Explain the Need for a Claims-Made Form

question 40

Essay

Explain the need for a claims-made form. Explain how a liability insurance contract written on a claims-made form works.

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Definitions:

Expense Recognition

An accounting principle that dictates the timing of reporting an expense in the financial statements.

Dishonors

Refers to the failure to accept or pay a bill of exchange or promissory note when due.

Dishonored Note

A promissory note that has not been paid by the maker at maturity.

Maturity

The date on which a financial obligation or investment becomes due for payment or achieves its full value.