Which statement is TRUE regarding coverage limits in a property insurance policy?

The selected answer is accurate because it reflects a common feature of many property insurance policies that allows for coverage limits to be reinstated after a loss occurs. This means that if a policyholder experiences a covered loss and receives a payout, the policy may provide for the coverage limits to be restored up to the original amount. This reinstatement can help the insured maintain their level of protection for future risks, providing continued safety and assurance.

In contrast, the first statement suggests that coverage limits are fixed despite claims, which does not account for reinstatement features. The second statement implies that coverage limits are regularly updated based on changes in market value, which is not a standard practice in all policies; typically, coverage limits are determined at the time of policy issuance and can only be adjusted at renewal. The third statement claims that coverage limits only apply to total losses, but in reality, coverage limits apply to all covered losses up to the policy's specified amount, not just total losses.