Insurance Policy Provisions and Settlement Options Quiz

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Questions and Answers

What does the Louisiana Valued Policy Law (LVPL) apply to?

Real property

Any lawful and substantial economic interest in the safety of property (correct)

All types of property damage

Personal property damaged by covered perils

What does the LVPL require insurers to do?

Determine the value of the property at the time the policy is written

Use the valuation to determine the premium charge (correct)

Pay the policy limits to the insured

All of the above

What is covered under a Standard Fire Policy?

Fires caused by lightning, natural disasters, gas explosions, and faulty wiring

Removal of debris

Internal explosions

All of the above (correct)

What property can be covered under a Standard Fire Policy?

All of the above Signup and view all the answers

What does the rule of indemnity, or indemnity principle, state?

An insurance policy should not provide a benefit that is greater than the insured's loss Signup and view all the answers

Where are liberalization clauses most likely to be found?

Property insurance Signup and view all the answers

What is the purpose of a liberalization clause in an insurance policy?

To give policyholders more coverage or benefits without requiring additional premium payments Signup and view all the answers

What does a standard homeowners insurance policy include?

Coverage for the structure of the home, coverage for personal belongings, liability protection, additional living expenses Signup and view all the answers

What is the purpose of the 'subrogation' right for the insurance company?

To seek reimbursement from the at-fault party after paying a covered claim Signup and view all the answers

What determines the loss settlement amount in property insurance?

Type of loss cost settlement option agreed upon in the homeowner's insurance policy Signup and view all the answers

What do loss settlement provisions in insurance policies detail?

How a claim will be paid, including replacement cost payment for the dwelling and personal property Signup and view all the answers

What are the three loss settlement options in property insurance?

Actual cash value, replacement cost, and agreed value Signup and view all the answers

What does a duty to defend insurance clause provide the insurer with?

The right to defend the policyholder against covered lawsuits Signup and view all the answers

What does a standard mortgage clause protect the lender from?

Borrower intentionally damaging the mortgaged property Signup and view all the answers

What does a loss payable clause allow?

A third party to be paid for a loss instead of the insured or beneficiary Signup and view all the answers

What does 'No benefit to bailee' in insurance policies mean?

Only the policyholder can benefit from the insured property, and insurance won't cover damages while the property is in the possession of a third party Signup and view all the answers

What does Louisiana's Valued Policy Law require insurance companies to do?

Pay the full value of a policy to the insured if the property is a total loss, irrespective of the actual cash value at the time of the loss Signup and view all the answers

Study Notes

Insurance Policy Provisions and Settlement Options

"Subrogation" or "subro" is the right of the insurance company to seek reimbursement from the at-fault party after paying a covered claim, protecting the policyholder and insurer from losses that aren't their fault.
Loss settlement amount in property insurance depends on the type of loss cost settlement option agreed upon in the homeowner's insurance policy.
Loss settlement provisions detail how a claim will be paid, including replacement cost payment for the dwelling and personal property, and may include a recoverable depreciation clause.
The three loss settlement options are actual cash value, replacement cost, and agreed value, each with different implications for claim payment.
A duty to defend insurance clause gives the insurer the right to defend the policyholder against covered lawsuits, including hiring lawyers and deciding on settlements or court cases.
A standard mortgage clause protects the lender if the borrower intentionally damages the mortgaged property, forming a separate contract between the insurer and mortgagee.
A loss payable clause allows a third party to be paid for a loss instead of the insured or beneficiary.
"No benefit to bailee" in insurance policies means only the policyholder can benefit from the insured property, and insurance won't cover damages while the property is in the possession of a third party.
Louisiana's Valued Policy Law requires insurance companies to pay the full value of a policy to the insured if the property is a total loss, irrespective of the actual cash value at the time of the loss.

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Description

Test your knowledge of insurance policy provisions and settlement options with this quiz. Explore concepts such as subrogation, loss settlement options, duty to defend clauses, standard mortgage clauses, and more. See how well you understand the intricacies of insurance policies and their implications for claim payments and coverage.