Property and Casualty Insurance Practice Exam

What is the purpose of the Pair and Set Clause in an insurance policy?

1. It covers complete replacements for lost items

2. It requires depreciation for the entire set

3. Loss to one item does not indicate a total loss to the set

4. It automatically appraises the entire pair or set

The correct answer is: Loss to one item does not indicate a total loss to the set

The purpose of the Pair and Set Clause in an insurance policy is to clarify how losses involving items that are part of a set or pair are handled. When this clause is included in an insurance policy, it specifies that the loss of one item does not equate to a total loss of the entire set or pair. For example, if a policyholder has a set of dinnerware and one plate is broken, the loss of that single item doesn't mean the whole set is deemed lost. This clause ensures that the insured can receive compensation for the individual lost item while still retaining the value of the remaining pieces of the set. Recognizing losses in this way protects the insured from losing coverage on all items just because one was damaged or lost and emphasizes that replacement or repair can focus only on the damaged item without penalizing the insured for maintaining the rest of the set. This provision is particularly valuable for items that are inherently more valuable or appreciated as a collection, reinforcing the idea that the overall integrity and value of the remaining pieces must be considered separately from the loss.