FIN 350 CH 9 QUIZ EXAM | QUESTIONS & ANSWERS (VERIFIED) | LATEST UPDATE | GRADED A+

Fundamental purposes of the principle of indemnity include which of the following? ANSWER: Reduce Moral Hazard To prevent the insured from profiting from insurance The loss settlement under which of the following supports the principle of indemnity? A) life insurance B) valued policies C) replacement cost property insurance D) actual cash value property insurance ANSWER: D A total loss under a valued policy is settled on the basis of the ANSWER: amount of insurance covering the loss. Which of the following statements describes how losses will be settled if a property insurance policy is written on a replacement cost basis? Deeagles - Stuvia US ANSWER: Losses are settled without a deduction for depreciation. Which of the following statements about the principle of insurable interest is (are) true? I. It makes it difficult to measure the amount of an insured's loss. II. It reduces moral hazard. ANSWER: B All of the following will support an insurable interest for purposes of purchasing property and liability insurance EXCEPT A) former ownership of property. B) potential legal liability. C) secured creditors. D) contractual right. ANSWER: A When must an insurable interest legally exist in life insurance? A) only at the time of the insured's death B) only at the inception of the policy C) only at the time the beneficiary is paid D) both at the time of the insured's death and at the inception of the polic