Why Must an Insured Avoid Acknowledging Liability for a Loss

question 49

Multiple Choice

Why must an insured avoid acknowledging liability for a loss?

• A) because the insurer has a duty to defend
• B) because it could jeopardize the insurer's right of subrogation
• C) because it may result in increased premiums
• D) because it would constitute a breach of the insured's fiduciary duty

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Definitions:

Contingency

An event or condition that is possible but cannot be predicted with certainty, often requiring planning for different potential outcomes.

System

A system is a coherent set of interrelated components that work together to achieve a specific goal or function, often within an organizational or technological context.

Systems Thinking

An analytical approach focused on understanding the interconnections and interactions within complex systems, rather than viewing components in isolation.

Interrelated Parts

Interrelated parts describe components that are connected in such a way that changes in one part can affect the functioning of other parts within a system.