Property Insurance FundamentalsQuestion 193 of 215
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?
a.Subrogation against a negligent third party
b.The insurer's right of salvage in the damaged property after settling the loss
c.A coinsurance penalty against the insured
d.Reformation of the insurance contract
Explanation
Once the insurer has paid the insured the full insured value of a damaged item, salvage rights let the insurer take possession of the damaged property and recover whatever value remains by selling it. Subrogation is different: it lets the insurer pursue a third party whose fault caused the loss.
Law Reference: Salvage rights conceptPractice all 215 questions free — no signup required.
Related questions on this topic
- 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?
- 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?
- A neighbor negligently starts a fire that damages the insured's garage. The insurer pays the insured for the loss and then sues the neighbor to recover what it paid. This step is BEST described as which of the following?
- A building is insured by two property policies covering the same interest: Policy A with a $200,000 limit and Policy B with a $300,000 limit. A covered $50,000 loss occurs. Under a pro-rata other-insurance clause, how is the loss shared?
- Under a 'contribution by equal shares' other-insurance method, how do two policies generally share a loss?
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against California Property & Casualty Insurance License Exam · How we review