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For what can an insurance related rule in the deed be useful?

Answer and explanation

Correct answer: To protect firm assets

An insurance-related rule in a partnership deed explains how insurance protection connected with the firm should be handled. The governing concept is risk management: business assets, stock, premises, or other insurable interests may face loss through events such as fire, theft, or accidents. A suitable clause can identify responsibility for obtaining insurance, paying the premium, and dealing with claim money, subject to applicable law and the actual policy. Therefore, option A is correct because insurance can protect the firm’s assets or compensate the firm for covered loss. It does not reduce a partner’s age, remove taxes permanently, or provide a lawful method of hiding cash.

Related tags

Insurance ClauseFirm AssetsRisk ManagementPartnership DeedPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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