Texas General Lines — Property and CasualtyProperty and Casualty Insurance BasicsEasy
A homeowner's policy includes a clause stating that if the insurer broadens coverage under a current edition of the policy form without additional premium, that broadened coverage automatically applies to the existing policy. What is this clause called?
- ALiberalization Clause
- BAssignment Clause
- CAbandonment Clause
- DSeverability Clause
Show answer & explanationAnswer & explanation
Correct answer: A. Liberalization Clause
The Liberalization Clause ensures that if an insurer improves coverage without extra cost during a policy's term, the insured benefits immediately, avoiding the need for a new policy.
Why the other options are wrong
- B. The Assignment Clause states that a policy cannot be transferred to another party without the insurer's written consent.
- C. The Abandonment Clause prohibits the insured from abandoning damaged property to the insurer for full value.
- D. The Severability Clause ensures that the policy applies separately to each insured as if they were the only insured.
Liberalization Clause
A policy provision that states if the insurer broadens coverage under a current edition of the policy form without additional premium, that broadened coverage automatically applies to the existing policy.
- Benefits the insured
- Automatic application of broader coverage
- No additional premium required
Memory trick: Liberated policies automatically adopt better terms.