Network Security NETSEC 2 Practice Exam

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A Florida dwelling is insured on a replacement-cost basis and suffers a covered building loss. Subject to the policy and statute, what is the usual sequence of payment?

The insurer may always withhold the entire claim until reconstruction is complete The insurer initially pays only the land value The insurer must pay twice the actual cash value before repairs begin The insurer initially pays at least the actual cash value less the deductible, then pays additional replacement-cost amounts as repair or replacement work is performed and expenses are incurred

Correct Answer:

The insurer initially pays at least the actual cash value less the deductible, then pays additional replacement-cost amounts as repair or replacement work is performed and expenses are incurred

Explanation:

Florida law generally requires an initial payment of at least the actual cash value of the insured loss, less the deductible, with remaining replacement-cost amounts paid as work is performed and expenses are incurred, subject to applicable policy and statutory provisions.

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