Florida Insurance Claims Adjuster License Practice Exam

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Prepare for the Florida Insurance Claims Adjuster Test. Access multiple choice questions, flashcards, and detailed explanations to enhance your knowledge and confidence. Start mastering the material today!

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What does Replacement cost settlement imply in insurance?

Settlement based on the current market value
Providing reimbursement for repair costs only
Replacing old items with new without depreciation
Settling for the cash value of the item

The correct answer is: Replacing old items with new without depreciation

Replacement cost settlement in insurance refers to the insurance company providing reimbursement for the cost of replacing damaged or lost items with new items, without taking into account any depreciation. This means that the individual will receive a payout that is enough to replace the damaged or lost item with a brand new one, rather than only receiving a portion of the current market value or the cash value of the item. Options A, B, and D are incorrect because they do not fully encompass the concept of replacement cost settlement and may result in the policyholder not being able to fully replace their damaged or lost items.