If the insured keeps recovered property, how is the loss payment adjusted?

If the insured keeps recovered property, how is the loss payment adjusted?

• A. Based on current replacement cost
• B. Based on amount named insured receives for property
• C. Flat fee
• D. Not adjusted

Answer: (B)

When recovered property is kept by the insured, the loss payment is determined by the amount of insurance stated for that property. The indemnity is limited to the policy’s stated amount for the property, not to replacement cost or any flat fee. This ensures the payout doesn’t exceed the coverage limit, even though salvage value or other factors may come into play.

When recovered property is kept by the insured, the loss payment is determined by the amount of insurance stated for that property. The indemnity is limited to the policy’s stated amount for the property, not to replacement cost or any flat fee. This ensures the payout doesn’t exceed the coverage limit, even though salvage value or other factors may come into play.