Policy Structure & ProvisionsQuestion 466 of 474
After a covered loss, the policy's option to repair or replace allows the insurer to:
a.Refuse the claim when repairs cost too much
b.Name the contractor the insured has to hire
c.Restore the property instead of paying cash
d.Pay the insured the full policy limit at once
Explanation
The insurer reserves the right to pay the value of the lost property, to pay the cost of repairing it, or to repair or replace it with property of like kind and quality, which caps what an insured can insist on in cash. The option is a settlement choice, not a way out of the claim, so refusing a costly claim is not what it permits, and it does not force the insured to hire anyone.
This topic, taught in full in the Personal Lines Insurance Producer guide. Personal Lines Insurance Producer — Complete Study Guide (2026) — PDF + EPUB, $19.99 · 14-day refund →
Practice all 474 questions free — no signup required.
Own the complete Personal Lines Insurance Producer guide — PDF + EPUB, $19.99 →
Related questions on this topic
- A proof of loss filed with the insurer is best described as:
- The insured and the insurer agree the fire loss is covered but cannot agree on its dollar amount. Under the appraisal condition:
- The suit against us condition provides that an insured may sue the insurer only after:
- A dry cleaner ruins a customer's coat. Under the no benefit to bailee condition, the cleaner:
- Under the loss payment condition, the insurer adjusts a covered loss with, and pays:
- Two policies cover the same $30,000 loss, one with a $200,000 limit and one with a $100,000 limit. Under the other insurance condition, the larger policy pays:
Last reviewed: · editorial process
PrepPass team · Verified against California Personal Lines Insurance License Exam · How we review