392
RCMultiple Choice

Unit Summary — Cumulative exam

Question 392 • Career Explorations - EL3401

What is the definition of liability?

Answer
A
the amount a consumer must pay after an incident before the insurance company starts paying
B
the monthly amount paid for insurance
C
intentionally destroying something in order to collect insurance
D
a responsibility to pay for or fix a problem

Explanation

A liability is a responsibility or legal obligation, often to pay for damage or correct a problem. So the correct choice is “a responsibility to pay for or fix a problem.” The amount paid before insurance starts covering a claim is a deductible, and the monthly insurance payment is a premium.

AI-written and checked against the verified answer.

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