When Must an Insurable Interest Legally Exist in Property Insurance

question 39

Multiple Choice

When must an insurable interest legally exist in property insurance for an insured to receive payment for a loss from the insurer?

• A)only at the time of the loss
• B)only at the inception of the policy
• C)only at the time the loss settlement process takes place
• D)both at the time of the loss and at the inception of the policy

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Definitions:

Prepaid Expense

Expenses paid in advance and recorded as assets before they are used or consumed.

Consumed

Consumed refers to the portion of resources, goods, or services that have been used up in the process of generating revenue.

Accounting Period

A specific period of time covered by financial statements, usually encompassing a fiscal quarter or year.

Contra Account

An account used in accounting to record reductions of related accounts, which has a balance opposite to the normal balance of the related account.