Define and describe the concept of a surety. In your response define and describ
ID: 346497 • Letter: D
Question
Define and describe the concept of a surety. In your response define and describe the concept of an insurable interest and the factor of risk as it applies to insurance.For two points of extra credit describe the concept and process relative to subrogation. Define and describe the concept of a surety. In your response define and describe the concept of an insurable interest and the factor of risk as it applies to insurance.
For two points of extra credit describe the concept and process relative to subrogation.
For two points of extra credit describe the concept and process relative to subrogation.
Explanation / Answer
A surety is a party which is an organization or individual that guarantees the payment of debt of another party in case the debtor is unable to make the payment and defaults. Surety agreement is expected to lower the risk of the lender, who can lend debts based on the backup in case it doesn't trust the debtor or doesn't have the confidence on the debtor.
An individual or organization is said to have an insurable interest on a property or life owned by him when damage(partial/complete) in the property or life will result in a financial loss to the entity. This highlights the fact that a person cannot insure anything which doesn't result in a loss to him/her.
Subrogation is a legal right or ability of an insurance carrier or provider to legally pursue a third party to repay for the loss suffered by the insured. Here, the insurance carrier acts on behalf of the insured to get covered for the loss caused by the at-fault party. This concept is very common in auto-insurance where a vehicle damaged in accident and possessing insurance will be paid by the at-fault party who is expected to be paid to the insured through the insurance carrier.
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