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lesya692 [45]
3 years ago
9

Insurance policies often contain a covenant of good faith and fair dealing. Even if the clause is not in the policy, often court

s will imply it. Explain the covenant of good faith and fair dealing and provide an example illustrating when an insurance company might breach this covenant.
Business
1 answer:
Oxana [17]3 years ago
6 0

Answer:

The <em>covenant of good faith and fair dealing</em> simply requires all the parties to a contract to deal in an even-handed manner such that one party's action does not frustrate the other or prevent the other from getting the benefits of that contract.

In insurance, this covenant is sometimes captured under the heading <em>Uberrima fides</em>. This is a Latin phrase meaning <em>"Utmost Good Faith".</em>

In insurance, this covenant is legally binding on all parties to ensure they each reveal every information that is material to the acceptance or rejection of the risk (on the part of the Insurer) whilst on the part of the Insured the insurer is required to be explicit regarding the terms of the policy as well as the calculations by which the premium is arrived at.

For example, if an Insurance company is looking at covering someone under it's Life Insurance Policy, the person taking out the contract must disclose whether or not the Insured has any latent health issues which might shorten their lifespan. If there is such a condition, the Insurance company may still take on the risk albeit at a relatively higher rate than a client without such medical conditions.

 

An Insurance Company may breach this covenant if they delay or refuse to reasonable settle claims due to the Insured. It may also arise if the Insurance company by some technical manipulation intentionally under settles an Insurance claim.

If for instance, a Comprehensive Insurance Policy files a valid claim, the Insurer may be liable for negligence and or intentional wrongdoing.

Cheers!

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Answer:

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4 0
2 years ago
ConsGrough, Inc. has increased its annual common dividend by 3% in each of the years that the company has existed. If you believ
Salsk061 [2.6K]

Answer: $171.67 would be the price of the security

Explanation: This problem relates to dividend growth model, which can be shown as follows :-

=\frac{D_{1}}{P_{0}}+\:G

where'

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therefore,

=\frac{\$5\left ( 1+3\% \right )}{P_{0}}+\:3\%

solving this we get

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8 0
3 years ago
During the current year, the Jules Company incurred the following product costs:Direct materials used in production $250,000Dire
ICE Princess25 [194]

Answer:

Option (D) is correct.

Explanation:

Given that,

Direct materials used in production = $250,000

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Manufacturing overhead = $245,500

Beginning Work in Process Inventory = $20,000

Ending Work in Process Inventory = $30,000

Cost of finished goods manufactured for the year:

= Direct materials used in production + Direct labor + Manufacturing overhead + Beginning Work in Process Inventory

= $250,000 + $185,000 + $245,500 + $20,000 - $30,000

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5 0
3 years ago
Diamond Company is considering investing in new equipment that will cost $1,400,000 with a 10-year useful life. The new equipmen
ivolga24 [154]

Answer:

the cash payback period is 6.09 years

Explanation:

The computation of the cash payback period is shown below:

= Initial Investment  ÷ Net annual cash inflow

= $1,400,000 ÷ $230,000

= 6.09

Now the net annual cash flow is  

. Net operating income $90,000.00

Add: Depreciation   $140,000.00

Net annual cash inflow   $230,000.00

Hence, the cash payback period is 6.09 years

6 0
2 years ago
A business has the following items: - Land $1,500,000 - Machinery $30,000 - Cash $10,000 - Loan $500,000 - Owner’s equity? _____
vodomira [7]

Answer:

The owner's equity amounts to $1,040,000

Explanation:

The formula to compute the owner's equity is as:

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= $1,500,000 + $40,000

= $1,540,000

Liabilities = Loan

= $500,000

Putting the values above in the formula:

= $1,540,000 - $500,000

= $1,040,000

6 0
3 years ago
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