Property Insurance FundamentalsQuestion 190 of 215
A property insurer files a broader version of its homeowners form with the California Department of Insurance that takes effect during the term of an existing policy. Which provision typically extends the broader coverage to that existing policy at no extra premium?
a.The salvage clause
b.The pair-and-set clause
c.The vacancy clause
d.The liberalization clause
Explanation
A liberalization clause provides that if the insurer broadens its form during the policy period (or within a short window before the effective date) without charging extra premium, that broadened coverage automatically applies to existing policies. It is one-way: it gives the insured the benefit of improvements without re-underwriting.
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Related questions on this topic
- What is the principal purpose of a coinsurance clause in a property policy?
- Which statement best describes the protection given to a lender under a standard (union) mortgage clause in a property policy?
- How does an OPEN (simple) mortgage clause differ from a STANDARD (union) mortgage clause?
- Under a typical commercial property vacancy provision, what generally happens if the building is vacant for more than 60 consecutive days before a covered loss occurs?
- An insured owns a matched pair of antique candlesticks. One candlestick is destroyed by a covered peril. Under a typical pair-and-set clause, how is the loss settled?
- After paying the insured the full insured value of a damaged commercial freezer, the insurer claims the damaged freezer itself. This right is best described as which of the following?
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