If a Provision in an Insurance Policy Is Ambiguous

question 12

Multiple Choice

If a provision in an insurance policy is ambiguous:

• A) it is interpreted in favor of the insurer because the insured could have rejected the policy.
• B) it is interpreted against the insurer.
• C) parol evidence is admitted to show what was intended.
• D) the policy is declared void and the insurer is required to return all premiums to the insured.

---

Definitions:

Current Asset

An asset that is expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of a business.

Accrued Revenues

Revenues that have been earned but not yet received in cash or recorded at the statement date.

Current Liabilities

Short-term financial obligations due within one year, including accounts payable, short-term debt, and other accrued liabilities.

Balance Sheet

A financial statement that presents a company's financial position, including assets, liabilities, and equity, at a specific point in time.