James purchased liability insurance with a $100,000 limit from Insurer A. When Insurer A denied a claim that James thought should be covered, he bought a second liability insurance policy with a $150,000 limit from Insurer B
Before he cancelled the policy with Insurer A, a $60,000 loss occurred. If this loss is settled on a pro rata basis, how much must each insurer pay?
A) Insurer A will pay $10,000 and Insurer B will pay $50,000.
B) Insurer A will pay $20,000 and Insurer B will pay $40,000.
C) Insurer A will pay $24,000 and Insurer B will pay $36,000.
D) Insurer A will pay $40,000 and Insurer B will pay $20,000.
Answer: C
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Which of the following statements regarding the accidental death benefit rider (also known as double indemnity) is true?
A) Adding the accidental death benefit rider doubles the premium for the policy. B) Financial planners agree that adding the accidental death benefit rider is a wise purchase. C) The economic value of a human life is doubled or tripled if death is caused by an accident, justifying the purchase of the rider. D) The death benefit is doubled only if an accidental injury is the direct cause of death and death occurs prior to a specified age.
All of the following is a financing factor that impacts the firm's leverage EXCEPT:
A) debt financing. B) new equity. C) suppliers. D) marketing.