What are the three amounts an indemnity agreement of a fire policy states will be paid in the event of a claim?

An indemnity agreement in a fire policy outlines how claims will be settled, particularly by defining the amounts that will be paid upon a loss. The correct answer identifies three critical components that are crucial to determining the indemnity amount:

1. Actual Cash Value (ACV): This term refers to the value of the property at the time of the loss, which takes into account depreciation. It provides a fair compensation based on what the property was worth just before the fire incident, rather than its original purchase price or replacement cost.

2. Insured's Interest: This concept refers to the financial stake that the insured has in the property. Only individuals or entities with an insurable interest in the property can claim benefits under the policy; thus, the indemnity payment should reflect the extent of that interest.

3. Policy Limit: This is the maximum amount that the insurance company will pay out for a claim under the policy. It's crucial because even if the actual cash value or the insured's interest exceeds this limit, the insurer is not liable to pay more than the specified policy limit.

Understanding these three components helps clarify the scope of coverage that the insured can expect in the event of a claim under a fire insurance policy. The other