Property-Only Practice Questions - Property-Only Insurance License Exam

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An insured owns a home with a market value of $300,000 but a replacement cost of $400,000. The home is destroyed by a covered peril. Under a homeowners policy with adequate replacement-cost coverage and no coinsurance penalty, the insurer will pay:

$$300,000 — the market value $$400,000 — the replacement cost up to the policy limit $$350,000 — the average of the two Whichever is less between market value and replacement cost

Correct Answer:

$$400,000 — the replacement cost up to the policy limit

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