Beverly Has an HO-2 Contract with a $100,000 Per Occurrence

question 12

Multiple Choice

Beverly has an HO-2 contract with a $100,000 per occurrence limit on the Liability coverage. She rents out her basement to a college student,and the student's personal property is damaged by Beverly's negligence. The student sues her for $3,000. How much will the HO policy pay for this loss?

• A)$0 is paid because this liability is excluded
• B)$0 is paid due to the care, custody and control exclusion
• C)$3,000 is paid because the loss is not excluded
• D)$3,000 is paid under the property section and not the legal liability section

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Definitions:

Consolidated Income Statement

A Consolidated Income Statement is a financial report that combines the income, expenses, and profits of a parent company and its subsidiaries, showing the overall performance as a single entity.

Acquisition Method

The Acquisition Method is an accounting technique used in consolidating the financial statements of a group where one entity controls others.

Noncontrolling Interest

The share of ownership in a subsidiary that cannot be directly or indirectly linked to the parent company.

Fair Value

The revenue expected from an asset sale or the cost to offload a liability in a transaction with market players on the date it is appraised.