Question

In: Operations Management

Carl applies for fire insurance for his house. Before the application is processed, Carl’s house burns...

Carl applies for fire insurance for his house. Before the application is processed, Carl’s house burns down. Carl will have coverage if the insurance company Doesn’t find out about the fire until after the policy issues Chooses to accept the application Issued a binder Makes coverage retroactive

Solutions

Expert Solution

Answer: Issued a binder

Explanation:

Binder is a temporary document to provide coverage until the policy is issued by the company. Property insurance may be provided while the application is being processed if a binder is issued. Hence Carl will have coverage if the binder is issued. Retroactive insurance coverage provide coverage for the losses that have already occurred, but Carl has just applied for the fire insurance coverage and the retroactive date would start when the policy starts. It is not possible to hide about the fire till the policy issuance and the company cannot choose to accept the application when the damage is already occurred. hence these options are wrong.


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