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If a Material Change in Risk Occurs After a Fire

question 48

Essay

If a material change in risk occurs after a fire insurance policy has been entered into,what must the insured do in order to maintain his or her coverage? When this occurs,what options does the insurer have?


Definitions:

Price Setter

An entity, often a dominant firm or a monopoly, that has the ability to influence the market price of goods or services rather than being a price taker.

Price Taker

An individual or company that must accept prevailing prices in the market, having no influence over them.

Perfect Competition

A market structure characterized by a large number of small firms, a homogeneous product, and very easy entry and exit, leading to firms being price takers.

Natural Monopoly

A market condition where a single firm can supply a product or service at a lower cost than two or more firms, due to economies of scale.

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