17 Questions
What does the Louisiana Valued Policy Law (LVPL) apply to?
Any lawful and substantial economic interest in the safety of property
What does the LVPL require insurers to do?
Use the valuation to determine the premium charge
What is covered under a Standard Fire Policy?
All of the above
What property can be covered under a Standard Fire Policy?
All of the above
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
Where are liberalization clauses most likely to be found?
Property insurance
What is the purpose of a liberalization clause in an insurance policy?
To give policyholders more coverage or benefits without requiring additional premium payments
What does a standard homeowners insurance policy include?
Coverage for the structure of the home, coverage for personal belongings, liability protection, additional living expenses
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
What determines the loss settlement amount in property insurance?
Type of loss cost settlement option agreed upon in the homeowner's insurance policy
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
What are the three loss settlement options in property insurance?
Actual cash value, replacement cost, and agreed value
What does a duty to defend insurance clause provide the insurer with?
The right to defend the policyholder against covered lawsuits
What does a standard mortgage clause protect the lender from?
Borrower intentionally damaging the mortgaged property
What does a loss payable clause allow?
A third party to be paid for a loss instead of the insured or beneficiary
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
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
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.
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.
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