Which of the Following Statements About the Personal Liability Coverage

question 27

Multiple Choice

Which of the following statements about the personal liability coverage (Coverage E) of an unendorsed homeowners policy is true?

• A)Coverage is written on an accident basis.
• B)Coverage is provided for bodily injury liability.
• C)Coverage is provided for business and professional liability.
• D)Coverage is provided for personal injury liability.

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Definitions:

Sunk Cost

A sunk cost refers to money already spent and permanently lost, which cannot be recovered and should not impact future business decisions.

Externality

A cost or benefit that affects a party who did not choose to incur that cost or benefit, often seen in environmental and public goods scenarios.

After-tax Proceeds

The net amount received after taxes are deducted from the gross proceeds of a sale or transaction.

Tax Shield

A deduction allowed by the tax laws that lowers a person's or corporation's taxable income and thus their tax liability.