William Owned a Factory That Was Burned to the Ground

question 16

Multiple Choice

William owned a factory that was burned to the ground as a result of Jefferson's negligence.Happily, William had purchased first-party coverage from Clinton Insurance Corp (CIC) .Which of the following statements is most likely to be TRUE?

• A)William will receive compensation from Jefferson.
• B)William will receive some compensation from Jefferson and the rest from CIc.
• C)Jefferson will be subrogated to William's position.
• D)CIC will sue Jefferson in tort.
• E)Because of the doctrine of indemnification, CIC must repay William's insurance premiums if a court holds Jefferson liable to CIc.

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Definitions:

Subsidiary

A company that is controlled by another company, known as the parent company, through ownership of more than half of its voting stock.

Fixed Assets

Long-term tangible assets used in operation of a business that are unlikely to be converted into cash within a short period.

Consolidated Financial Statements

Financial statements that represent the aggregate financial position and results of operations for a parent company and its subsidiaries as a single economic entity.

Combined Entity

A business entity that results from the combination of two or more separate entities through merger, acquisition, or another method, leading to consolidation for financial reporting purposes.