When a Policy Provides Insurance Against Third-Party Claims, the Insurer

question 48

Multiple Choice

When a policy provides insurance against third-party claims, the insurer is obligated to make reasonable efforts to settle such a claim. If a settlement cannot be reached, then regardless of the claim's merit, the insurer must _______any suit against the insured.

• A) prosecute
• B) avoid at all costs
• C) indemnify
• D) defend

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Definitions:

Intra-Entity Transfer

Transactions involving assets, services, or funds between divisions or units within the same company, impacting financial statements when aggregated.

Equity Method

An accounting technique used by firms to assess the profits earned from their investments in other companies by recording such profits in proportion to their ownership stake in the invested company.

Consolidation

The process of combining the financial statements of a parent company with those of its subsidiaries to create a single set of financials.

Intra-Entity Transfer

Transactions of goods, services, or funds that occur between departments or divisions within the same company or organization.