Completing the Application, Underwriting, Delivering Policies, Contract Law
A policyowner argues that because an insurance policy is a contract of adhesion, any disputed term should automatically be construed against the insurer. Which statement provides the most accurate legal response to this argument?
Answer and explanation
Answer: C. The adhesion principle reflects insurer-drafted standardized terms and unequal bargaining power, but Texas courts first determine whether a term is genuinely ambiguous. Clear language is enforced as written; only unresolved reasonable ambiguity is construed against the drafter in favor of coverage.Source: Texas Judiciary — RSUI Indemnity Co. v. Lynd Co. — Opinion page 6, unequal bargaining power and rule for uncertain insurance language
More completing the application, underwriting, delivering policies, contract law questions
- An applicant submits an application with the initial premium, making an offer to buy coverage. The insurer issues the policy exactly as applied for. Which contract formation element is most directly demonstrated by the insurer's issuance of the policy?
- An applicant submits an application without premium. The policy is issued as applied for. Before delivery and premium collection, the applicant suffers a severe heart attack. What must the producer do at delivery?
- An applicant submits truthful application statements and the required initial premium. What does the insurer furnish as its side of the contract's consideration?
- An applicant will keep an existing policy nominally in force but reduce its face amount to fund the new policy. Which replacement disclosure is appropriate?
- An applicant with average health, normal build, and no hazardous hobbies is classified into which standard underwriting category?
- An applicant with superior health, excellent family history, and non-smoker status is placed in which underwriting risk class, receiving lower premium rates?
590 Texas questions like this one.
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