Hawaii Insurance Adjuster License Practice Exam

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Prepare for the Hawaii Insurance Adjuster Test with flashcards and multiple-choice questions. Each question includes hints and explanations. Equip yourself with the knowledge you need to succeed!

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For full replacement cost recovery under a Businessowners Policy, what percentage of the covered property's full replacement value must be maintained?

70%
80%
90%
100%

The correct answer is: 80%

For a Businessowners Policy (BOP), in order to ensure full replacement cost recovery, the insured must maintain a coverage limit that is at least 80% of the property's full replacement value. This percentage ensures that in the event of a loss, the insurance policy will provide adequate coverage to replace the damaged or destroyed property without a significant depreciation deduction. Maintaining at least 80% coverage reflects the insurer's requirement to minimize the moral hazard of underinsurance while allowing businesses to safeguard their assets effectively. This threshold helps mitigate the risk for both the insurer and the insured, as it encourages business owners to adequately insure their properties to prevent potential financial losses due to insufficient coverage.