In a replacement of insurer scenario, which statement is true?

In a replacement of insurer scenario, which statement is true?

• A. The insurer that issued the original policy.
• B. The insurer responsible for issuing the new policy.
• C. The agent determines which insurer will issue the new policy.
• D. The policy is replaced automatically.

Answer: (B)

Replacement of insurer means you’re swapping the old coverage for a new policy with a different company. The true statement is that the insurer responsible for issuing the new policy is the replacing insurer—the one that writes the new contract and assumes the coverage and claims obligations under that new policy. The original insurer is not the one issuing the new policy, and their duties under the old policy end when the replacement takes effect. The agent does not unilaterally decide which insurer will issue the new policy; the choice is made through the replacement arrangement, and a new policy must be issued rather than the policy being replaced automatically.

Replacement of insurer means you’re swapping the old coverage for a new policy with a different company. The true statement is that the insurer responsible for issuing the new policy is the replacing insurer—the one that writes the new contract and assumes the coverage and claims obligations under that new policy. The original insurer is not the one issuing the new policy, and their duties under the old policy end when the replacement takes effect. The agent does not unilaterally decide which insurer will issue the new policy; the choice is made through the replacement arrangement, and a new policy must be issued rather than the policy being replaced automatically.