Insurance Companies Can Usually Cover the Claims of Policyholders Because

question 15

Multiple Choice

Insurance companies can usually cover the claims of policyholders because:

• A) the incidence of claims normally averages out across all policyholders.
• B) they issue a very limited number of policies.
• C) they are fully insured by the U.S. government.
• D) their stockholders will cover any cash shortfalls encountered by the company.

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Definitions:

Uniform Commercial Code

A comprehensive set of laws governing commercial transactions in the United States, intended to standardize legislation across states.

Article 2

A part of the Uniform Commercial Code (UCC) dealing specifically with the sale of goods in the United States.

Legally Binding

A term describing agreements or contracts that have legal force and can be enforced by law.

Contract

A legally enforceable agreement between two or more parties with mutual obligations.