Ann is such a bad driver that she is bound to have another accident. Her neighbor Zachery adds Ann's car to the list of autos covered under Zachery's auto policy, expecting a payoff when Ann has her next accident. Not surprisingly, Ann totals her car. Surprisingly, to Zachery at least, his insurer refuses to pay Zachery's collision claim for this car listed in his policy. Why?

a. Ann's accident was expected from the standpoint of Zachery, the insured.

b. Ann's bad driving presented a moral hazard.

c. Zachery had no insurable interest in Ann's car.

d. Zachery had not obtained Ann's permission to insure her car.

Estela purchased a property insurance policy with a $1 million limit on the vacation home she owned. Estela subsequently sold the building, but Estela continued to pay the premium on this policy. If the building is completely destroyed in a windstorm:

a. Estela will collect $1 million

b. the insurer will not pay Estela's claim because she no longer has an insurable interest in the building

c. the insurer will pay $1 million to the current building owner

d. the insurer will refund Estela's premium and pay the windstorm claim

Answer rating: 100% (QA)

The detailed answer for the above question is provided below The answer is c Zachery had no insurabl... View the full answer