Florida Insurance Claims Adjuster License Practice Exam

The Valuation Clause in Boiler and Machinery coverage provides for replacement cost if:

1. Property is repaired or replaced within 18 months

2. Property is repaired or replaced within 24 months

3. Property is repaired or replaced within 36 months

4. Property is repaired or replaced within 48 months

The correct answer is: Property is repaired or replaced within 18 months

The Valuation Clause in Boiler and Machinery coverage provides for replacement cost if the property is repaired or replaced within 18 months. This means that the insurance company will cover the cost to fully replace the damaged property with new items or materials, rather than just the depreciated value. The other options are incorrect because they either have a longer or shorter time frame for replacement, which means the policyholder may receive less or more than the full replacement cost. This could result in the policyholder paying out of pocket for the remaining cost of replacement or receiving unnecessary compensation. Therefore, Option A is the most suitable choice for ensuring appropriate coverage for the damaged property.