Which of the Following Is Correct with Respect to the Principle

question 26

Multiple Choice

Which of the following is correct with respect to the principle of subrogation as it relates to insurance law?

• A) Subrogation refers to the insured's right to demand payment from the insurance company if the insured-against event takes place.
• B) Subrogation refers to the principle that, if the insured does not take out enough insurance, he will be taken to be responsible for a portion of any loss incurred.
• C) Subrogation refers to the practice of the insurance companies taking out their own insurance where the policy involves potentially large losses or high risk.
• D) Subrogation refers to the principle that, if an insurance company pays out on a policy, they assume all of the rights of the insured against the person causing the loss.
• E) Subrogation refers to the principle that the insured cannot benefit from his own wrongdoing.

---

Definitions:

Purchases Returns and Allowances

Transactions involving the return of goods to suppliers or receiving discounts due to issues like damaged goods, leading to a reduction in purchase costs.

Merchandise Inventory

The goods a company holds in stock with the intention of selling them as part of its business operations.

Freight-In

Freight-in refers to the shipping cost associated with getting goods delivered from suppliers to the buyer, often included in the inventory cost of purchased goods.

Sales Returns

Goods returned by buyers after sale due to defects, dissatisfaction, or other reasons, which are deducted from total sales revenue.