What are the insurer's obligations after a covered loss?

• A. Verifying coverage, investigating and evaluating the claim, and paying the claim or denying it
• B. Immediately paying the full claimed amount without investigation
• C. Canceling the policy
• D. Negotiating with third party outside the claim investigation

Answer: (A)

After a covered loss, the insurer must handle the claim in stages: first verify that the loss is covered by the policy—confirming the policy is in force, the loss falls within the covered perils and period, and that any applicable deductibles or endorsements are accounted for. Then the insurer investigates to gather all relevant facts and evidence, which may involve inspections, statements, estimates, and documentation to determine the scope of damage and the cause. Next comes evaluating the claim, applying the policy terms to decide how much is payable, considering factors like depreciation, replacement versus actual cash value, sublimits, and any coinsurance or endorsements. Finally, the insurer pays the claim if it’s covered or issues a denial with explanations if it’s not, completing the claim decision. This sequence ensures the claim is handled fairly and in accordance with the policy. Immediate payment without investigation would be inappropriate, and canceling the policy or negotiating outside the claim process aren’t proper obligations after a loss.