Which of the Following Statements Best Reflects the Concept Behind

question 71

Multiple Choice

Which of the following statements best reflects the concept behind the rule of indemnity?

• A)If a large number of people are exposed to the same risk,a predictable number of losses will occur during a given period of time.
• B)If a written contract exists between the insured and an insurance company,the insured is entitled to receive the maximum amount stated in the contract in the event of a loss.
• C)If an insurance company's premiums generate excess funds,these excess funds must be returned to the policyholders in the form of dividends or reductions in future premiums.
• D)An insured person cannot collect more than the actual loss from an insurable risk.

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Definitions:

American Federation

A large organization, often used in the context of labor unions, that consists of smaller groups or unions within a specific country, such as the American Federation of Labor.

Labor

The human effort, including physical and mental capabilities, used to produce goods or services.

CIO

The Congress of Industrial Organizations, a federation of unions that organized workers in industrial unions in the United States and Canada from 1935 to 1955.

Collective Bargaining

The process whereby labor unions and employers negotiate wages, hours, and working conditions on behalf of the employees.