance policy on senior executives as well as kidnap and ransom insurance.

Accepted Answer

Companies often take out life insurance policies on key employees to protect against financial loss from their death, and kidnap and ransom insurance to cover potential costs associated with kidnapping incidents.

Question 5

Errors and omissions insurance is a type of products liability insurance that manufacturers of consumer goods purchase.

Accepted Answer

Errors and omissions insurance is a type of professional liability insurance that protects businesses and professionals against claims of inadequate work or negligent actions, not specifically for manufacturers of consumer goods.

Question 6

Any person can take out a life insurance policy on the life of another person.

Accepted Answer

In most jurisdictions, you need to have an insurable interest in the life of the person you are insuring, meaning you would suffer a financial loss if they were to die.

Quiz 15: Real Estate and Insurance Law