Policy Provisions and Property Insurance Coverage
What the exam tests
This domain tests how a public adjuster reads a property policy before estimating a claim. You need to connect coverage grants, exclusions, conditions, and loss-measurement clauses to the actual damage.
Core coverage concepts
- Insurable interest and indemnity limit recovery to the insured's financial loss. A claimant cannot collect more than the policy allows or more than the actual loss.
- Actual cash value (ACV) is generally replacement cost less depreciation; replacement cost value (RCV) pays to repair or replace without depreciation, often after repairs are completed.
- Policy limits, deductibles, coinsurance, and special sublimits apply before payment. Exclusions for wear and tear, faulty workmanship, mold, or ordinance compliance may require a separate endorsement.
- Duties after loss commonly include prompt notice, protecting property from further damage, inventorying damaged property, submitting a proof of loss, and cooperating with examination under oath.
- Appraisal and suit-limitation clauses create deadlines and dispute procedures. Nebraska fire and valued-policy provisions can affect total-loss measurement, so confirm the specific policy and statute.
Worked example
A kitchen loss has an RCV of $40,000 and $8,000 depreciation. The deductible is $2,000. The initial ACV payment is $40,000 minus $8,000 minus $2,000, or $30,000. The insured can recover the $8,000 depreciation after completing repairs, subject to the limit and policy terms. If a coinsurance clause applies, the adjuster must first test the limit against the required insurance before applying the deductible.
Traps that cost marks
- Treating the ACV check as the final settlement and missing recoverable depreciation.
- Applying the deductible to each item instead of once per loss, unless the policy says otherwise.
- Ignoring ordinance-or-law coverage, matching requirements, or debris-removal sublimits.
- Missing the proof-of-loss or suit-limitation deadline.