The Primary Purpose of Coinsurance in Property Insurance Is to

question 49

Multiple Choice

The primary purpose of coinsurance in property insurance is to

• A)reduce moral hazard.
• B)achieve equity in rating.
• C)minimize problems in settling claims.
• D)eliminate small losses.

---

Definitions:

Depreciable Assets

Assets subject to wear and tear or obsolescence, which are systematically decreased in value over their useful life for accounting purposes.

Alternative Depreciation Method

A depreciation method different from the straight-line depreciation, allowing for a higher depreciation charge in the earlier years of an asset's life.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the consumption of the asset's economic benefits.

Financial Statement

A written record detailing the financial activities and condition of a business or entity, including balance sheets, income statements, and statements of cash flows.