Why Is an Insured Entitled to Collect Only the Amount

question 64

Multiple Choice

Why is an insured entitled to collect only the amount of the actual loss incurred from its insurance coverage?

• A) Contracts of indemnity prevent profiting from an insured against event.
• B) A bank is entitled to an indemnity contribution on a prorated basis.
• C) Insurance coverage typically covers a minimum portion of the value of property.
• D) A bank may be entitled to an interest in the proceeds for a secured loss.

---

Definitions:

Asset Increase

An increase in the total value of assets owned by a company, which can occur due to acquisitions, improvements, or valuation increases.

Corresponding Decrease

A decrease in one variable or metric that occurs in response to an increase in another variable.

Liability

A financial obligation or debt that an entity is required to pay to another entity.

Change In Accounting Principle

An adjustment in the way a company recognizes, measures, presents, or discloses financial information due to a change in accounting policy.