Explanation:

Sure thing—let’s run through what each option actually means:

- Option 1: No insurance has been undertaken for building

If there’s no policy to inspect, maybe there was never any insurance at all. That’s a red flag, but not the only possible reason for the policy being missing.

- Option 2: Lien on building

A lien means someone else (usually a lender) has a legal right over the building until a debt is paid. If the insurance papers aren’t available, it’s not a direct indication of a lien. A lien would usually show up in legal/title documents, not with insurance policies.

- Option 3: Insurance premium has not been paid

If the premium isn’t paid, the insurance company may not issue the policy or could cancel it. The bond (policy document) would then not be available for inspection. This is actually the most likely reason.

- Option 4: Insurance premium paid but not recorded

If the premium is paid but not recorded, the policy should still exist physically. The absence of a policy doesn’t usually point to a recording issue.

Here’s the thing—the answer that really fits is:

Option 3: Insurance premium has not been paid

If the premium wasn’t paid, the company probably never issued the insurance bond. That’s the usual scenario when documents can’t be found during an audit.