West Virginia Adjusters Practice Exam

Under the Valued Policy Law, an insurer can only issue a fire insurance policy:

1. after assessing the risk

2. for a fixed and specific dollar amount

3. with adjustable coverage amounts

4. with agreed-upon deductions

The correct answer is: after assessing the risk

The correct choice highlights the requirement that under the Valued Policy Law, an insurer must issue a fire insurance policy for a fixed and specific dollar amount. This law stipulates that in the event of a total loss, the insurer is obligated to pay the agreed-upon amount stated in the policy, regardless of the actual cash value of the property at the time of the loss. This ensures that both the insured and the insurer have a clear understanding of the coverage and benefits associated with the policy. Assessing the risk, while an important part of underwriting, does not directly pertain to the stipulations of the Valued Policy Law, which focuses on the fixed amount aspect. Similarly, adjustable coverage amounts and agreed-upon deductions are not concepts that align with the requirements outlined by the Valued Policy Law. Instead, the law aims to simplify the claims process and provide certainty for policyholders regarding the compensation they will receive in the event of a loss.