Arizona Adjuster Practice Exam

Which clause ensures a loss payee is included in any claim payment related to insured property?

1. Loss payable clause

2. Coverage clause

3. Premium clause

4. Claim settlement clause

The correct answer is: Loss payable clause

The correct choice focuses on the specific purpose of the loss payable clause, which is integral to insurance policies. This clause is designed to ensure that any loss payment made by the insurer in relation to covered property is directed to the designated loss payee. This could be a lender or a financial institution with a financial interest in the property. By including a loss payable clause in an insurance policy, the insured ensures that their financial interests are protected. If a loss occurs and a claim is filed, the insurer cannot simply disburse the funds without considering the claims of the loss payee. This helps safeguard the loss payee's stake in the property and guarantees they receive payment in accordance with their financial agreement with the insured. Other types of clauses listed, such as coverage clauses, focus on defining what is covered by the policy, while premium clauses concern the amounts payable for coverage. Claim settlement clauses typically outline how claims will be resolved and the process for settling them but do not specifically address the inclusion of a loss payee in the payment process. Thus, the loss payable clause distinctly ensures the protection of the loss payee’s interests in claims related to insured property.