When Must an Insurable Interest Legally Exist in Property Insurance

question 14

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 takes place
• D)both at the time of the loss and at the inception of the policy

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Definitions:

Uncollectible Accounts Expense

An expense account reflecting the cost of accounts receivable that a company does not expect to collect.

Allowance for Doubtful Accounts

A contra asset account that reduces the total amount of accounts receivable on the balance sheet to reflect the likelihood of some accounts being uncollectible.

Net Credit Sales

The total value of sales made on credit after subtracting any returns and allowances, reflecting the actual sales revenue expected to be collected.

Allowance for Doubtful Accounts

A contra-asset account that represents the amount of receivables a company does not expect to actually collect.