If an Insured Has Fully Insured the Property with Two

question 32

Multiple Choice

If an insured has fully insured the property with two different insurers:

• A)the insurer with which the policy was first taken out must cover the claim.
• B)the insurer with which the policy was last taken out must cover the claim.
• C)the insurer must make an election as to which insurer to bring the claim with and that insurer can seek a pro rata contribution from the other insurer.
• D)the insured can recover the full amount of the loss from both insurers.

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Definitions:

Average Portfolio Standard Deviation

A measure of the volatility of all the assets in a portfolio, calculated as the square root of the variance of the portfolio's returns.

Coefficient of Correlation

A numerical metric evaluating the magnitude and orientation of a linear correlation between two variables, with values spanning from -1 to 1.

Capital Allocation Line

A graph showing risk-versus-return profiles of different portfolios, including the risk-free rate and a combination of risky assets, guiding optimal asset allocation.

Efficient Frontier

A concept in modern portfolio theory demonstrating the set of optimal portfolios offering the highest expected return for a given level of risk.