Regarding Insurance Contracts, Utmost Good Faith Is Important Because

question 38

Multiple Choice

Regarding insurance contracts, utmost good faith is important because

• A) without it, there is fraudulent omission.
• B) the insured must calculate his risks.
• C) the insurance company is in a position of superior knowledge.
• D) insurance records follow the policy holder for life.
• E) third parties may be involved-especially with liability policies.

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Definitions:

Renovation Expense

Costs incurred during the process of improving or updating a building, facility, or equipment to modern standards or efficiency.

Income Tax Expense

The amount of money a company owes in taxes based on its taxable income.

Capital Budgeting

The process of planning and evaluating investments in long-term assets, considering the potential returns and strategic fit with the organization's goals.

Straight-Line Depreciation

A method of allocating the cost of an asset evenly over its useful life.