A restaurant owner leased a meeting room at the restaurant to a second party.The lease specified that the second party,not the restaurant owner,would be responsible for any liability arising out of the use of the meeting room,and that the restaurant owner would be "held harmless" for any damages.The restaurant owner's use of the hold-harmless agreement is an example of
A)retention.
B)self-insurance.
C)insurance.
D)noninsurance transfer.

Question

Quizplus · Accepted Answer

The use of a hold-harmless agreement is an example of a noninsurance transfer, where the potential risk or liability is transferred to another party. The restaurant owner is not insuring against the risk but rather transferring it to the second party who will be using the meeting room.

A Restaurant Owner Leased a Meeting Room at the Restaurant