Georgia Personal Lines Agent Exam 2025 – 400 Free Practice Questions to Pass the Exam

The correct choice refers to the Loss Settlement Clause, which is vital in insurance policies, particularly those concerning property. This clause specifically allows the policyholder to receive compensation for a partial loss without any reduction for depreciation as long as the insured maintains coverage that is at least 80% of the property’s replacement cost at the time of loss.

This is designed to encourage policyholders to insure their property sufficiently so they can fully recover in the event of a claim. By meeting the 80% requirement, the insured is safeguarded from the typical depreciation deductions that would otherwise apply, thus ensuring they receive the most equitable compensation for their losses.

In contrast, a Coinsurance Clause establishes a requirement for the amount of insurance to be maintained relative to the value of the property. Failing to meet this requirement can result in penalties during a claim, but it does not provide the same assurances regarding full payment without depreciation as the Loss Settlement Clause does. The Standard Mortgage Clause and Loss Payable Clause have different functions, focusing on mortgagee rights and claims payment processes, respectively, and do not address the issue of depreciation on partial losses like the Loss Settlement Clause does.