Florida Insurance Claims Adjuster License Practice Exam

Under a PAP, when does the insurance company cease to defend the insured?

1. A. The insurance company is not obligated to defend the insured

2. B. After the case has been resolved

3. C. When the policy limit is exhausted

4. D. At the policy's expiration

The correct answer is: C. When the policy limit is exhausted

Under a PAP, the insurance company is required to defend the insured until the policy limit is exhausted. Option A is incorrect because the insurance company is obligated to defend the insured under a PAP. Option B is incorrect because the insurance company is responsible for defending the insured until the policy limit is reached, not just until the case is resolved. Option D is incorrect because the policy expiration does not determine when the insurance company ceases to defend the insured.