Property Insurance FundamentalsQuestion 238 of 474
Under a stated amount arrangement, a covered loss is settled at:
a.The greater of the stated sum or repair cost
b.The stated sum plus the cost of any salvage
c.The lesser of the stated sum or actual value
d.The stated sum, whatever the actual value
Explanation
A stated amount fixes a ceiling rather than a promise: the insurer pays the smallest of the stated figure, the actual cash value, or what it costs to repair or replace, so the insured is indemnified rather than enriched. Paying the stated sum regardless of value describes an agreed value approach. Choosing the greater of two figures would pay more than the loss.
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