Florida Insurance Claims Adjuster License Practice Exam

The provision in the Builders Risk Coverage Form that penalizes the insured for underinsurance is called:

1. Coinsurance

2. Full Reporting

3. Agreed Value

4. Adequate Insurance Clause

The correct answer is: Adequate Insurance Clause

The provision in the Builders Risk Coverage Form that penalizes the insured for underinsurance is called the Adequate Insurance Clause. This clause ensures that the insured has a sufficient amount of insurance coverage to fully protect their investment in the construction project. A is incorrect because coinsurance refers to a different type of insurance clause that requires the insured to pay a percentage of any loss if they are underinsured. B and C are also incorrect because they do not address the penalty for underinsurance. Full Reporting is a requirement for the insured to keep the insurance company updated on the status of the construction project, while Agreed Value sets the amount of coverage agreed upon by the insured and insurer at the beginning of the policy. Only D accurately describes the provision that penalizes the insured for underinsurance.