West Virginia Adjusters Practice Exam

What should an insured do if recovered property (previously declared as a loss) is returned?

1. Pay a recovery fee to the insurer

2. Inform the insurer and either return the settlement or surrender the property

3. Keep both the settlement payment and the property

4. No action is needed

The correct answer is: Pay a recovery fee to the insurer

The correct course of action when recovered property that was previously declared a total loss is returned to the insured is to inform the insurer and either return the settlement or surrender the property. Upon declaring the property a loss, the insurer typically compensates the insured for that loss. If the property is later found and returned, the insured has a responsibility to notify the insurer about the recovery. This means the insured cannot simply keep both the settlement payment and the property since that would result in an unjust enrichment; they have already received compensation for a loss that is no longer applicable. Therefore, the ethical and contractual obligation is to either return the settlement amount received from the insurer or surrender the recovered property back to the insurer. Options that suggest no action is needed or keeping everything do not align with the principles of fairness and responsibility in the insurance process, as they would undermine the purpose of the insurance contract.