Which of the Following Statements About the Insurer's Obligation to Provide

question 15

Multiple Choice

Which of the following statements about the insurer's obligation to provide a legal defense under the personal liability coverage (Coverage

• A)I only
• B)II only
• C)both I and II
• D)neither I nor II
• E)of the homeowners policy is (are)true? I.The insurer agrees to defend the insured only if the suit is not groundless,false,or fraudulent.
• II.The insurer's obligation to defend the insured ceases after the amount paid for damages from an occurrence equals the policy limit.

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Definitions:

Par Preferred Stock

A type of preferred stock that is issued at its nominal or face value, and typically has a fixed dividend rate.

Debit to Cash

An accounting entry that increases the cash balance in a company's books.

Paid-In Capital

The total amount of money investors have contributed to a company in exchange for equity.

Retained Earnings

The portion of net income that is not distributed to shareholders but instead retained by the company to reinvest in its core business or to pay debt.