Florida Insurance Licensing Practice Exam

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Prepare for the Florida Insurance Licensing Exam using comprehensive questions and in-depth explanations. Perfect your understanding of essential insurance concepts and ensure your success!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

An insured has a home with a replacement cost/value of $100,000, and carries an insurance policy for $80,000 with an 80% Coinsurance clause. For a $20,000 partial loss, how much will the insurance company pay?

$15,000
$20,000
$10,000
$5,000

The correct answer is: $20,000

The insurance company will pay the lesser of the replacement cost ($20,000) or the limit of insurance carried ($80,000), multiplied by the percentage of insurance required by the coinsurance clause (80%). Therefore, the insurance company will pay $20,000. Options A, C, and D are incorrect because they do not consider the coinsurance clause or the replacement cost of the home. Option A ($15,000) is below the limit of insurance carried and does not meet the coinsurance requirement. Option C ($10,000) is below the replacement cost of the home. Option D ($5,000) is below both the limit of insurance and the replacement cost of the home.