The fire loss based on material concealment

Assignment Help Financial Management

Reference no: EM131521064

Jeff is a book dealer who purchased a building from Richard. Jeff obtained a loan from the Gateway Bank to purchase the building, which held a mortgage on the building. Jeff planned to store his inventory of books in the building. He also planned to use part of the building for a fast-food restaurant. When Jeff applied for property insurance on the building, he did not tell the agent about the fast-food restaurant because premiums would be substantially higher. Eight months after the policy was issued, a fire occurred in the restaurant that caused substantial damage to the building.

a. Do any of the following parties have an insurable interest in the building at the time of loss? Explain your answer.

1. Jeff

2. Richard

3. Gateway Bank

b. Richard told Jeff he could save money by taking over Richard’s insurance instead of purchasing a new policy. Can Richard validly assign his existing property insurance policy to Jeff without notifying the insurer? Explain your answer.

c. Could Jeff’s insurer deny coverage for the fire loss based on a material concealment? Explain your answer.

d. Investigation of the fire revealed that an electrician improperly wired an electrical outlet in the restaurant, which caused the fire. Explain how subrogation might apply in this case.

Reference no: EM131521064

Questions Cloud

Calculate sales revenue and gross profit : Greg's Bicycle Shop has the following transactions related to its top-selling Mongoose mountain bike for the month of March 2012.

What scale of measurement are you using : Which methodology (which means approach or methods you will use to conduct your study) are you using?

Expected to change annual cash dividend while new projects : Let's say Novell is currently in a building stage. It's not expected to change its annual cash dividend while new projects are being developed over the next 3 y

Qualify for membership of mensa : a. What is the probability that no more than 4 of them will qualify for membership of Mensa?

The fire loss based on material concealment : ould Jeff’s insurer deny coverage for the fire loss based on a material concealment? Explain your answer.

Explain the multiple-step income statement : At the beginning of July, CD City has a balance in inventory of $2,900. The following transactions occur during the month of July.

Apply the irr rule : Apply the IRR rule. Required return 11% Given the following cash flows should we accept or reject? Why?

Effectiveness of the fiscal and monetary policies : Discuss and analyse the effectiveness of the fiscal and monetary policies employed in 2009, illustrating with aggregate demand-aggregate supply models.

Depicts ethical or unethical practices : Research and locate a current-events article or video that, like the example article from Tulsa World, depicts ethical or unethical practices that have occurred

User Account

All Pages