Final answer:
In a farm policy, the insurer is responsible for paying any costs incurred for the investigation or defense of a claim. These costs are part of the insurer's administrative expenses and are covered by the premiums paid by policyholders.
Step-by-step explanation:
In the context of a farm policy or any other type of insurance policy, the costs incurred by the insurer for the investigation or defense of a claim, such as the administrative costs of hiring workers, administering accounts, and processing insurance claims, are typically the responsibility of the insurer. These costs are part of the overhead required to run an insurance company effectively. The premiums that policyholders pay are designed to cover not just the average person's claims, but also these significant administrative expenses, and still allow for the company's profits.
To clarify, in a farm policy, any cost incurred by the insurer for the investigation or defense of a claim will be paid by the insurer. This is standard practice across the insurance industry and is in line with how insurance firms manage their finances, ensuring that premiums cover all operational costs while reducing the financial burden on the insured