What does the restoration of limits provision do after a loss?

What does the restoration of limits provision do after a loss?

• A. Restores either the full or reduced policy limits after payment of a loss
• B. Immediately terminates the policy
• C. Increases the deductible for future losses
• D. Replaces the insured property with a like-kind property

Answer: (A)

Restoration of limits is about replenishing the amount of coverage after a loss has been paid, so you can still have protection for additional losses during the policy term. After a claim is paid, this provision may restore your remaining coverage back to the full original limit or to a reduced limit, depending on the policy’s terms and how much was paid. It doesn’t terminate the policy, doesn’t change the deductible for future losses, and doesn’t replace the property. So the best description is that it restores either the full or a reduced policy limit after payment of a loss.

Restoration of limits is about replenishing the amount of coverage after a loss has been paid, so you can still have protection for additional losses during the policy term. After a claim is paid, this provision may restore your remaining coverage back to the full original limit or to a reduced limit, depending on the policy’s terms and how much was paid. It doesn’t terminate the policy, doesn’t change the deductible for future losses, and doesn’t replace the property. So the best description is that it restores either the full or a reduced policy limit after payment of a loss.