Which of the following statements about the replacement cost provision of the Homeowners 3 policy is true?
A)It applies to personal property losses only.
B)Except for small losses,the insured must repair or replace the damaged property in order to receive full replacement cost.
C)The insured is required to carry an amount of insurance equal to 100 percent of the replacement value of the insured property.
D)Loss settlements are equal to 50 percent of the value of the loss if the insured is carrying less than the required amount of insurance.

Question

Quizplus · Accepted Answer

The replacement cost provision typically requires the insured to actually repair or replace the damaged property before they can receive the full replacement cost, rather than just the actual cash value which accounts for depreciation. This ensures that the insurance coverage is used for its intended purpose of restoring the insured's property to its pre-loss condition.

Which of the Following Statements About the Replacement Cost Provision