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Mr. Rao holds 99.9% of the equity of Timber Co. Ltd. Timber Co.'s timber stock was insured in Mr. Rao's…

Timber Co. owns its assets separately from Rao, despite his almost-total shareholding. The stipulated personal policy gives the company no insured or beneficiary interest.…

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Mr. Rao holds 99.9% of the equity of Timber Co. Ltd. Timber Co.'s timber stock was insured in Mr. Rao's individual name and was destroyed by fire. Timber Co. sues the insurer for the loss. Which outcome is most consistent with the well settled principle of separate corporate personality ? Assume the policy insures Rao solely in his personal capacity, gives Timber Co. no beneficiary rights, and was not taken by him as its agent.

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Answer and explanation

Correct answer D

Timber Co. owns its assets separately from Rao, despite his almost-total shareholding. The stipulated personal policy gives the company no insured or beneficiary interest. Share ownership alone also gives Rao no proprietary insurable interest in the company's timber, so the claim fails.

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