Arizona Adjuster Practice Exam

In what situation may the assignment provision of a policy come into play?

1. When the insurer cancels coverage

2. When the insured sells the property

3. When there is a death in the family

4. When the claim amount is disputed

The correct answer is: When the insured sells the property

The assignment provision of a policy is relevant when the insured sells the property. This provision addresses the ability of the policyholder to transfer their rights or benefits under an insurance policy to another party. When property ownership changes due to a sale, the new owner typically needs to have insurance coverage in their name to protect their interest in the property. Therefore, the assignment provision allows the seller, or original policyholder, to assign their rights under the existing policy to the buyer, ensuring continuity of coverage. In contrast, situations such as the insurer canceling coverage or a death in the family do not directly trigger the assignment provision, as these circumstances do not necessarily involve the transfer of rights or benefits related to the policy. Similarly, disputing a claim amount pertains more to the claims process rather than transferring policy rights, so it does not involve the application of the assignment provision. Each of these scenarios operates under different aspects of insurance law and policy management.